CHINA UNICOM (HONG KONG) Ltd (Form: SC 13D/A, Received: 12/24/2008 06:06:14)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D/A

(Rule 13d-101. Information to be Included in Statements Filed Pursuant to
§ 240.13d-1(a) and Amendments Thereto Filed
Pursuant to § 240.13d-2(a))

Under the Securities Exchange Act of 1934
(Amendment No. 2)

China Unicom (Hong Kong) Limited

(Name of Issuer)

Ordinary Shares, Par Value HK$0.10 Per Share

(Title of Class of Securities)

16945R 10 4

(CUSIP Number)

Chu Ka Yee
China Unicom (Hong Kong) Limited
75 ^th Floor, The Center
99 Queen’s Road Central
Hong Kong
Telephone: (+852) 2121 3220

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

December 16, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

TABLE OF CONTENTS


	SIGNATURE
Schedule II
EXHIBIT C
EXHIBIT D
EXHIBIT E


1.	NAME OF REPORTING PERSON			CHINA UNITED NETWORK COMMUNICATIONS GROUP COMPANY LIMITED ⁽¹⁾


2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP					(A) o (B) o


3.	SEC USE ONLY


4.	SOURCE OF FUNDS:						OO


5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)						o


6.	CITIZENSHIP OR PLACE OF ORGANIZATION:					PEOPLE’S REPUBLIC OF CHINA


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER:				None



		8.	SHARED VOTING POWER:		16,733,353,135 ⁽¹⁾


		9.	SOLE DISPOSITIVE POWER:				None


		10.	SHARED DISPOSITIVE POWER:		9,725,000,020


11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:					16,733,353,135 ⁽¹⁾


12.	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES’						o


13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):						70.4% ⁽¹⁾


14.	TYPE OF REPORTING PERSON:						CO


⁽¹⁾		Formerly known as China United Telecommunications Corporation (“ Unicom Group ”).

⁽²⁾		Includes (i) 9,725,000,020 Unicom Shares (as defined in Item 1 of the Schedule 13D filed with the Securities and Exchange Commission on October 27, 2008 (the “ Schedule 13D ”)) held by China Unicom (BVI) Limited, a company incorporated in the British Virgin Islands (“ Unicom BVI ”), and (ii) 7,008,353,115 Unicom Shares held by China Netcom Group Corporation (BVI) Limited, a company incorporated in the British Virgin Islands (“ Netcom BVI ”) (including one Unicom Share held by CNC Cayman Limited, a wholly-owned subsidiary of Netcom BVI incorporated in the Cayman Islands (“ CNC Cayman ”)) as to which the Reporting Person may be deemed to be the beneficial owner due to its beneficial ownership interest in Unicom BVI and the formation of a group (as defined in Rule 13d-5(b)(1) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)) between Unicom BVI and Netcom BVI as a result of the Concert Party Agreement as described in Items 3 and 4 of the Schedule 13D. The Reporting Person disclaims beneficial ownership of the 7,008,353,115 Unicom Shares held by Netcom BVI.


1.	NAME OF REPORTING PERSON			CHINA UNITED TELECOMMUNICATIONS CORPORATION LIMITED


2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(A) o (B) o


3.	SEC USE ONLY


4.	SOURCE OF FUNDS:					OO


5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)					o


6.	CITIZENSHIP OR PLACE OF ORGANIZATION:				PEOPLE’S REPUBLIC OF CHINA


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER:			None



		8.	SHARED VOTING POWER:		16,733,353,135 ⁽¹⁾


		9.	SOLE DISPOSITIVE POWER:			None


		10.	SHARED DISPOSITIVE POWER:		9,725,000,020


11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:				16,733,353,135 ⁽¹⁾


12.	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES					o


13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):					70.4% ⁽¹⁾


14.	TYPE OF REPORTING PERSON:					CO


⁽¹⁾		Includes (i) 9,725,000,020 Unicom Shares (as defined in Item 1 of the Schedule 13D) held by Unicom BVI and (ii) 7,008,353,115 Unicom Shares held by Netcom BVI (including one Unicom Share held by CNC Cayman) as to which the Reporting Person may be deemed to be the beneficial owner due to its beneficial ownership interest in Unicom BVI and the formation of a group (as defined in Rule 13d-5(b)(1) under the Exchange Act) between Unicom BVI and Netcom BVI as a result of the Concert Party Agreement as described in Items 3 and 4 of the Schedule 13D. The Reporting Person disclaims beneficial ownership of the 7,008,353,115 Unicom Shares held by Netcom BVI.


1.	NAME OF REPORTING PERSON			CHINA UNICOM (BVI) LIMITED


2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(A) x (B) o


3.	SEC USE ONLY


4.	SOURCE OF FUNDS:					OO


5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)					o


6.	CITIZENSHIP OR PLACE OF ORGANIZATION:				BRITISH VIRGIN ISLANDS


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER:			None



		8.	SHARED VOTING POWER:		16,733,353,135 ⁽¹⁾


		9.	SOLE DISPOSITIVE POWER:			None


		10.	SHARED DISPOSITIVE POWER:		9,725,000,020


11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:				16,733,353,135 ⁽¹⁾


12.	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES					o


13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):					70.4% ⁽¹⁾


14.	TYPE OF REPORTING PERSON:					CO


⁽¹⁾		Includes (i) 9,725,000,020 Unicom Shares (as defined in Item 1 of the Schedule 13D) held by the Reporting Person and (ii) 7,008,353,115 Unicom Shares held by Netcom BVI (including one Unicom Share held by CNC Cayman) as to which the Reporting Person may be deemed to have acquired beneficial ownership due to the formation of a group (as defined in Rule 13d-5(b)(1) under the Exchange Act) between the Reporting Person and Netcom BVI as a result of the Concert Party Agreement as described in Items 3 and 4 of the Schedule 13D.


1.	NAME OF REPORTING PERSON			CHINA NETWORK COMMUNICATIONS GROUP CORPORATION


2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(A) o (B) o


3.	SEC USE ONLY


4.	SOURCE OF FUNDS:					OO


5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)					o


6.	CITIZENSHIP OR PLACE OF ORGANIZATION:				PEOPLE’S REPUBLIC OF CHINA


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER:			None



		8.	SHARED VOTING POWER:		16,733,353,135 ⁽¹⁾


		9.	SOLE DISPOSITIVE POWER:			None


		10.	SHARED DISPOSITIVE POWER:		7,008,353,115


11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:				16,733,353,135 ⁽¹⁾


12.	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES					o


13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):					70.4% ⁽¹⁾


14.	TYPE OF REPORTING PERSON:					CO


⁽¹⁾		Includes (i) 7,008,353,115 Unicom Shares (as defined in Item 1 of the Schedule 13D) held by Netcom BVI (including one Unicom Share held by CNC Cayman) and (ii) 9,725,000,020 Unicom Shares held by Unicom BVI as to which the Reporting Person may be deemed to be the beneficial owner due to its beneficial ownership interest in Netcom BVI and the formation of a group (as defined in Rule 13d-5(b)(1) under the Exchange Act) between Unicom BVI and Netcom BVI as a result of the Concert Party Agreement as described in Items 3 and 4 of the Schedule 13D. The Reporting Person disclaims beneficial ownership of the 9,725,000,020 Unicom Shares held by Unicom BVI.


1.	NAME OF REPORTING PERSON			CHINA NETCOM GROUP CORPORATION (BVI) LIMITED


2.	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP				(A) x (B) o


3.	SEC USE ONLY


4.	SOURCE OF FUNDS:					OO


5.	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(D) OR 2(E)					o


6.	CITIZENSHIP OR PLACE OF ORGANIZATION:				BRITISH VIRGIN ISLANDS


NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7.	SOLE VOTING POWER:			None



		8.	SHARED VOTING POWER:		16,733,353,135 ⁽¹⁾


		9.	SOLE DISPOSITIVE POWER:			None


		10.	SHARED DISPOSITIVE POWER:		7,008,353,115


11.	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:				16,733,353,135 ⁽¹⁾


12.	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES					o


13.	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):					70.4% ⁽¹⁾


14.	TYPE OF REPORTING PERSON:					CO


⁽¹⁾		Includes (i) 7,008,353,115 Unicom Shares (as defined in Item 1 of the Schedule 13D) held by the Reporting Person (including one Unicom Share held by CNC Cayman) and (ii) 9,725,000,020 Unicom Shares (as defined in Item 1) held by Unicom BVI as to which the Reporting Person may be deemed to have acquired beneficial ownership due to the formation of a group (as defined in Rule 13d-5(b)(1) under the Exchange Act) between Unicom BVI and the Reporting Person as a result of the Concert Party Agreement as described in Items 3 and 4.

This Amendment No. 2 (this “ Amendment No. 2 ”) amends and supplements the disclosures in Item 4 (Purpose of Transaction) and Item 5 (Interest in Securities of the Issuer) of the Schedule 13D (the “ Schedule 13D ”) filed with the Securities and Exchange Commission on October 27, 2008, as amended by Amendment No. 1 filed on November 25, 2008, relating to the ordinary shares of par value HK$0.10 per share (the “ Unicom Shares ”) of China Unicom (Hong Kong) Limited (formerly known as China Unicom Limited), a corporation organized under the laws of Hong Kong (“ China Unicom ”). Unless specifically amended hereby, the disclosures set forth in the Schedule 13D, as previously amended, remain unchanged.

Capitalized terms not otherwise defined in this Amendment No. 2 have the meanings given to them in the Schedule 13D, as previously amended.

Item 4. Purpose of Transaction.

Item 4 of the Schedule 13D, as previously amended, is hereby further amended and supplemented by adding the following:

On December 16, 2008, China United Network Communications Corporation Limited (“ Unicom Subsidiary ”), a foreign-invested enterprise established under the laws of the PRC and a wholly-owned subsidiary of China Unicom, agreed to acquire from Unicom Group and Netcom Group for cash the Target Assets and Business (as defined below) pursuant to the two-step approach applicable to all related party transactions of China Unicom that are subject to the approval of the independent shareholders of China Unicom.

First, on December 16, 2008, Unicom Group, Netcom Group and Unicom A Share Company entered into a business and assets transfer agreement (the “ Acquisition Agreement ”), pursuant to which Unicom A Share Company agreed to acquire (1) the telecommunication business across the 21 provinces in southern China ¹ and the local access telephone business and related assets in Tianjin Municipality operated by Unicom Group and Netcom Group and/or their respective subsidiaries and branches, (2) the backbone transmission assets in northern China ² owned by Netcom Group and/or its subsidiaries, (3) a 100% equity interest in Unicom Xingye Science and Technology Trade Company Limited, a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of Unicom Group, owned by Unicom Group, (4) a 100% equity interest in China Information Technology Designing & Consulting Institute, a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of Unicom Group, owned by Unicom Group, and (5) a 100% equity interest in Unicom New Guoxin Communications Limited Company, a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of Unicom Group, owned by Unicom Group (items (1) to (5), together, the “ Target Assets and Business ”). Second, on the same date, Unicom Subsidiary and Unicom A Share Company entered into a transfer agreement in connection with the Acquisition Agreement (the “ Transfer Agreement ”). Pursuant to the Transfer Agreement, Unicom A Share Company agreed to transfer all of its rights and obligations under the Acquisition Agreement to the Unicom Subsidiary (collectively, the transactions contemplated under the Acquisition Agreement and the Transfer Agreement, the “ Proposed Acquisitions ”). The consideration payable by Unicom Subsidiary for the Proposed Acquisitions is approximately RMB6.43 billion (equivalent to approximately US$939.4 million) in cash, subject to adjustments in the circumstances described in section 3 of the Acquisition Agreement. The completion of the Proposed Acquisitions is subject to a number of conditions precedent, including but not limited to, the approval from the relevant PRC government authorities, the approval from the independent shareholders of China Unicom and Unicom A Share Company and the effectiveness of the Lease (as defined below). Subject to the satisfaction (or waiver, if applicable) of the conditions precedent, completion of the Proposed Acquisitions is expected to take place on January 31, 2009. In the event any of the conditions precedent is not satisfied (or, if applicable, waived) by January 31, 2009 (or such other date as the parties may agree), the Transfer Agreement will lapse. On completion of the Proposed Acquisitions, all of the profits and losses generated from the operation of the Target Assets and Business will be assumed by China Unicom and its subsidiaries with effect from January 1, 2009.


