11:17     CHINA UNICOM<00762> - Announcement (16)                             

    imposing a cap on the agency services for each of the financial years     
    ending 31 December 2005 and 2006.                                         
                                                                              
    (D)                                                                       
    New Guoxin Premises Leasing Agreement                                     
    (i)                                                                       
    Pursuant to an agreement dated 24 March 2005 (the New Guoxin              
    Premises Leasing Agreement), the New Operating Entity agrees to           
    provide their own premises to the A Share Company on the basis that       
    the A Share Company will have the right to transfer its rights and        
    obligations under the agreement to Unicom New Guoxin. Completion of       
    the agreement is subject to, inter alia, the approval of the              
    Independent Shareholders of the Company. The agreement provides that      
    the initial term shall be two years commencing from 1 January 2005        
    and is renewable for further terms of two years at the option of the      
    New Operating Entity.                                                     
                                                                              
    (ii)                                                                      
    Pursuant to a transfer agreement dated 24 March 2005, the A Share         
    Company agrees to transfer to Unicom New Guoxin all of its rights and     
    obligations under the New Guoxin Premises Leasing Agreement. Under        
    the transfer agreement, the A Share Company will cease to be a party      
    to the New Guoxin Premises Leasing Agreement, and Unicom New Guoxin       
    will become a party to it in place of the A Share Company. Following      
    the transfer, Unicom New Guoxin will exercise and enjoy all the           
    rights of the A Share Company arising under the New Guoxin Premises       
    Leasing Agreement in substitution of the A Share Company as if Unicom     
    New Guoxin had at all times been a party to the New Guoxin Premises       
    Leasing Agreement. Completion of the transfer agreement is subject        
    to, inter alia, A Share Company's independent shareholders' approval.     
                                                                              
                                                                              
    Background                                                                
    Pursuant to the New Guoxin Premises Leasing Agreement, the New            
    Operating Entity will provide their own premises according to the         
    request of Unicom New Guoxin from time to time.                           
                                                                              
    Pricing standards                                                         
    The rental amount in each case is based on the higher of                  
    depreciation costs and market prices for similar premises in that         
    locality.                                                                 
                                                                              
    Historical information                                                    
    For the year ended 31 December 2004, the total rental amount for          
    premises leased paid by Unicom New Guoxin to the Group was                
    approximately RMB19.47 million (HK$18.35 million).                        
                                                                              
    Chesterton Petty, an independent property valuer, has confirmed that      
    the rental amounts payable by Unicom New Guoxin under the above           
    arrangements are fair and reasonable to the Group and are not below       
    market rent.                                                              
                                                                              
    Cap Amount                                                                
    For each of the financial years ended 31 December 2005 and 2006           
    respectively, the aggregate rental payable by the Unicom New Guoxin       
    for the premises under the New Guoxin Premises Leasing Agreement will     
    not exceed the capped amount of RMB26.29 million (HK$24.78 million)       
    and RMB35.49 million (HK$33.45 million) respectively.                     
                                                                              
    The caps on the New Guoxin Premises Leasing Agreement have been set       
    with reference to:                                                        
                                                                              
    (i)                                                                       
    the Company's transactions in 2004 with Unicom New Guoxin;                
    (ii)                                                                      
    the Company's estimates of the premises that are required to be           
    leased by Unicom New Guoxin; and                                          
                                                                              
    (iii)                                                                     
    the Company's estimate of market rent at the respective locations         
    for 2005 and 2006.                                                        
                                                                              
    The estimation of the maximum number of premises that may be leased       
    by Unicom New Guoxin in the next two years takes into account the         
    growth potential of the businesses of Unicom New Guoxin and the           
    corresponding demand for more premises due to such growth.                
                                                                              
    4.                                                                        
    Approval of Independent Shareholders                                      
    The Board (excluding the independent non-executive directors whose        
    views will be expressed in their letter to the Independent                
    Shareholders to be included in a circular to be despatched to the         
    Shareholders) takes the view that the terms of the New Agreements are     
    fair and reasonable, on normal commercial terms and that the              
    Continuing Connected Transactions are in the interests of the Company     
    and its Shareholders as a whole.                                          
                                                                              
    The Company will seek Independent Shareholders' approval of the           
    terms of the New Agreements and the caps for each of the financial        
    years ending 31 December 2005 and 2006 on the relevant Continuing         
    Connected Transactions. In addition, the Company shall comply with        
    the relevant requirements under Chapter 14A of the Listing Rules in       
    relation to the Continuing Connected Transactions.