11:17     CHINA UNICOM<00762> - Announcement (15)                             

    Shanghai) average of Actual Cost per Operator Seat (as defined below)     
    plus 10%, in each case, for the previous year.                            
                                                                              
                                                                              
    The Actual Cost per Operator Seat is comprised of wages,                  
    administration expenses, operation and maintenance expenses,              
    depreciation of equipment and leasing fees for premises attributable      
    to the customer service. The Actual Cost per Operator Seat in a           
    certain area shall be the product of dividing the costs of Unicom New     
    Guoxin providing `10010' services (as confirmed in the audit report       
    issued by an external audit firm) in the same region for the previous     
    year by the average number of monthly operator seats of Unicom New        
    Guoxin for the previous year. Such audit report and relevant              
    supporting documents shall be provided to the New Operating Entity        
    and its auditor.                                                          
                                                                              
    (b)                                                                       
    Determination of the number of effectively operating operator seats:      
    Unicom New Guoxin shall notify the number of operator seats of the        
    previous month to the New Operating Entity before the tenth day of        
    each month. The New Operating Entity shall confirm the number of          
    effectively operating operator seats within five working days based       
    on the criteria as set out in the Service Standard for                    
    Telecommunication Operations (for Trial Implementation) published by      
    the MII. The number of effectively operating operator seats will be       
    subject to the final confirmation by the New Operating Entity.            
                                                                              
    Historical information                                                    
    For the year ended 31 December 2004, the aggregate fees paid by the       
    Group for the customer services pursuant to Old Comprehensive             
    Operator Services Agreement was approximately RMB525 million (HK$495      
    million).                                                                 
                                                                              
    No Cap Amount                                                             
    The Company considers that the transaction value of customer              
    services shall not be subject to any annual cap amount for the            
    following reasons:                                                        
                                                                              
    The Group's revenue growth depends heavily on the growth of its           
    subscriber base. As customer service is an ancillary service to many      
    of the Group's subscribers, any subscriber growth will necessarily        
    result in the increased use of customer service. Neither the Group        
    nor Unicom New Guoxin will be able to control it as it depends            
    entirely on subscriber usage. Any cap on this transaction will            
    therefore potentially limit the Group's ability to provide normal         
    customer service to its users and jeopardise the operation of the         
    Group. The customer services will be priced on a cost plus margin         
    basis and the costs will be audited annually by an independent audit      
    firm and is subject to the final confirmation by the Group thus           
    affording added protection to the Group.                                  
                                                                              
    The Company has applied to the Hong Kong Stock Exchange for waiver        
    from the requirements under Rule 14A.35(2) of the Listing Rules for       
    imposing a cap on the customer service for each of the financial          
    years ending 31 December 2005 and 2006.                                   
                                                                              
    (3)                                                                       
    Agency services                                                           
    Background                                                                
    Pursuant to the New Comprehensive Operator Services Agreement,            
    Unicom New Guoxin will provide subscriber development services to the     
    New Operating Entity by telephone or through other channels by            
    utilizing its paging network, equipment and operators.                    
                                                                              
    Pricing standards                                                         
    The pricing standard for the agency fee is that the agency fee            
    chargeable to the New Operating Entity shall not exceed the average       
    of agency fees chargeable by independent third party agents providing     
    subscriber development service to the New Operating Entity in the         
    same region.                                                              
                                                                              
    Historical information                                                    
    For the year ended 31 December 2004, approximately RMB9.05 million        
    (HK$8.53 million) were incurred by the Group for the payment of           
    agency fees in total pursuant to the Old Comprehensive Operator           
    Services Agreement.                                                       
                                                                              
    No Cap Amount                                                             
    The Company considers that the transaction value of agency services       
    shall not be subject to any annual cap amount for the following           
    reasons:                                                                  
                                                                              
    Agency service is essential to the Group, which needs effective           
    marketing strategies and means to sustain its growth in the highly        
    competitive telecommunications market in China today. The agency fee      
    is based on commissions charged for each newly developed subscriber.      
    The total amount of commissions will increase if the nubmer of new        
    subscribers developed by Unicom New Guoxin increases. Any cap on this     
    service is therefore a limit on the number of new subscribers that        
    Unicom New Guoxin is allowed to develop for the Group. Any such limit     
    will limit the growth of the Group.                                       
                                                                              
    The Company has applied to the Hong Kong Stock Exchange for waiver        
    from the requirements under Rule 14A.35(2) of the Listing Rules for