¹		For purposes of this Amendment No. 2, southern China refers to Shanghai Municipality, Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Hubei Province, Hunan Province, Guangdong Province, Guangxi Autonomous Region, Hainan Province, Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Autonomous Region and Xinjiang Autonomous Region.

²		For purposes of this Amendment No. 2, northern China refers to Beijing, Tianjin Municipality, Hebei Province, Henan Province, Shandong Province, Liaoning Province, Heilongjiang Province, Jilin Province, Inner Mongolia Autonomous Region and Shanxi Province.

In addition, in connection with the Proposed Acquisitions, Unicom Subsidiary, Unicom Group, Netcom Group and Unicom New Horizon Mobile Telecommunications Company Limited (“ Unicom New Horizon ”), a limited liability company incorporated under the laws of the PRC and a wholly-owned subsidiary of Unicom Group, entered into a network lease agreement on December 16, 2008 (the “ Network Lease Agreement ”), pursuant to which Unicom Subsidiary will lease the telecommunications networks underlying the telecommunications business across the 21 provinces in southern China that is subject to the Proposed Acquisitions from Unicom New Horizon on an exclusive basis upon completion of the Proposed Acquisitions for an annual lease fee of RMB2.0 billion (equivalent to approximately US$292.2 million) and RMB2.2 billion (equivalent to approximately US$321.4 million) for the two financial years ending December 31, 2009 and December 31, 2010, respectively (the “ Lease ”). Subject to the satisfaction (or waiver, if applicable) of certain conditions, including, among other things, the completion of the Proposed Acquisitions and the approval of the independent shareholders of the Unicom A Share Company, the initial term of the Lease is two years effective from January 1, 2009 and is renewable at the option of Unicom Subsidiary with advance notice prior to the expiration of the Lease. Pursuant to the Network Lease Agreement, Unicom New Horizon also granted Unicom Subsidiary an option, but not an obligation, exercisable at the discretion of Unicom Subsidiary at any time during the term of the Lease, to purchase the leased telecommunications networks in southern China at a price to be agreed between the parties with reference to the appraised value of such telecommunications networks, applicable laws and taking into account prevailing market conditions and other factors.

The above summary descriptions of the Acquisition Agreement, the Transfer Agreement and the Network Lease Agreement are qualified in their entirety by reference to the complete text of such agreements filed as exhibits to this Amendment No. 2, the English translation of which are incorporated herein by reference.

Except as set forth in this Amendment No. 2 and the Schedule 13D, as previously amended, none of the Companies nor, to the best knowledge of each of the Companies, any of its respective executive officers or directors has any present plans or proposals that relate to or would result in the occurrence of any of the following events: (a) the acquisition by any person of additional securities of China Unicom, or the disposition of securities of China Unicom; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving China Unicom or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of China Unicom or any of its subsidiaries; (d) any change in the present board of directors or management of China Unicom, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of China Unicom; (f) any other material change in China Unicom’s business or corporate structure; (g) changes in China Unicom’s memorandum and articles of association or instruments corresponding thereto or other actions which may impede the acquisition of control of China Unicom by any person; (h) causing a class of securities of China Unicom to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of China Unicom becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or (j) any action similar to any of those enumerated above.

Item 5. Interest in Securities of the Issuer.

Item 5 of the Schedule 13D, as previously amended, is hereby further amended and supplemented by (i) amending and restating Schedule II to reflect changes in the information set forth therein resulting from, among other things, the forfeiture of certain options in accordance with the applicable option plans and (ii) amending and restating paragraphs (c) and (d) as follows:

(c) Except as set forth in the Schedule 13D, as previously amended, and as further amended and supplemented by this Amendment No. 2, and Schedule II, neither any of the Companies nor, to the best knowledge of each of the Companies, any of its respective executive officers and directors listed on Schedule I (as previously filed), beneficially owns or has effected any transactions in the Unicom Shares during the past 60 days.

(d) Except as set forth in the Schedule 13D, as previously amended, and as further amended and supplemented by this Amendment No. 2, and Schedule II, neither any of the Companies nor, to the best knowledge of each of the Companies, any of its respective executive officers and directors listed on Schedule I (as previously filed), has the right to receive or the power to direct the receipt of dividends from, or the proceeds of sale, of the Unicom Shares.

Item 7. Material To Be Filed As Exhibits.

Item 7 of the Schedule 13D, as previously amended, is hereby amended by adding the following exhibits:

Exhibit C:

Acquisition Agreement, dated December 16, 2008, by and among Unicom Group, Netcom Group and Unicom A Share Company (English translation)

Exhibit D:

Transfer Agreement, dated December 16, 2008, by and between Unicom A Share Company and Unicom Subsidiary (English translation)

Exhibit E:

Network Lease Agreement, dated December 16, 2008, by and among Unicom Subsidiary, Unicom Group, Netcom Group and Unicom New Horizon (English translation)

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


China United Network Communications Group Company Limited			China United Telecommunications Corporation Limited

By:	/s/ Chang Xiaobing		By:	/s/ Chang Xiaobing

	Name:	Chang Xiaobing		Name:	Chang Xiaobing
	Title:	Chairman		Title:	Chairman
	Date:	December 24, 2008		Date:	December 24, 2008

China Unicom (BVI) Limited

By:	/s/ Chang Xiaobing

	Name:	Chang Xiaobing
	Title:	Director
	Date:	December 24, 2008

China Network Communications Group Corporation			China Netcom Group Corporation (BVI) Limited

By:	/s/ Zuo Xunsheng		By:	/s/ Zuo Xunsheng

	Name:	Zuo Xunsheng		Name:	Zuo Xunsheng
	Title:	Deputy General Manager		Title:	Director
	Date:	December 24, 2008		Date:	December 24, 2008

Schedule II

Beneficial Ownership of Executive Officers and Directors

The percentages of Unicom Shares outstanding provided in the tables below are based on 23,767,631,322 Unicom Shares outstanding as of December 16, 2008; provided that Unicom Shares issuable upon exercise of options that are exercisable within 60 days of December 16, 2008 are considered outstanding for the purpose of calculating the percentage of outstanding Unicom Shares held by such individual, but not for the purpose of calculating the percentage of outstanding Unicom Shares held by any other individual.

Beneficial Ownership of Unicom Shares of Executive Officers and Directors of Unicom Group


							Total Number
							of Unicom
							Shares
	Unicom Shares Beneficially Owned						Covered by
	Aggregate						Options in					Option
	Number of						Unicom			Option Expiration		Exercise
Name	Unicom Shares ⁽¹⁾			Percentage			Shares ^{(2), (3)}			Date		Price
Chang Xiaobing		900,000			0.0038	%		526,000			December 20, 2010	HK$	6.20
								746,000			February 14, 2012	HK$	6.35

								1,272,000

Tong Jilu		666,000	⁽⁴⁾		0.0028	%		292,000			June 22, 2010	HK$	15.42
								92,000			July 19, 2010	HK$	5.92
								460,000			February 14, 2012	HK$	6.35

								32,000	⁽⁵⁾		July 19, 2010	HK$	5.92
								40,000	⁽⁵⁾		February 14, 2012	HK$	6.35

								916,000

Li Gang		230,000			0.0010	%		460,000			February 14, 2012	HK$	6.35

Zhang Junan		230,000			0.0010	%		460,000			February 14, 2012	HK$	6.35

Jiang Peihua		53,600			0.0002	%		1,600			June 21, 2010	HK$	15.42
								206,000			February 14, 2012	HK$	6.35

								207,600

Dong Qunke		0			0			0

Li Xiong		0			0			0

Zhang Dongchen		0			0			0


⁽¹⁾		None of the executive officers and directors of Unicom Group owns any Unicom Shares. The total number of Unicom Shares beneficially owned by such executive officers and directors reflects Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008.

⁽²⁾		Each option gives the holder the right to purchase one Unicom Share.

⁽³⁾		Comprised of all Unicom Shares underlying options, including Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008 and which have also been reflected in the column “Aggregate Number of Unicom Shares”.

⁽⁴⁾		Includes 52,000 Unicom Shares beneficially owned by his spouse, with whom he shares the power to vote or dispose or to direct the vote or to direct the disposition.

⁽⁵⁾		Options of China Unicom beneficially owned by his spouse.

Beneficial Ownership of Unicom Shares of Executive Officers and Directors of Unicom A Share Company


							Total Number
							of Unicom
							Shares
	Unicom Shares Beneficially Owned						Covered by
	Aggregate						Options in					Option
	Number of						Unicom			Option Expiration		Exercise
Name	Unicom Shares ⁽¹⁾			Percentage			Shares ^{(2), (3)}			Date		Price
Chang Xiaobing		900,000			0.0038	%		526,000			December 20, 2010	HK$	6.20
								746,000			February 14, 2012	HK$	6.35

								1,272,000

Tong Jilu		666,000	⁽⁴⁾		0.0028	%		292,000			June 22, 2010	HK$	15.42
								92,000			July 19, 2010	HK$	5.92
								460,000			February 14, 2012	HK$	6.35

								32,000	⁽⁵⁾		July 19, 2010	HK$	5.92
								40,000	⁽⁵⁾		February 14, 2012	HK$	6.35

								916,000

Lu Jianguo		814,600			0.0034	%		292,600			June 21, 2010	HK$	15.42
								292,000			July 19, 2010	HK$	5.92
								460,000			February 14, 2012	HK$	6.35

								1,044,600

Liu Yunjie		148,600			0.0006	%		148,600			June 21, 2010	HK$	15.42

Zhang Jian		54,000			0.0002	%		198,000			February 14, 2012	HK$	6.35

Gao Shangquan		0			0			0

Chen Xiaoyue		0			0			0


						Total Number
						of Unicom
						Shares
	Unicom Shares Beneficially Owned					Covered by
	Aggregate					Options in				Option
	Number of					Unicom		Option Expiration		Exercise
Name	Unicom Shares ⁽¹⁾		Percentage			Shares ^{(2), (3)}		Date		Price
Chen Junliang		0		0			0

Wang Chenguang		0		0			0

Zhao Chuanli		88,400		0.0004	%		24,400		June 21, 2010	HK$	15.42
							196,000		February 14, 2012	HK$	6.35

							220,400

Tang Fuxin		32,000		0.0001	%		164,000		February 14, 2012	HK$	6.35

Lao Jianhua		0		0			0


⁽¹⁾		None of the executive officers and directors of the Unicom A Share Company owns any Unicom Shares. The total number of Unicom Shares beneficially owned by such executive officers and directors reflects Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008.

⁽²⁾		Each option gives the holder the right to purchase one Unicom Share.

⁽³⁾		Comprised of all Unicom Shares underlying options, including Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008 and which have also been reflected in the column “Aggregate Number of Unicom Shares”.

⁽⁴⁾		Includes 52,000 Unicom Shares beneficially owned by his spouse, with whom he shares the power to vote or dispose or to direct the vote or to direct the disposition.

⁽⁵⁾		Options of China Unicom beneficially owned by his spouse.

Beneficial Ownership of Unicom Shares of Executive Officers and Directors of Unicom BVI

Total Number

of Unicom

Shares

Unicom Shares Beneficially Owned

Covered by

Aggregate

Options in

Option

Number of

Unicom

Option Expiration

Exercise

Name

Unicom Shares ⁽¹⁾

Percentage

Shares ^{(2), (3)}

Date

Price

Chang Xiaobing

900,000

0.0038

526,000

December 20, 2010

HK$

6.20

746,000

February 14, 2012

HK$

6.35

1,272,000

Li Qiuhong

548,400

0.0023

204,400

June 21, 2010

HK$

15.42

204,000

July 19, 2010

HK$

5.92

280,000

February 14, 2012

HK$

6.35

688,400


⁽¹⁾		None of the executive officers and directors of Unicom BVI owns any Unicom Shares. The total number of Unicom Shares beneficially owned by such executive officers and directors reflects Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008.

⁽²⁾		Each option gives the holder the right to purchase one Unicom Share.

⁽³⁾		Comprised of all Unicom Shares underlying options, including Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008 and which have also been reflected in the column “Aggregate Number of Unicom Shares”.

