09:39 NW MOBILE<00862> - Announcement (2) REASONS FOR THE TRANSACTION The interconnection, transmission, traffic routing and other related services are necessary for connection of the mobile network of NWPCS with other telecommunications operators and for conveyance of telephone calls. Since NWPCS obtained a Public Radiocommunications Services Licence in 1996, NWPCS has been using the Services offered by fixed telecommunications service operators ("FTNS Operators"). In view of price erosion caused by market competition amongst the FTNS Operators, NWPCS may consider early termination of certain existing orders and placement of new order for the same or similar Services from other FTNS Operators in order to enjoy greater savings. As such, it is possible that NWPCS may place new orders for the Services with NWT as long as NWT offers competitive quotes amongst the FTNS Operators. The directors of the Company ("Directors") consider that the entering into of the Master Agreement will minimize the administrative procedures for the Company since, so long as the aggregate annual value for the Services does not exceed the Cap, the Company is not required to make separate disclosure for each order pursuant to the Listing Rules provided that the terms of each order is the same as the Master Agreement except for operational details. Subsequent orders will be aggregated and subject to the relevant disclosure and approval requirements pursuant to the Listing Rules as and when the Cap is exceeded. The Directors (including the independent non-executive Directors) also consider that the transaction is on normal commercial terms and in the ordinary and usual course of business of the Company. They are also of the view that the terms of the Master Agreement and the amount of the Cap are fair and reasonable and in the interests of the Company and its shareholders as a whole. CONTINUING CONNECTED TRANSACTION NWT is a wholly-owned subsidiary of NWD, which is in turn the controlling shareholder holding approximately 71.81% interest in the issued share capital of the Company. Accordingly, NWT is regarded as an associate of NWD and the entering into of the Master Agreement constitutes a continuing connected transaction for the Company under the Listing Rules. As each of the applicable percentage ratios for the transaction under the Master Agreement is, on an annual basis, less than 25% and the Cap is less than HK$10,000,000 for each of the two years ending 30 June 2007 and 2008, the entering into of the Master Agreement is subject to reporting and announcement requirements under Rules 14A.45 to 14A.47 and annual review requirements under Rules 14A.37 and 14A.38 of the Listing Rules, but is exempt from independent shareholders' approval requirements. INFORMATION ON THE GROUP The Group principally engages in offering superior mobile services including voice service and customized data services tailored to the specific needs of individual customer groups via advanced mobile technology. INFORMATION ON NWT NWT principally engages in offering a wide spectrum of unparalleled integrated communications solutions, applications and content services, such as broadband, IP telephony, Virtual Private Network (VPN), International Private Leased Circuit (IPLC), system integration, wireless solutions, and local and international voice services. By Order of the Board Ho Pui Sin Company Secretary Hong Kong, 19 May 2005 As at the date of this announcement, the board of directors of the Company comprises (i) five executive directors namely Dr. Cheng Kar Shun, Henry, Mr. Chow Yu Chun, Alexander, Mr. Doo Wai Hoi, William, JP, Mr. To Hin Tsun, Gerald and Dr. Wai Fung Man, Norman; (ii) two non-executive directors namely Mr. Ho Hau Chong, Norman and Mr. Lo Lin Shing, Simon; and (iii) three independent non-executive directors namely Mr. Hui Chiu Chung, JP, Mr. Kwong Che Keung, Gordon and Mr. Wei Chi Kuan, Kenny.