Beneficial Ownership of Unicom Shares of Executive Officers and Directors of Netcom Group


						Total Number
						of Unicom
						Shares
	Unicom Shares Beneficially Owned					Covered by
	Aggregate					Options in				Option
	Number of					Unicom		Option Expiration		Exercise
Name	Unicom Shares ⁽¹⁾		Percentage			Shares ^{(2), (3)}		Date		Price
Lu Yimin		0		0			0

Zuo Xunsheng		0		0			686,894		November 16, 2010	HK$	5.57

Li Jianguo		602,000		0.0025	%		0

Pei Aihua		0		0			482,560		November 16, 2010	HK$	5.57

Li Fushen		0		0			723,840		November 16, 2010	HK$	5.57

Zhao Jidong		0		0			723,840		November 16, 2010	HK$	5.57

Jiang Zhengxin		0		0			0


⁽¹⁾		Except for Ms. Li Jianguo, none of the executive officers and directors of Netcom Group owns any Unicom Shares.

⁽²⁾		Each option gives the holder the right to purchase one Unicom Share.

⁽³⁾		Comprised of all Unicom Shares underlying options, including Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008 and which have also been reflected in the column “Aggregate Number of Unicom Shares”.

Beneficial Ownership of Unicom Shares of Executive Officers and Directors of Netcom BVI

Total Number

of Unicom

Shares

Unicom Shares Beneficially Owned

Covered by

Aggregate

Options in

Option

Number of

Unicom

Option Expiration

Exercise

Name

Unicom Shares ⁽¹⁾

Percentage

Shares ^{(2), (3)}

Date

Price

Zuo Xunsheng

686,894

November 16, 2010

HK$

5.57

Li Fushen

723,840

November 16, 2010

HK$

5.57


⁽¹⁾		None of the executive officers and directors of Netcom BVI owns any Unicom Shares.

⁽²⁾		Each option gives the holder the right to purchase one Unicom Share.

⁽³⁾		Comprised of all Unicom Shares underlying options, including Unicom Shares issuable upon exercise of options that are exercisable as of December 16, 2008 and will become exercisable within 60 days following December 16, 2008 and which have also been reflected in the column “Aggregate Number of Unicom Shares”.

EXHIBIT C

CHINA UNITED NETWORK COMMUNICATIONS GROUP COMPANY LIMITED

CHINA NETWORK COMMUNICATIONS GROUP CORPORATION

AND

CHINA UNITED TELECOMMUNICATIONS CORPORATION LIMITED

BUSINESS AND ASSETS TRANSFER AGREEMENT

Dated as of December 16, 2008

TABLE OF CONTENTS


NO.		PAGE
1.	DEFINITIONS AND INTERPRETATION		4
2,	BUSINESS AND ASSETS TRANSFER		9
3.	PRICING AND PAYMENT		10
4.	CLOSING AND SETTLEMENT		11
5.	CONDITIONS PRECEDENT		17
6.	REPRESENTATIONS AND WARRANTIES		19
7.	PROFIT AND LOSS FOR THE RELEVANT PERIODS		20
8.	TAXATION		20
9.	ANNOUNCEMENT		21
10.	BREACHING LIABILITIES		21
11.	FORCE MAJEURE		22
12.	CONFIDENTIALITY		22
13.	WAIVER, RIGHTS AND REMEDIES		23
14.	SEVERABILITY		23
15.	NOTICES		24
16.	GOVERNING LAW AND ARBITRATION		24
17.	EFFECTIVENESS AND AMENDMENT		25
18.	APPENDIX		26

ANNEX	UNDERTAKINGS AND GUARANTEES BY THE TRANSFEROR

THIS AGREEMENT is made on December 16, 2008 in Beijing, the People’s Republic of China ( the “PRC”).

BETWEEN

Transferors:	CHINA UNITED NETWORK COMMUNICATIONS GROUP COMPANY LIMITED (“Unicom Group”)

	Address:	Suite 615, Henderson Center Office Building 3, No. 18 Jianguomen Nei Avenue, Beijing

	CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (“Netcom Group”)

	Address:	Building C, No. 156 Fuxingmennei Avenue, Xicheng District, Beijing

Transferee:	CHINA UNITED TELECOMMUNICATIONS CORPORATION LIMITED (“Unicom A-share Company”)

	Address:	Building 29, No. 1033 Changning Road, Shanghai

WHEREAS:

(1)

Unicom Group is a limited liability company established and existing in accordance with the laws of the PRC, operating comprehensive telecommunications business in the PRC. Unicom Group currently owns 100% shares (directly or indirectly) of Unicom Xingye Science and Technology Trade Company Limited, China Information Technology Designing & Consulting Institute and Unicom New Guoxin Communications Limited Company. Unicom Group also owns fixed telecommunications network and operates local fixed-line business in Tianjin Municipality, Sichuan Province and Chongqing Municipality;

(2)		Netcom Group is a state-owned enterprise established and existing in accordance with the laws of the PRC, operating comprehensive telecommunications business in the PRC. Netcom Group currently owns fixed telecommunications network and operates relevant business in the 21 provinces and municipalities (autonomous regions) in southern China. Netcom Group also owns backbone transmission assets in 10 provinces and municipalities (autonomous regions) in northern China;

(3)		Unicom A-share Company is a company limited by shares established and existing in accordance with the laws of the PRC. Its shares were listed on the Shanghai Stock Exchange on October 9, 2002, with Unicom Group being its controlling shareholder;

(4)		China Unicom (Hong Kong) Limited (“Unicom Red-chip Company”) is indirectly controlled by Unicom A-share Company, through China Unicom (BVI) Limited (“Unicom BVI”). Unicom Red-chip Company is a limited liability company registered in Hong Kong, whose shares are listed in Hong Kong and the United States;

(5)		China United Network Communications Corporation Limited (“Unicom Operating Company”) is a foreign-invested enterprise established and existing in accordance with the laws of the PRC, and 100% owned by Unicom A-share Company;

(6)		According to the relevant arrangements between Unicom Group and Netcom Group, the two companies agreed to merge, with Unicom Group being the surviving entity. The post-merger Unicom Group will assume all the rights and obligations of Unicom Group and Netcom Group after consolidation (the “Group Merger”). Subject to necessary regulatory approvals, it is expected that the Group Merger will come into effect in early January 2009;

(7)		Unicom Group and Unicom A-share Company executed a memorandum on August 12, 2002, in connection with the transactions between Unicom Group or its subsidiaries (except for Unicom A-share Company and the subsidiaries controlled by Unicom A-share Company) and Unicom Red-chip Company which is indirectly controlled by Unicom A-share Company and Unicom Red-chip Company’s subsidiaries, after Unicom A-share Company were listed. Pursuant to such memorandum: if a transaction between Unicom Red-chip Company or its subsidiaries, and Unicom Group or its subsidiaries (except for Unicom A-share Company and its controlling subsidiaries) is required to be approved by minority shareholders of Unicom A-share Company under the “Shanghai Stock Exchange Listing Rules”, as applicable from time to time, and if the transaction is required to be approved by minority shareholders of Unicom Red-chip Company at the same time, the relevant transaction above shall be conducted as follows: (i) Unicom Group or its subsidiaries (except for Unicom A-share Company and its controlling subsidiaries) and Unicom A-share Company or Unicom BVI shall sign an agreement for the proposed transaction, setting forth the rights and obligations of the parties thereto (including, but not limited to, Unicom Group agrees to transfer the rights and obligations of Unicom A-share Company or Unicom BVI under that agreement to Unicom Red-chip Company or its subsidiaries); (ii) Unicom A-share Company or Unicom BVI shall transfer the rights and obligations as set forth therein to Unicom Red-chip Company or its subsidiaries;

(8)		According to the arrangement between Unicom Group, Netcom Group and Unicom New Horizon Mobile Telecommunications Company ( “Unicom New Horizon”), Unicom Group and Netcom Group intend to, after the merger, contribute (i) the fixed network assets and the related rights and obligations in the 21 south provinces and municipalities (autonomous regions) originally owned by Netcom Group to Unicom New Horizon, and (ii) the local fixed network assets and relevant rights and obligations owned by Unicom Group in Chongqing province and Sichuan municipality, into Unicom New Horizon, and increase the registered capital of Unicom New Horizon correspondingly;

(9)

In order to avoid and reduce competition and related party transactions between Unicom Group and Netcom Group on one hand, and Unicom Operating Company on the other hand, in accordance with the principles as set forth above in the memorandum, Unicom Group and Netcom Group agreed to contribute, through Unicom A-share Company, the fixed-line business, backbone transmission assets in northern China, and the interests in the relevant subsidiaries that operate related telecommunication business to Unicom Operating Company.

NOW THEREFORE , for the purposes of above-mentioned operations, assets and equity transfer, through friendly negotiation based on equality and mutual benefit, the parties hereto agree as follows:


1.		Definitions and Interpretation

Unless otherwise specified, the following expressions shall have the following meanings in this Agreement, including the recitals hereof and the annex hereto:


“10 provinces and municipalities (autonomous regions) in northern China”		means Beijing, Tianjin Municipality, Hebei Province, Henan Province, Shandong Province, Liaoning Province, Heilongjiang Province, Jilin Province, Inner Mongolia Autonomous Region and Shanxi Province;

“21 provinces and municipalities (autonomous regions) in southern China”		means Shanghai Municipality, Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Hubei Province, Hunan Province, Guangdong Province, Guangxi Zhuang Autonomous Region, Hainan Province, Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Hui Autonomous Region and Xinjiang Uygur Autonomous Region;


“Agreements Pending Assignment”		means the agreements as defined in Clause 4.3;

“Asset Appraisal Reports”		means the asset appraisal reports on the Benchmark Appraisal Date issued by Zhongqihua Asset Evaluation Co. Ltd., in connection with the Transaction, including: (i) with respect to Netcom Group’s fixed-line business in the 21 provinces and municipalities (autonomous regions) in southern China, and Unicom Group’s local fixed-line business in Sichuan Province and Chongqing Municipality and the local fixed-line assets and business in Tianjin Municipality, the asset appraisal report (Zhongqihua [2008] No. 481) in connection with the proposed transfer of the fixed-line business and the related assets in the 21 provinces and municipalities (autonomous Regions) in southern China and the fixed-line assets in Tianjin municipality by China Network Communications Group Corporation and China United Telecommunications Corporation; (ii) with respect to the Northern Backbone Assets, the asset appraisal report (Zhongqihua [2008] No. 479) in connection with the transfer of the Northern Backbone Transmission Assets by China Network Communications Group Corporation; (iii) with respect to the equity interest in Unicom Xingye, the appraisal report (Zhongqihua [2008] No. 482) in connection with the proposed transfer of equity interests in Unicom Xingye Science and Technology Trade Company Limited by China United Telecommunications Corporation; (iv) with respect to the equity interest in CITC, the appraisal report (Zhongqihua [2008] No. 483)


		in connection with the proposed transfer of equity interests in China Information Technology Designing & Consulting Institute by China United Telecommunications Corporation; (v) with respect to the equity interest in Unicom New Guoxin, the appraisal report (Zhongqihua [2008] No. 484) in connection with the proposed transfer of the equity interest in Unicom New Guoxin Communications Company Limited by China United Telecommunications Corporation;

“Benchmark Appraisal Date”		means June 30, 2008, in the case of the appraisal of the Target Business and Assets (excluding CITC); or September 30, 2008, in the case of the appraisal of CITC;

“CITC”		means China Information Technology Designing & Consulting Institute;

“Closing Date”		means the last calendar day of the month in which all the conditions precedent under Clause 5.1 hereof have been satisfied or waived;

“fixed-line assets”		means fixed telecommunications network assets, i.e., telecommunication equipments and facilities for the operation and management of fixed telecommunications network;

“fixed-line business”		means operating various domestic and international fixed telecommunication networks and facilities to provide voice, data, video and multi-media telecommunication and information services based on fixed network;


“fixed telecommunications network”		means various domestic and international telecommunication network and facilities;

“MIIT”		means Ministry of Industry and Information Technology of the PRC;

“MOC”		means the Ministry of Commerce of the PRC;

“Netcom Group”		means China Network Communications Group Corporation;

“Northern Backbone Assets”		means the backbone transmission assets in northern China as set forth in Clause 2.2 (3) hereof;

“SASAC”		means the State-owned Assets Supervision and Administration Commission of the State Council;

“Subsidiaries in Telecommunications Services”		means Unicom Xingye, CITC and Unicom New Guoxin and their respective subsidiaries;

“Target Business and Assets”		means all or part of the business and assets set forth in Clause 2.2 hereof (if applicable);

“Transaction”		means the transaction of transferring the Target Business and Assets from the Transferor to the Transferee under Clause 2.1 hereof;

“Transferor”		means either one or both of Unicom Group, Netcom Group;

“Unicom A-share Company” or “Transferee”		means China United Telecommunications Corporation Limited;


“Unicom Group”		means China United Network Communications Group Company Limited, formerly known as China United Telecommunications Corporation;

“Unicom New Guoxin”		means Unicom New Guoxin Communications Company Limited;

“Unicom New Horizon”		means Unicom New Horizon Mobile Communications Company (to be renamed to Unicom New Horizon Communications Company);

“Unicom Operating Corporation”		means China United Network Communications Corporation Limited;

“Unicom Red-chip Company”		means China Unicom (Hong Kong) Limited; and

“Unicom Xingye”		means Unicom Xingye Science and Technology Trade Company Limited.

b)		Unless otherwise expressly provided hereof, all references to a clause or article in this Agreement shall refer to a clause or article of this Agreement.

c)		All references to a party to this Agreement or any other agreement or document in this Agreement shall include any successor or authorized assignee of such party.

d)		All references to any law or any provision of any law in this Agreement shall include any amendment to or re-enactment of such law or provision, any legal provision replacing such law or provision, and all regulations and legal documents promulgated pursuant thereto.

e)		The headings in this Agreement and the appendix hereto are inserted for convenience only and shall not have any effect on the construction of this Agreement.


2.		Business and Asset Transfer

2.1		The Transferor agrees to transfer the Target Business and Assets to the Transferee on the Closing Date as stipulated in this Agreement, and the Transferee agrees to accept the transfer of the Target Business and Assets, in accordance with the terms and conditions as set forth herein.

2.2		On the date of signing this agreement, the scope and basic information of the Target Business and Assets shall be contained in the Assets Appraisal Reports, including:

	(1)		Fixed-line Business of the 21 Provinces and Municipalities (Autonomous Regions) : including the fixed-line business operated by Netcom Group in the 21 provinces and municipalities (autonomous regions) in Southern China, the local fixed-line business operated by in Sichuan Province and Chongqing Municipality and the related rights and obligations;

	(2)		Tianjin Fixed-line Business and Assets : including local fixed-line business and the related assets owned by Unicom Group in Tianjin Municipality and the related rights and obligations;

Reference shall be made to the asset appraisal report (Zhongqihua [2008] No. 481) issued by Zhongqihua Asset Evaluation Co. Ltd., in connection with the Transaction for the detailed scope of the business and assets described above in items (1) and (2).

(3)

Northern Backbone Assets : including the backbone transmission assets in the 10 provinces and municipalities (autonomous regions) in northern China owned by Netcom Group through its subsidiaries (mainly comprising cables, fiber optic cables, pipelines and certain transmission equipment). Reference shall be made to the asset appraisal report issued by Zhongqihua Asset Evaluation Co. Ltd. (Zhongqihua [2008] No. 479) in connection with the Transaction for details; and

(4)

Equity Interest in the Subsidiaries in Telecommunications Service : including a 100% interest in Unicom Xingye, CITC, and Unicom New Guoxin held (directly or indirectly) by Unicom Group. Reference shall be made to the asset appraisal reports issued by Zhongqihua Asset Evaluation Co. Ltd. (Zhongqihua [2008] No. 482, [2008] No. 483 and [2008] No. 484) in connection with the Transaction for details.

2.3		The parties agree that the Target Business and Assets shall be deemed to be legally owned by the Transferee, from 0:00 of the next day following the Closing Date. Unless otherwise agreed by the parties, all rights, interests, liabilities, responsibilities and obligations concerning the Target Business and Assets prior to the Closing Date (including on the same day, the same below) shall be borne by the Transferor; and any rights, interests, liabilities, responsibilities and obligations concerning the Target Business and Assets arising after the Closing Date (not including the same day, the same below) shall be borne by the Transferee.

2.4		It is the Transferor’s responsibilities to obtain governmental approvals and the business registration and handle other necessary procedural matters in connection with this transaction. It is the Transferee’s responsibilities to assist the Transferor with such matters.

2.5		The parties hereto confirm that once the merger between Unicom Group and Netcom Group have been completed, Unicom Group shall automatically assume all the rights and obligations of Netcom Group under this Agreement, without any further notice to the Transferee and their successors.

2.6		Each of Unicom Group and Netcom Group irrevocably agrees that Unicom A-share Company may transfer any of its rights and obligations hereunder to any subsidiary of Unicom Operating Company or any subsidiary of Unicom A-share Company, without any further consent or approval from Unicom Group or Netcom Group.


3.		Pricing and Payment

3.1

The total consideration of the Target Business and Assets is approximately RMB 64.3 billion.

3.2

Given that reference shall be made to the appraised value in the applicable Asset Appraisal Reports for the pricing of certain portion of the Target Business and Assets, and that such Asset Appraisal Reports have not been filed with the SASAC as of the signing of this Agreement, the parties hereto agree and confirm that:

	3.2.1		If there is no difference between the final appraised value of the Target Business and Assets filed with the SASAC (as applicable, same for below) and the appraised value contained in the Asset Appraisal Reports, the price set forth in Clause 3.1 hereof shall not be adjusted;

	3.2.2		If the absolute value of the difference between the final appraised value of the Target Business and Assets filed with the SASAC and the appraised value in the Asset Appraisal Reports is no greater than RMB300 million, the parties hereto agree to adjust the price set forth in Clause 3.1 hereof based on the final appraised value of the Target Business and Assets filed with the SASAC, and to execute a “confirmation letter of price adjustment “ within five (5) business days after completing the filing with the SASAC;

	3.2.3		If the absolute value of the difference between the final appraised value of the Target Business and Assets filed with the SASAC and the appraised value in the Asset Appraisal Reports exceeds RMB300 million, the parties agree to renegotiate the transfer price on the condition that the parties shall be bound by the other terms and conditions hereof.

3.3

The Transferee shall pay the Transferor cash as consideration. Pursuant to this Agreement, the payment shall be made on the Closing Date with immediately available funds by telegraphic transfer (T/T).


4.		Closing and Settlement

4.1

To complete the transfer of the Target Business and Assets, the Transferor and the Transferee (and their provincial branches and subsidiaries) shall coordinate with each other to ensure the satisfaction of all conditions precedent for the closing, to enable the Transferee to replace the Transferor to provide non-stop services to the customers of the Target Business and Assets, starting from the Closing Date, including but not limited to:

4.1.1

From the date of this Agreement to the Closing Date:

	(1)		The Transferor shall keep the same amount of channels of fixed-line services, and keep unchanged the content, manner and standards of the services that were previously provided to its customers;

	(2)		The Transferor shall ensure that the operating and service capacity of its fixed-line business and network performance is normal and not lower than the original level.

4.1.2

Except as otherwise determined or consented by the parties, during the period from the Closing Date to the date that all the related matters are completed:

	(1)		The parties shall make efforts to ensure that the services provided by the Transferor to its fixed-line customers are not substantially affected by this Transaction;

	(2)		The parties shall make efforts to ensure that the operating and service capacity and the network performance are not substantially affected by this Transaction.

4.2

For the purpose of the transfer of the Target Business and Assets, the contracts/agreements executed in the name of the following entities and currently effective, shall be assumed by the Transferee from the next day following the Closing Date:

	4.2.1		Unicom Group or Netcom Group;

	4.2.2		Unicom Group’s Tianjin branch, Sichuan branch or Chongqing branch;

	4.2.3		Netcom Group’s branches in the 21 provinces and municipalities (autonomous regions) in southern China;

	4.2.4		Netcom Group’s subsidiaries in the 10 provinces and municipalities (autonomous regions) in northern China; or

4.2.5

other branches of the entities above.

4.3

The parties hereto have executed agreements and/or consent letters for assignment with the relevant parties thereto with respect to the contracts/agreements under Clause 4.2 above; if any contract/agreement (the “Agreements Pending Assignment”) has not been approved by the relevant party thereto for assignment, with respect of such Agreements Pending Assignment, the parties specifically agree as follows:

	4.3.1		Unless otherwise provided herein, any rights, obligations, profits or losses held by The Transferor under the Agreements Pending Assignment shall be assumed by the Transferee from the next day following the Closing Date. The Transferor agrees to receive or hold interests in respect of the Agreements Pending Assignment in the capacity of a trustee of the Transferee, and the ownership of such interests shall belong to the Transferee. The Transferor shall transfer such interests to the Transferee as requested by the Transferee from time to time.

	4.3.2		The Transferor shall exercise the rights and perform the obligations under the Agreements Pending Assignment strictly in accordance with the instructions given by the Transferee from time to time, and shall not amend any provisions of or terminate any of the Agreements Pending Assignment.

	4.3.3		The Transferee shall compensate the Transferor for all reasonable costs incurred by the Transferor in performing the obligations under Clause 4.3.1 above, except for those caused by negligence or mistake of, or other reasons on the part of, the Transferor.

	4.3.4		The Transferor shall assist the Transferee in enforcing any of the rights of the Transferee under the Agreements Pending Assignment in its own name (including bringing legal or arbitration proceedings or taking other necessary actions), if necessary.

	4.3.5		The parties hereto shall use their best efforts to complete the assignment of the Agreements Pending Assignment as soon as practicable, and/or to obtain the consent letters from other relevant parties to the Agreements Pending Assignment.

4.4		Confirmation and delivery of the relevant rights and obligations with respect to the fixed-line business operation (the “Rights and Obligations related to the Business Operations”) in the 21 provinces and municipalities (autonomous regions) in southern China.

		Given that the Transferee shall become the entity providing fixed-line businesses in the 21 provinces, municipalities (autonomous regions) in southern China following the Closing Date, and that the Transferee may not be able to directly settle all rights and obligations relating to the business operation with customers, other relevant third-party telecom operators and suppliers prior to the Closing Date, due to external reasons or inconvenience. In order to ensure that the Transaction will not impact the business continuity, the Transferee shall, based upon the Assets Appraisal Reports, assume the rights and obligations related to the business operation, on and prior to the Closing Date in the following manners:

	4.4.1		Balance of accounts receivable: accounts receivable refer to the amount charged to the purchasers or service recipients, as a result of selling communications products, providing communications services, leasing communication circuits and network elements to such purchases or service recipients in the fixed-line business operations. The Transferee shall make a one-time buyout of all the balance of accounts receivable as shown on the Transferor’s financial record as of the Closing Date, after deducting relevant bad debt reserves;

	4.4.2		Balance of other receivables: other receivables refer to the amount to be received other than project deposit and project equipment purchasing money in the fixed-line business operations. The Transferee shall make a one-time buyout of all the balance of other receivable as shown on the Transferor’s financial record as of the Closing Date;

	4.4.3		Balance of pre-paid account: pre-paid account refers to the pre-paid amount of terminals cost, agency fees, advertising fees, telecommunications card production costs, property rent, equipment and vehicle rental fees, circuit element rental, media business costs, electricity, property management fees and etc., in fixed-line business operations. The Transferee shall make a one-time buyout of all the balance of pre-paid account as shown on the Transferor’s financial record as of the Closing Date;

	4.4.4		Balance of advance received: Advance received includes deposit by customers, deposit related to cards (including payment cards and pre-paid cards), advance payment for advertisement and media service, project costs and sales of communications terminals, SIM cards, valuable communication cards. The Transferee shall succeed, and the Transferor shall pay the Transferee the same amount of cash as, the balance on the Transferor’s financial record as of the Closing Date;

	4.4.5		Balance of accounts payable: accounts payable refers to, in connection with the fixed-line business, the unpaid inter-connection cost to other operators, network elements and circuits leasing fees, property rent, base station leasing fees, equipment leasing fees, vehicle leasing fees, property management fees, commissions, purchasing money for terminals, shared profit form business cooperation. The Transferee shall succeed, and the Transferor shall pay the Transferee the same amount of cash as, the balance on the Transferor’s financial record as of the Closing Date;

	4.4.6		Other payables: other payables refers to, in connection with the fixed-line business, the payables, after deducting the payables relating to project deposit and cash guarantee, social security contribution and commissions and etc. The Transferee shall succeed, and the Transferor shall pay the transferee the same amount of cash as, the balance on the Transferor’s financial record as of the Closing Date;

	4.4.7		Payrolls payable: all the employees relating to the Target Business and Assets of the Transferor under employment contracts shall be transferred to the Transferee (the “Transferred Employees”). The payrolls payable to the Transferred Employees shall transfer to the Transferee along with the fixed-line business, and the Transferor shall pay the same amount of cash to the Transferee based upon the Asset Appraisal Reports;

	4.4.8		Customer points: Customer points equals the total customer points transferred from the Transferor to the Transferee multiplied by the point exchange rate mutually agreed by the parties, then multiplied by the unit point value rate (RMB0.01/per unit of customer point), payable in cash to the Transferee.

		Clauses 4.4.1-4.4.3 above provide for the Transferee’s payment obligations, Clauses 4.4.4-4.4.8 provide for the Transferor’s payment obligations. The parties hereby confirm that, the parties’ rights and obligations relating to the business operations shall be settled in accordance with reasonable commercial principles. The parties agree that during the closing process if the parties found that the settlement of any rights or obligations relating to the business operation are not included in the Clauses 4.4.1-4.4.8 hereof, the parties shall settle such rights and obligations in accordance with the aforementioned principles in good faith.

4.5		The Transferor shall bear and pay all the unpaid taxes arising from the Target Business and Assets prior to the Closing Date.

4.6		The parties agree that either party’s payment obligation can be offset by the other party’s payment obligation under this Agreement on the condition that such setoff will not have any impact on the price for this Transaction.

4.7		As for certain assets that are included in the Target Business Assets, the transfer of which requires formal registration to be effective against a third party, the Transferee shall obtain the ownership of such assets upon the delivery of such assets by the Transferor (transfer of possession) on the Closing Date. In order to obtain the effectiveness against a third party, the Transferor agreed to facilitate the Transferee to register such assets under the name of the Transferee or the Transferee’s local branches after the Closing Date.

4.8		The parties hereby agree to use their best effort to complete, as soon as practicable, the closing matters that have not been solved on the Closing Date. The parties hereto agree to take all actions to ensure the full completion of the Transaction, including but not limited to, executing or causing another party to execute documents, applying and obtaining any approval, consent and authorization, registering, recording and filing the relevant procedural documents. The parties hereto shall negotiate in an amicable manner and handle properly any relevant matters not referred to herein.

4.9

According to Clause 4.8 of this Agreement, the Transferor hereby irrevocably agrees that for any assets, equity and/or interest of the Target Business and Assets, the transfer of which require registration (including but not limited to, ownership certificates, transfer of ownership and alteration registration, etc.) with governmental agencies during the closing process (the “Assets Pending Registration Amendment”), the Transferee shall be entitled to request the Transferor register the title to the Assets Pending Registration Amendment directly or indirectly under the name of the subsidiary (or subsidiaries) of the Transferee as designated by the Transferee (the “Ultimate Transferee”). The Transferor and the Transferee hereby agree that the parties, for purposes of the aforementioned registration process, may directly arrange for execution of all relevant legal documentation in connection with the registration amendment by the Transferor and/or direct holder of the Target Business and Assets, and the Ultimate Transferee.


5.		Conditions Precedent

5.1

The delivery of the Target Assets and Business shall be subject to the satisfaction of the following conditions:

5.1.1

filing with the relevant government departments and obtaining the approvals, permissions or consents from the relevant government agencies as follows:

	(1)		the applicable filing with/approval by the SASAC for the purposes of this transaction of the Target Assets and Business;

	(2)		the approval of the change in the business scope of Unicom Operation Company by the MIIT;

	(3)		the approval of the changes in Unicom’s articles of association and the business scope by the MOC; and

	(4)		other approvals, permissions, filings or registrations with or by the PRC government agencies and other relevant governments and regulatory authorities of other relevant jurisdictions (if any).

5.1.2

Obtaining the approval of the shareholder meetings of Unicom A-share Company and Unicom Red-chip Company for the following matters:

	(1)		Unicom A-share Company shall hold a general meeting of shareholders and approve to perform this Agreement in accordance with the applicable laws, regulations and listing rules;

	(2)		Unicom A-share Company shall hold a general meeting of shareholders and approve to perform the Network Lease Agreement in accordance with the applicable laws, regulations and listing rules;

	(3)		Unicom Red-chip Company shall hold a meeting of shareholders to approve Unicom A-share Company to transfer its rights and obligations under this Agreement to Unicom Operation Company in accordance with the applicable laws, regulations and listing rules;

	5.1.3		Unicom Group and Netcom Group shall inject their fixed network assets in the southern 21 provinces, municipalities and autonomous regions respectively to Unicom New Horizon, and Unicom New Horizon shall obtain the relevant approval or permission to lease such assets (if any);

	5.1.4		The financial conditions, business operation or prospects shall not have any material adverse change during the period from the Benchmark Appraisal Date to the Closing Date.

5.2		The parties shall make reasonable effort to satisfy all the conditions set forth in Cause 5.1 as soon as practicable by January 31, 2009.

5.3		This Agreement shall automatically terminate if any condition has not been satisfied (or waived and/or exempted, but the conditions set forth in Clause 5.1.2 shall not be waived and/or exempted under any circumstances) prior to the date set forth in Clause 5.2 or any other date agreed in writing by the parties. Either party has no right to claim any compensation against the other under this Agreement (except as the right arising from previous breach of this Agreement).

Representations and Warranties

6.1

Each of the parties hereto represents, states and warrants to each other that:

	6.1.1		such party is established, existing and formally registered in accordance with the laws of the PRC;

	6.1.2		such party has full legal right, power and authority to execute this Agreement and perform its obligations hereunder, which constitute a liability validly binding upon such party pursuant to the provisions of this Agreement;

	6.1.3		the performance of the provisions of this Agreement will not result in:

	(1)		any breach of any provision of such party’s incorporation documents or other relevant documents, or breach of any laws, regulations or rules applicable to such corporation; or

	(2)		any breach of any important contract, agreement, permit or other instrument, or breach of any order, judgement or decree issued by any court, governmental department and regulatory authority;

	6.1.4		such party will provide full consultation, close collaboration and active support to the other party in the process of the Transaction, especially in satisfying or fulfilling the conditions precedent and handling the closing procedural matters of the Transaction;

	6.1.5		such party has executed and processed or will execute and process all necessary documents and approvals, and has taken or will take all necessary steps pursuant to relevant laws, regulations and rules to ensure the legality and validity of the Transaction contemplated herein;

	6.1.6		such party will handle or assist the other party in the joint handling of any matter in respect of the Transaction, including without limitation providing information in respect of the Transferor, drafting and executing relevant documents, and handling relevant approval and registration formalities in accordance with the provisions of applicable laws and this Agreement.

6.2

In addition to the statements, representations and warranties as provided in Clause 6.1 above, the Transferor makes the following representations and warranties to the Transferee:

	6.2.1		The Transferor has all the necessary approvals, permissions or authorizations by the government departments to operate the Target Business and Assets prior to the Closing Date;

	6.2.2		Unicom Group shall legally succeed all the rights and obligations of Netcom Group under this Agreement after the merger of Unicom Group and Netcom Group; and

	6.2.3		All the undertakings and covenants listed in Annex of this Agreement are true, complete and accurate and there are no false or misleading statements or omissions. The Transferor will strictly fulfill such undertakings and covenants in their valid period.

Profit and Loss for the Relevant Periods

The parties hereto agree:

7.1		Any profits or losses generated or resulted from the Target Business and Assets in the period from Benchmark Appraisal Date to December 31, 2008 (including such date) shall be owned and borne by the Transferor.

7.2		Any profits or losses generated or resulted from the Target Business and Assets in the period from January 1, 2009 to the Closing Date (and including the Closing Date) shall be owned and borne by the Transferee. The parties hereto further confirm that the price shall not be adjusted because of the provisions specified in the above.

7.3		Profits or losses generated or resulted from the Target Business and Assets on the Closing Date and thereafter shall be owned and borne by the Transferee.

Taxation

8.1

Subject to Clause 8.2 of this Agreement and unless otherwise provided herein (or any other transaction documents), the parties hereto shall pay their own costs, fees and other expenses (including incurred by affiliated companies) arising in connection with this Transaction.

8.2		The parties or their affiliated companies shall bear all the taxes caused by this transaction under this Agreement (or other transaction documents) and costs collected by government agencies, regulatory authorities and stock exchanges in accordance with the laws and regulations and relevant provisions or decisions.

8.3		As far as this transaction concerned, unless otherwise provided by the laws, regulations and/or the parties otherwise agree, all the costs, arising in connection with the Target Business and Assets (including business conditions needed) delivered from the Transferor to the Transferee and accepted by the Transferee from the Transferor, shall be reasonably arranged and settled by the parties through consultations.

Announcement

9.1		Any party (and any of its affiliated companies) shall not make any announcement or issue any circular about the existence this Agreement (or any other transaction documents) or other subjects without the prior written approval of the other party (either party shall not unreasonably delay or withhold such approval).

9.2		The restrictions of Clause 9.1 above shall not apply, if the laws or the stock exchange or any regulatory or other agencies or departments (regardless whether or not the requirements are of the force of law) of appropriate jurisdiction have the relevant announcement, circular or notice requirements. Unless otherwise provided as above, any party publishing a notice or issue a circular shall make reasonable consultations with respect to the form, content and timing of such notice or circular with the other party in advance.

10.

Breaching Liabilities

10.1

If any of the parties in the Agreement makes any representations and/or warranties untrue, inaccurate, incomplete, or there are any false statements, omissions or misleading statements, or any undertakings under this Agreement are violated, or any terms of this Agreement are breached, a breach of contract shall be constituted. Except as otherwise provided in the Agreement, for the actual losses incurred by the performing party, the party in breach should make a comprehensive and full compensation.

10.2		If the Transferor has been informed that after the signing of this Agreement, some circumstances may result in any statement and commitment to ensure that the objectives of the business or financial operation has a significant bearing on any aspect of becoming false, inaccurate or misleading, the Transferor will make its efforts within a reasonable period of time to notify the Transferee in writing.

10.3		In the event of any claims or potential claims and legal proceedings that may be made or initiated against the Transferee and in accordance with the Agreement the Transferee may seek for reimbursement from the Transferor, then the Transferee will do its best within a reasonable period of time to notify the Transferor in writing.

11.

Force Majeure

If any of the parties is rendered unable to perform or is caused to delay in its performance of any obligation under this Agreement due to the occurrence of any event beyond its reasonable control or due to any reason other than its own fault or negligence, such party shall not be deemed to have breached this Agreement and the performance of such obligation shall be suspended to the extent which is fair and reasonable under the circumstances. If a party is rendered unable to perform any of its obligations under this Agreement as a result of a force majeure event, such party shall give a written notice to the other party within 15 days of the occurrence of such force majeure event. The party claiming the force majeure event as the cause of its non-performance shall take proper steps to mitigate or eliminate the effect of the force majeure event, and shall, within the shortest possible time, endeavored to resume the performance of any obligation so affected by the force majeure event.

12.

Confidentiality

12.1		Each party shall (and ensure each of its representatives shall) keep secret of confidential documents and shall not disclose them to anyone unless (a) permitted by Clause 12; or (b) otherwise consented by other written consent.

12.2		Clause 12.1 shall not impede either party or its representatives from disclosing, if, in this context, either party can show the situations as follows:

	12.2.1		It is required by the laws or the stock exchange of the relevant jurisdiction or any regulatory or government or anti-monopoly agencies (including any tax departments) to disclose (but only if the disclosing party shall first inform the other parties of its intention to disclose the information and consider the reasonable views of any other parties);

	12.2.2		The disclosed confidential documents are legally held by the party or any of its representatives (in any case a written record is required), and there is no obligation of confidentiality before they are held or received;

	12.2.3		The disclosed confidential documents have become available to the public not due to result of that party’s (or its representatives’) fault before the disclosure;

	12.2.4		The disclosure is a result of any arbitration or judicial proceedings arising in connection with this Agreement.

13.

Waiver, Rights and Remedies

Unless otherwise expressly provided in this Agreement, either party does not, or fails, or delays to exercise any rights, power or remedies under this Agreement or any transaction documents, shall not be deemed as waiving such rights, power or remedies, and shall also not impede exercising such rights, power or remedies at any subsequent time. Single or partial exercise of any such rights, power or remedial action shall not prevent further exercise.

14.

Severability

If any of the provisions under this Agreement becomes invalid, illegal or unenforceable in any respect in accordance with any applicable laws, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected or prejudiced in any manner.


15.		Notices

15.1	Any notices required under this Agreement shall be written in Chinese, and delivered by hand, or transmitted by fax, or sent by registered mail, or delivered by speedpost approved by the parties. Any such notice shall be deemed to have been received at the time as follows: (a) when delivered, if delivered by hand, or sent by registered mail, or delivered by speedpost; or (b) when send, if transmitted by fax. Under any circumstances, the notice shall be deemed as accepted on the next business day if delivered at any non-working hours.

15.2	For the purpose of Clause 15.1, the address and fax number of the parties are as follows:

	China United Network Communications Group Corporation Limited

	Address:	No. 21 Jinrong St., Xicheng Dist., Beijing
	P.C.:	100140
	Addressee:	Qin Shaojuan
	Fax:	010-8662 9184

	China Network Communications Group Corporation

	Address:	No. 21 Jinrong St., Xicheng Dist., Beijing
	P.C.:	100140
	Addressee:	Qin Shaojuan
	Fax:	010-8662 9184

	China United Telecommunications Corporation Limited

	Address:	Building 29, No. 1033 Changning St., Shanghai
	P.C.:	200121
	Addressee:	Zhang Baoying
	Fax:	021-5273 2220


16.		Governing Law and Arbitration

16.1

This Agreement shall be governed by the laws of the PRC, and shall be interpreted and implemented in accordance with the laws of the PRC.

16.2		If any dispute arises in connection with the interpretation or implementation of this Agreement, the relevant parties shall endeavour to resolve the dispute through friendly negotiation. If the relevant parties fail to resolve any dispute in the manner as described above within 60 days after the issuance of a dispute notice, either party may initiate an arbitration.

16.3		Dispute shall be submitted to the China International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its arbitration rules in effect at the time by arbitration. Dispute shall be ruled by three arbitrators. Each party shall select an arbitrator (jointly appointed by the Transferor) and the third arbitrator shall be appointed by the two arbitrators appointed by the parties, but if the other two arbitrators can not decide the third arbitrator, the CIETAC shall appoint the third arbitrator.

16.4		Arbitration proceedings shall be presided by the CIETAC, and unless otherwise agreed by the parties, the arbitration shall be conducted in Chinese. The arbitration procedure shall be carried out in Beijing.

16.5		The arbitral awards, according to the arbitration procedures, shall be final and binding on the parties, and shall be enforced in accordance with its terms.

16.6		Arbitration fees shall be paid by the losing party. The parties agree that the party against which the legal proceedings shall pay all reasonable costs and expenses, as well as attorney fees, if it is necessary for the other party to enforce the arbitral awards through any type of legal procedure.

16.7		During the period of dispute resolution, all parties shall continue to implement other parts of this Agreement.


17.		Effectiveness and Amendment

This agreement, after signed by the parties or their legal representatives on behalf of the authorized signature and affixed with their official seal, shall come into force. After the signing of this Agreement, any amendments to the Agreement (or any other transaction documents) must be in writing and signed by the legal representatives of the parties or their authorized representatives and affixed with their official seals.


18.		Appendix

18.1		The Transferor or the Transferee shall handle, in accordance with the actual situation, the lawsuit, arbitration, administrative investigation and other disputes arising after the Completion Date, yet caused by the events or reasons prior to the Completion Date. The Transferor shall bear the responsibility for such lawsuit, arbitration, administrative investigation and other disputes and the relevant rights are subject to the provisions of the Agreement.

18.2		The parties hereto agree that if there is any conflict between the terms of this Agreement and any other agreements, this Agreement shall prevail, unless (a) other agreements clearly provide that it prevails this Agreement; and (b) the Transferor and the Transferee are also the signatories to such agreements, or otherwise agree in writing that such agreement take precedence over this Agreement on relevant aspects.

18.3		Unless otherwise agreed by the parties, this Agreement and its annexes constitute all legal documents of this transaction, and replace all previously oral and written agreements relating with the above-mentioned matters.

18.4		This Agreement has ten (10) copies, each party has two copies. The rest copies are all for information disclosure and approval and/or record by government departments. All the copies have the same legal effect.

(There is no text below and the next page is the signature page)

(There is no text in this page, and this page is the signature page of the Business and Asset Transfer Agreement)

China United Network Communications Group Company Limited (stamp)

Legal representatives or the authorized representative:

China Network Communications Group Corporation (stamp)

Legal representatives or the authorized representative:

China United Telecommunications Corporation Limited (stamp)

Legal representatives or the authorized representative:

ANNEX 1
UNDERTAKINGS AND GUARANTEES BY THE TRANSFEROR

Except for the items that have been disclosed in this Agreement or have been listed as provision is in the accounts, on the date of this Agreement and the Closing Date, the Transferor hereby makes the following statements, representations and warranties to the Transferee:


1.		General Covenants

	1.1		All materials in connection with the Target Business and Assets provided to Transferee or its representatives and consultants are true, accurate and complete and there is no false statement, omission or misleading statement.

	1.2		Account

			The accounts made preceding the Closing Date in connection with the Target Business and Assets (“Account”) truly and fairly reflect the conditions of the assets, debts and performance of the Target Business and Assets, and the value of its assets and equity, including but not limited to:

	(1)		The accounts are compiled and treated with the requirements of all the relevant laws and regulations then in force and with all statements of proper applicable accounting policies and accrual basis principle then in force;

	(2)		The asset and debt items in connection with the Target Business and Assets under the Account have been disclosed in accordance with the generally accepted accounting policies;

	(3)		The performance results indicated by the Account fairly reflect the operation conditions of the Target Business and Assets;

	(4)		The depreciation policy adopted by the account is in compliance with the requirements of the relevant laws, regulations and accounting policies;

	(5)		For the Target Business only, the Transferor has consistently adopted the accounting policies, unless otherwise agreed by the Transferee or adjustments required by the national policies;

	(6)		None of the financial information provided to the Transferee or its representatives and advisers is misleading in any material respect nor materially over-stated the value of the Assets nor materially under-stated the liabilities of the Target Business and Assets at the dates to which they are drawn up and the Transferor has not materially over-stated the profits nor under-stated the losses of the Target Business and Assets in respect of the periods to which they relate;

	(7)		All the legal registers, account books and other records in connection with the Target Business and Assets, which is required to be kept by the applicable laws, have been properly kept in accordance with such laws and the relevant generally accepted accounting policies and are complete and accurate.

	1.3		Litigation and Investigation

			To the best knowledge of the Transferor, no material lawsuit, arbitrations, administrative proceedings, and governmental investigation or inquiries are in progress or pending against or concerning the Target Business and Assets.

	1.4		Compliance of the Tax and other Laws

	(1)		All the taxes and expenses arising out of or in connection with the Target Business or Assets preceding the Closing Date shall be bore by the Transferor.

	(2)		The Transferor observes the applicable PRC laws and regulations, without materially violating the relevant laws and regulations in any substantial aspects, without being rendered or involved in any material civil, criminal and administrative claims, investigation, complaint or lawsuit threat resulting from such violation and without any situations that may cause such claim, investigation, complaint or lawsuit.

	(3)		The corresponding liabilities resulting from the violation of the laws, administrative regulations, administrative rules, and local regulations in connection with the Target Business and Assets preceding the Closing Date, shall be borne by the Transferor.


2.		Special Covenants Applicable to Local Fixed-line Business of 21 Southern Provinces, Municipalities and Autonomous Regions and Tianjin Municipality (“Target Business”)

	2.1		The Transferor has the legal right to operate the Target Business preceding the Closing Date.

	2.2		The operation of the Target Business is in compliance with the applicable laws and regulations (both of PRC and other jurisdictions) preceding the Closing Date, and has obtained all the necessary licenses, permissions, authorizations and approvals to effectively operate the Target Business in the current operation places with the current operation mode, and there are no legal and/or factual obstacles.

	2.3		Target Business Users (“Users”)

	(1)		The information and data (including the fees owed by the users) provided by the Transferor to the Transferee shall be true, accurate, and complete, without any false statement, omission or the situation where the users do not accept such information and data.

	(2)		The data of the debts owed by the users provided by the Transferor to the Transferee shall be true, accurate and complete.

2.4

Contractual Relationships and Business Arrangements

(1)

The contractual relationships and business arrangements incorporated into the Target Business:

	(a)		are duly executed and legally binding the relevant parties;

	(b)		are made on the basis of fairness and reasonableness and in compliance with the general commercial principles.

(2)

Save and except for the disclosures to the Transferee, there are no such arrangements or agreements executed but not performed by the Transferor as one party in relation to the Target Business:

	(a)		Due to this transaction, the agreements or arrangements will be affected as follows: the other party is entitled to relieve from any of its obligations or exercise any right (including termination right, pre-emptive rights, or other options); or the Target Business will be in default of such arrangements and agreements or lose its existing operation benefits, rights or licenses it is entitled to, or the responsibilities in the operation of the Target Business and Assets will be created or increased;

	(b)		Such arrangements or agreements are not entered into in the ordinary course of business;

	(c)		The arrangements and agreements are concerning the financial and operation conditions or prospects of the Target Business, or might have material impact on the Target Business.

(3)

Fundamental Defaults

	(a)		No fundamental defaults incur under any arrangements with the Target Business as the contractual object, nor are there any situations that might cause such fundamental defaults.

	(b)		The Transferor is not in material default under any agreements or arrangements in connection with the Target Business, and there are no circumstances likely to give rise to any such defaults.

	(c)		When any such material default incurs, the corresponding liabilities shall be bore by the Transferor. If the Transferee has been involved in such default, the Transferor shall indemnify the Transferee for all the losses it suffers (including but not limited to the relevant costs and attorney fees).


3.		Special Covenants Applicable to Tianjin Municipality Local Fixed-line Assets and Northern Backbone Transmission Assets (“Assets”)

3.1

Ownership

(1)

The Assets are lawfully owned by the Transferor with a clear and legal title and free from any dispute;

	(2)		Expect as disclosed to the Transferee by the Transferor, the Transferor has not created any security rights, transfer right, option, pre-emptive right, concession, factoring, lease or rent agreement, lease and purchase agreement, conditional sales or credit sale, extended payment agreement or any other similar agreements or arrangement (or establish or enter into any item of the above agreements or obligations, including conditional obligation) over such Assets;

	(3)		Unless otherwise stipulated in this Agreement, the Transferee shall, after the Completion, enjoy the full and complete rights over the Assets as the owner of such Assets in the same property status as the original property status, and have the right to legally transfer and dispose such property rights, and shall not be restricted by any detainment, pledge and encumbrance from any third party.

3.2

In terms of their actual use status, the Transferor undertakes that the Assets shall meet the following requirements:

	(1)		the Assets are properly maintained, danger-free and up-to-date, no need for update or replacement unless required by normal operation;

	(2)		in compliance with the state and industry norms, and in normal use;

	(3)		being able to be properly and effectively put into use intended on the completion of the Transaction and meet the requirements of lasting operation; and

	(4)		no materially adverse changes incurred to the conditions of the Assets, compared with that indicated by the primary and final lists, except for the normal wear and tear.

3.3

Changes to the Assets

(1)

Any changes to the Assets from the execution of this Agreement to the Closing Date is in accordance with the relevant laws, regulations and the internal management requirements of the Transferor.

	(2)		The information/data regarding the Assets transferred by the Transferor to the Transferee shall be true, accurate, complete, and without any false statement or omission.

	(3)		Any changes to the Assets from the execution of this Agreement to the Closing Date will not materially aversely affect the value, use and function of such Assets; nor do they adversely affect the operation that depends on such Assets.


4.		Special Covenants for the Shares of the Telecommunications Service Subsidiary Companies

	4.1		Subsidiaries in Telecommunications Services are limited liability companies established and existing under the laws of the PRC, and their business certificates are in full effect; their respective Articles of Association are in accordance with the PRC applicable laws and in full effect.

	4.2		The Transferor lawfully owns the equity interests of the Subsidiaries in Telecommunications Services and such equity interests are not restricted by any security interests, which include but not limited to pre-emptive rights, options, mortgages, pledges or liens.

	4.3		From the execution of this Agreement to the Closing Date:

	(1)		The business of the Subsidiaries in Telecommunications Services is operated in a general and normal way, and the Subsidiaries in Telecommunications Services have not paid or agreed to pay any amount, except these arising out of the ordinary course of business.

	(2)		The transactions by and between the Subsidiaries in Telecommunications Services and the connected parties of the Transferor are conducted at arm’s length on the basis of truthfulness and fairness.

	(3)		The Subsidiaries in Telecommunications Services have not waived the liabilities of the substantial debtors if such debtors paid any amount below the book value of their debts. No material debts of the Subsidiaries in Telecommunications Services have become due, taken as subordinate debt, or written-off or evidenced to be unrecoverable in any proceedings.

	(4)		The Subsidiaries in Telecommunications Services have not prepaid any substantial loan or debt before the due date.

	(5)		The business of the Subsidiaries in Telecommunications Services has not been affected by any unusual factors which did not affect any other companies operating similar business.

EXHIBIT D

CHINA UNITED TELECOMMUNICATIONS CORPORATION LIMITED

AND

CHINA UNITED NETWORK COMMUNICATIONS CORPORATION LIMITED

TRANSFER AGREEMENT IN CONNECTION WITH THE BUSINESS AND
ASSETS TRANSFER AGREEMENT

Dated as of December 16, 2008

- 1 -

THIS TRANSFER AGREEMENT IN CONNECTION WITH THE BUSINESS AND ASSETS TRANSFER AGREEMENT (hereinafter referred to as this “Agreement”) is made as of this 16 ^th day of December in 2008, in Beijing, the People’s Republic of China (hereinafter referred to as the “PRC”), by and between:

Transferor:	China United Telecommunications Corporation Limited (hereinafter referred to as “Unicom A-Share Company”)
	Legal Address:	Building 29, No. 1033 Changning Road, Shanghai

Transferee:	China United Network Communications Corporation Limited (hereinafter referred to as “Unicom Operation Company”)
	Legal Address:	12 ^th Floor, Henderson Center Office Building 1, No. 18 Jianguomen Nei Avenue, Beijing

WHEREAS,

(1)		China United Network Communications Group Company Limited (hereinafter referred to as “Unicom Group”), a limited company duly incorporated and validly existing under the PRC laws, is an integrated telecommunications business operator, possesses directly or indirectly 100% shares of Unicom Xingye Science and Technology Trade Company Limited, China Information Technology Designing & Consulting Institute and Unicom New Guoxin Communications Limited Company and owns fixed-line telecommunications network and runs local fixed-line telephone business in Tianjin Municipality, Sichuan Province and Chongqing Municipality; and

(2)		China Network Communications Group Corporation (hereinafter referred to as “Netcom Group”), a state-owned integrated telecommunications business operator duly established and validly existing under the PRC laws, owns fixed-line telecommunications network and runs local fixed-line telephone business in the twenty one southern provinces, municipalities and autonomous regions (including Shanghai Municipality, Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Hubei Province, Hunan Province, Guangdong Province, Guangxi Zhuang Autonomous Region, Hainan Province, Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Tibet Autonomous Region, Shaanxi Province, Gansu Province, Qinghai Province, Ningxia Hui Autonomous Region and Xinjiang Uygur Autonomous Region), and possesses the backbone transmission assets in the ten northern provinces, municipalities and autonomous regions (including Beijing Municipality, Tianjin Municipality, Hebei Province, Henan Province, Shandong Province, Liaoning Province, Heilongjiang Province, Jilin Province, Inner Mongolia Autonomous Region and Shanxi Province); and

- 2 -

(3)		Unicom A-Share Company, a joint stock limited company duly incorporated and validly existing under the PRC laws, has had its common shares listed on the Shanghai Stock Exchange since October 9, 2002 with Unicom Group as its controlling shareholder; and

(4)		Unicom A-Share Company indirectly controls Unicom Red Chip Company (herein “Unicom Red Chip Company”) through China Unicom (BVI) Limited (hereinafter referred to as “Unicom BVI”). Unicom Red Chip Company is a limited company registered in Hong Kong with its shares listed in Hong Kong and the U.S. respectively; and

(5)		Unicom Operation Company is a foreign-invested enterprise established under the PRC laws and a wholly-owned subsidiary of Unicom Red Chip Company; and

(6)		Pursuant to the arrangement by and between Unicom Group and Netcom Group, Netcom Group is to be merged with and consolidated into Unicom Group. Subject to all the necessary PRC approvals, it is expected that such merger will become effective in early January 2009. Upon such merger becoming effective, Unicom Group so merged will assume all the rights and obligations of Netcom Group and all the assets, liabilities and business of Netcom Group will be vested in the merged Unicom Group; and

(7)		Pursuant to the arrangement by and among Unicom Group, Netcom Group and Unicom New Horizon Mobile Telecommunications Company Limited (hereinafter referred to as “Unicom New Horizon”), upon completion of the merger of Unicom Group and Netcom Group, (1) the fixed-line telephone network assets in the twenty one southern provinces, municipalities and autonomous regions owned by former Netcom Group and the credits and the liabilities thereof and (2) the fixed-line telephone assets in Sichuan Province and Chongqing Municipality owned by Unicom Group and the credits and the liabilities thereof shall be vested into Unicom New Horizon, the registered capital of which shall be increased accordingly; and

- 3 -

(8)		Unicom Group and Unicom A-Share Company had entered into a memorandum of understanding (hereinafter referred to as the “Connected Transaction MOU”) on December 12, 2008 in connection with the transaction between Unicom Group or its subsidiaries (not including Unicom A-Share Company and the subsidiaries controlled thereby) and Unicom Red Chip Company indirectly held by Unicom A-Share Company and its subsidiaries. Pursuant to the understanding reached in the Connected Transaction MOU, if the transaction between Unicom Red Chip Company or its subsidiaries and Unicom Group or its subsidiaries (not including Unicom A-Share company and the subsidiaries controlled thereby) is subject to the approval of the minority shareholders of Unicom A-Share Company according to the Listing Rules of the Shanghai Stock Exchange (hereinafter referred to “SSE Listing Rules”) from time to time, and at the same time be deemed as a connected transaction subject to the approval of the minority shareholders of Unicom Red Chip Company according to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (hereinafter referred to “HKES Listing Rules”) from time to time, the above-mentioned connected transaction shall be carried out in a two-step approach as follows: (1) Unicom Group or its subsidiaries (not including Unicom A-Share company and the subsidiaries controlled thereby), and Unicom A Share Company or Unicom BVI Company are to enter into the Acquisition Agreement clarifying the rights and obligations of each party in connection with the proposed transaction (including but not limited to: Unicom Group’s permission of the transfer of the rights and obligations of and by Unicom A-Share Company or Unicom BVI Company under Acquisition Agreement to Unicom Red Chip Company or its subsidiaries), and (2) Unicom A Share Company or Unicom BVI Company then transfer all of the afore-mentioned rights and obligations under the Acquisition Agreement to Unicom Red Chip Company or its subsidiaries; and

(9)		For the purpose of avoidance and reduction of the competition and connected transactions among Unicom Group, Netcom Group and Unicom Operation Company, pursuant to the SSE Listing Rules, the HKES Listing Rules and the provisions of the Connected Transaction MOU, Unicom Group, Netcom Group and Unicom A-Share Company entered into as of December 16, 2008 the Business and Assets Transfer Agreement (hereinafter referred to as the “Acquisition Agreement”), according to which Unicom Group and Netcom Group shall transfer their respectively owned fixed-line network business, northern backbone transmission assets and other related telecommunications assets as well as the their shares in the subsidiaries providing such telecommunication service businesses to Unicom A-Share Company; and

- 4 -

(10)

Pursuant to the Telecommunications Network Lease Agreement (hereinafter referred to as “Network Lease Agreement”) entered into by and among Unicom Group, Netcom Group, Unicom New Horizon and Unicom Operation Company, Unicom New Horizon agrees to lease to Unicom Operation Company the fixed-line network assets in the 21 southern provinces, municipalities and autonomous regions transferred to it by and from Unicom Group and Netcom Group.

WHEREAS THE ABOVE, through friendly negotiation based on the principle of equality and mutual benefit, the Parties hereto agree as follows:

1		Subject to the satisfaction of the validity condition set forth in Clause 7 of this Agreement, the Transferor hereby agrees to transfer immediately all rights and obligations described in the Acquisition Agreement and its Annexes to the Transferee. The Transferee hereby agrees to accept the rights and obligations of the Transferor under the Acquisition Agreement.

2		Once the Transferor transfers to the Transferee all its rights and obligations under the Acquisition Agreement, the Transferee shall immediately assume all the rights and obligations of the Transferor under the Acquisition Agreement, and the Transferor shall immediately terminate all its rights and obligations under the Acquisition Agreement assumed by the Transferee.

3		The Transferor confirms that, pursuant to Clause 2.5 of the Acquisition Agreement, Unicom Group, Netcom Group and the Transferor have confirmed that, once upon the completion of the merger of Unicom Group and Netcom Group, Unicom Group shall automatically assume all the rights and obligations of Netcom Group under this Agreement without sending a separate notice to the Transferor and the Transferee; and that pursuant to Clause 2.6 of the Acquisition Agreement, Unicom Group and Netcom Group have irrevocably agreed that the Transferor shall have the right to transfer to the Transferee all its rights and obligations under the Acquisition Agreement, and the Transferor shall have the right to transfer all its rights and obligations under the Acquisition Agreement to the Transferee without obtaining any others approvals by and from Unicom Group or Netcom Group.

4		Each Party herein guarantees its full right, power and ability to execute and perform this Agreement. This Agreement, upon execution, shall create the legal, valid and binding obligations upon each Party.

5		The Transferee agrees to, within the valid term of the Acquisition Agreement, enjoy and perform the past and future rights and obligations of the Transferor thereunder according to the terms and conditions thereof.

- 5 -

6		The Transferor hereby irrevocably agrees that, with regard to the registration of any changes in connection with the assets, shares and/or equity related to the Target Business and Assets under the Acquisition Agreement during the process of completion required by the governmental bodies (including but no limited to title certificates, title handover process, change registration with industrial and commercial administration authorities, etc.), the Transferee shall have the right to sign and execute directly with the asset holders the legal documents related to the change registration, and that Unicom Group and Netcom Group shall work in coordination with the Transferee in the handover registration directly to the name of the Transferee.

7		Validity of Right and Obligation Transfer

		Subject to the satisfaction of the following conditions, the transfer of the rights and obligations under this Agreement shall concurrently come into force with the completion under the Acquisition Agreement:

	7.1		The extraordinary general meeting of Unicom Red Chip Company approves that, according to its applicable laws, regulations and listing rules, the Transferee transfers its rights and obligations under the Acquisition Agreement to the Transferee;

	7.2		The extraordinary general meeting of Unicom A-Share Company approves the delivery and performance of the Acquisition Agreement and the Network Lease Agreement according to its applicable laws, regulations and listing rules; and

	7.3		Other precedent conditions for completion under the Acquisition Agreement have been satisfied or exempted.

8		Force Majeure

		If a party is rendered unable to perform any of its obligations under this Agreement as a result of a force majeure event, such party shall give a written notice to the other party immediately and provide the details of the event and valid proof documents stating the reasons for the failure to or delay in performance of the obligation under this Agreement and its Annexes within 15 days of the occurrence of such force majeure event. Pursuant to the influence of the force majeure event over the performance of the obligation, the Parties shall negotiate and determine whether to suspend, partially exempt, or extend the performance of such obligation.

- 6 -

9	Confidentiality

	Unless otherwise provided or required by the laws or regulatory bodies, or for the purpose of the disclosure by the Transferor to the SSE and the disclosure by Unicom Red Chip Company to the Hong Kong Stock Exchange, no party to this Agreement shall provide or disclose any information and material relating other party’s business to any company, enterprise, organization or person.

10	No Waiver

	Save and except as provided by the law, no failure or inability of any party to exercise, and no delay in exercising, and right, power or remedy under or conferred in accordance with this Agreement shall constitute a waiver of such right, power or remedy by that party.

11	Notice

	Any of the notices relating this Agreement shall be made in writing, delivered by hand or sent by registered mail or transmitted by fax. Any such notice shall be deemed to have been received upon delivery if delivered by hand, or deemed to have been received on the third (3rd) working days (in case it falls on a rest day or a statutory holiday of the state, the first business day after it shall be the alternate date) after the mail is sent, or deemed to have been received at the time of transmission if transmitted by fax. Any notice shall be effective upon delivery.

	The postal addresses and fax numbers for the parties are as follows:

	China United Telecommunications Corporation Limited
	Postal Address:	No. 21, Jinrong Avenue, Xicheng District, Beijing
	Postal Code:	100140
	Contact Person:	Zhang Baoying
	Fax Number:	010-6611-4366

	China United Network Communications Corporation Limited
	Postal Address:	No. 21, Jinrong Avenue, Xicheng District, Beijing
	Postal Code:	100140
	Contact Person:	Wang Tianpeng
	Fax Number:	010-6625 8743

- 7 -

12		Governing Law

		This Agreement shall be governed by the laws of the PRC, and shall be interpreted and implemented in accordance with such laws.

13		Dispute Resolution

		In the event of any dispute arising out of or relating to this Agreement during the execution of this Agreement, the Parties hereto shall attempt in the first instance to resolve such dispute through friendly consultation. If the dispute is not resolved by friendly consultations within thirty (30) days from the date on which one Party has requested consultations, then either Party may submit the Dispute to the China International Economic and Trade Arbitration Commission (“CIETAC”) to be resolved by arbitration in Beijing with a penal of three (3) arbitrators in accordance with CIETAC arbitration rules then in force. The arbitration shall be conducted in the Chinese language. The arbitration award shall be final and binding upon both Parties. The losing Party shall bear the arbitration fee, unless otherwise specified by the arbitration award.

14		Others

	14.1		Unless otherwise provided in this Agreement, the definitions and other interpretations shall have the same meanings as defined in the Acquisition Agreement.

	14.2		This Agreement shall come into effect upon execution and affixed with their official seals. Amendments or supplements to this Agreement shall only be made in writing, and shall become effective upon execution by the legal representatives or their authorized representatives and affixed with their official seals.

	14.3		In the event that any provision of this Agreement shall be void or unenforceable by reason of any provision of any applicable laws, the invalidity or unenforceability of any provision of this Agreement does not affect the validity and enforcement of the other provisions of this Agreement.

	14.4		This Agreement shall be signed in eight (8) copies of the same form. Each Party shall hold two (2) originals with equal effect.

(There is no text below and the next page is the signature page)

- 8 -

(There is no text in this page)

China United Telecommunications Corporation Limited (stamp)

Legal representatives or the authorized representative:

China United Network Communications Corporation Limited (stamp)

Legal representatives or the authorized representative:

- 9 -

EXHIBIT E

China United Network Communications Group Company Limited

China Network Communications Group Corporation

Unicom New Horizon Mobile Telecommunications Company Limited

and

China United Network Communications Corporation Limited

Lease Agreement on Relevant

Telecommunications Network Facilities

December 16, 2008

TABLE OF CONTENTS


1	DEFINITIONS AND INTERPRETATIONS	3
2	LEASE PRINCIPLE AND LEASE TARGET	5
3	CONDITIONS PRECEDENT	6
4	LEASE TERM	6
5	DELAY IN LEASE	7
6	LEASE FEE AND PAYMENT	9
7	OWNERSHIP AND RISK ALLOCATION	9
8	RESPONSIBILITIES	10
9	REPRESENTATIONS AND WARRANTIES	12
10	PURCHASE OPTION	14
11	DEFAULT AND REMEDIES	15
12	FORCE MAJEURE	16
13	CONFIDENTIALITY	16
14	TERMINATION	17
15	EXPENSE	18
16	WAIVER, RIGHT AND INDEMNITY	18
17	SEVERABILITY	19
18	NOTICE	19
19	GOVERNING LAW AND JURISDICTION	20
20	EFFECTIVENESS AND AMENDMENT	21
21	APPENDIX	22

This agreement is made on 16 December 2008 in Beijing, the People’s Republic of China (the “PRC”) among:


Lessor:		Unicom New Horizon Mobile Telecommunications Company Limited (“Unicom New Horizon”)

		Address: 601, Building 3, 18 Jianguomennei Avenue, Beijing

Lessee:		China United Network Communications Corporation Limited (“ Unicom China ”)

		Address: Floor 12, Building 1, Henderson Center, 18 Jianguomennei Street, Beijing

Other Parties:		China United Network Communications Group Company Limited (“ Unicom Group ”)

		Address: 615, Building 3, Henderson Center, 18 Jianguomennei Avenue, Beijing

		China Network Communications Group Corporation (“ Netcom Group ”)

		Address: Building C, 156 Fuxingmennei Avenue, Xicheng District, Beijing

Whereas:

(1)		Unicom Group is a limited liability company established and existing in accordance with the laws of the PRC. Unicom Group engages in the provision of telecommunications services. It currently owns fixed-line communications networks and operates fixed-line services in Sichuan Province and Chongqing Municipality.

(2)		Netcom Group is a stated-owned enterprise established and existing in accordance with the laws of the PRC. Netcom Group engages in the provision of telecommunications services. It currently owns fixed-line communications networks and operates fixed-line services in the 21 Southern Provinces, Municipalities (Regions).

(3)		Unicom New Horizon is a limited company established and existing in accordance with the laws of the PRC. Unicom Group holds 100% of the equity interest of Unicom New Horizon and is expected to change the name of Unicom New Horizon to Unicom New Horizon Communications Corporation Limited.

(4)		Unicom China is a foreign-invested company established and existing in accordance with the laws of the PRC. China Unicom (Hong Kong) Limited (“China Unicom”) holds 100% of the equity interest of Unicom China.

(5)		Pursuant to the relevant arrangements between Unicom Group and Netcom Group, Unicom Group is expected to merge with and absorb Netcom Group. Upon the completion of the merger, all the assets and liabilities of Unicom Group and Netcom Group will be transferred to the enlarged Unicom Group (“Merger of Group Corporations”). The merger between the aforesaid groups is subject to the approvals of the relevant PRC regulatory agencies and is expected to take effect in early January 2009.

(6)		Pursuant to the relevant arrangements among Unicom Group, Netcom Group and Unicom New Horizon, upon the completion of the merger between Unicom Group and Netcom Group, (i) all the assets and liabilities in relation to the fixed-line networks of the 21 Southern Provinces, Municipalities (Regions) owned by Netcom Group and (ii) all the assets and liabilities in relation to local fixed-line businesses in Sichuan Province and Chongqing Municipality owned by Unicom Group will be transferred to Unicom New Horizon, and the registered capital of Unicom New Horizon will be increased accordingly.

(7)		Pursuant to the Transfer Agreement on Relevant Telecommunications Businesses and Assets entered into by Netcom Group, Unicom Group and China United Telecommunications Corporation Limited (“Unicom A Share Company”), and the Transfer Agreement in relation to Transfer Agreement on Relevant Telecommunications Businesses and Assets entered into by Unicom A Share Company and Unicom China, Unicom Group and Netcom Group are expected to inject the telecommunications assets of the fixed-line businesses and first-class backbone transmission networks in Northern China, respectively owned by Unicom Group and Netcom Group, and the equity interests in the related operating subsidiaries into Unicom China through Unicom A Share Company (the “Injection Project”).

Now therefore, for the purpose of the Injection Project, for mutual consideration and through friendly negotiation, the parties hereto agree as follows:

1. DEFINITIONS AND INTERPRETATIONS

1.1

Unless otherwise specified therein, the following expressions shall have the following meanings in this Agreement, including the recitals hereof and the appendix hereto:


Effective Date of the Lease		the first date of the month immediately following the date when all the conditions precedent in Clause 3.1 under this Agreement have been satisfied or waived, or another date mutually agreed upon by the Lessor and Lessee.

Fixed-line Assets of 21 Provinces, Municipalities (Regions)		telecommunications equipments and facilities relating to operation and management of Fixed-line Telecommunications Networks owned by the Lessor in the 21 Southern Provinces, Municipalities (Regions).

Fixed-line Businesses		the businesses related to all domestic and international fixed-line telecommunications networks and facilities; the provision voice, data, graphics and multi-media telecommunications and communications services, which are based on fixed-line telecommunications networks .

Fixed-line Telecommunications Networks		all the fixed-line telecommunications networks, facilities and auxiliary equipments that the Lessor owns domestically or internationally.

Group Corporation		referring to Unicom Group and Netcom Group collectively; also referring to China United Network Communications Group Company Limited upon the completion of the merger between Unicom Group and Netcom Group.

Lease Term		the term agreed in Clause 4.1 of this Agreement.

Netcom Group		China Network Communications Group Corporation.

Purchase Option		option by the Lessee to purchase the Fixed-line Telecommunications Networks within the Target Regions, according to Clause 10 of this Agreement.


Target Regions or 21 Southern Provinces, Municipalities (Regions)		Shanghai Municipality, Jiangsu Province, Zhejiang Province, Anhui Province, Fujian Province, Jiangxi Province, Hubei Province, Hunan Province, Guangdong Province, Guangxi Zhuang Autonomous Region, Hainan Province, Chongqing Municipality, Sichuan Province, Guizhou Province, Yunnan Province, Xizang Autonomous Region, Shanxi Province, Gansu Province, Qinghai Province, Ningxia Hui Autonomous Region and Xinjiang Uygur Autonomous Region.

Transfer Agreement in relation to Transfer Agreement on Relevant Telecommunications Businesses and Assets		the Transfer Agreement in relation to Transfer Agreement on Relevant Telecommunications Businesses and Assets dated on 16 December 2008, entered into between Unicom A Share Company and Unicom China.

Transfer Agreement on Relevant Telecommunications Businesses and Assets		the Transfer Agreement on Relevant Telecommunications Businesses and Assets dated on 16 December 2008, entered into among Unicom Group, Netcom Group and Unicom A Share Company.

Unicom A Share Company		China United Telecommunications Corporation Limited.

Unicom China (the Lessee)		China United Network Communications Corporation Limited.

Unicom Group		China United Network Communications Group Company Limited, formerly known as “China United Telecommunications Corporation”.

Unicom New Horizon (the Lessor)		Unicom New Horizon Mobile Telecommunications Company Limited (to change to “Unicom New Horizon Telecommunications Company Limited”).

1.2		Unless otherwise expressly provided, all references in this Agreement to any clause or article shall refer to a clause or article of this Agreement.

1.3		All references in this Agreement to any party of this Agreement or of any other agreement or document shall include any successor or authorized assignee of such party.

1.4		All references in this Agreement to any law or any provision of any law shall include any amendment to or re-enactment of such law or provision, any legal provision replacing such law or provision, and all regulations and legal documents promulgated pursuant thereto.

1.5		The headings of this Agreement and the appendix hereto are inserted for convenience only and shall not have any effect on the construction of this Agreement.

2. LEASE PRINCIPLE AND LEASE TARGET

2.1		Subject to the conditions precedent in Clause 3.1 of this Agreement having been satisfied or waived, the Lessor agrees to lease the Fixed-line Assets of 21 Provinces, Municipalities (Regions) to the Lessee, in accordance with the terms and conditions as set forth herein.

2.2		Subject to the conditions precedent in Clause 3.1 of this Agreement having been satisfied or waived on or before 31 January 2009, the parties hereto agree or ratify the lease to take effect since 1 January 2009 (inclusive of that date).

2.3		The parties hereto agree that, unless agreed otherwise, the Lessee shall be permitted to exclusively use the Fixed-line Assets of 21 Provinces, Municipalities (Regions) so that the Lessee can operate the Fixed-line Businesses within the Target Regions in accordance with the applicable laws and regulations of PRC.

2.4		The Lessee shall pay the lease fees in accordance with Clause 6, as consideration for the Lessor’s performance of the obligations under this Agreement.

2.5		All the operating revenues, including but not limited to call charges, monthly fees, inter-network settlement revenues and other benefits arising out of or in connection to the operation of networks shall be collected by and belong to the Lessee.

2.6		All the expenses arising out of the operation, management and maintenance of the Fixed-line Telecommunications Network shall be assumed by the Lessee.

3. CONDITIONS PRECEDENT

3.1

The lease will become effective, subject to the satisfaction or waiver of the following conditions:

	(1)		The injection of Fixed-line Assets of 21 Provinces, Municipalities (Regions) into Unicom New Horizon by Unicom Group and Netcom Group, the approval or permission (if any) of the lease of such assets having been obtained by Unicom New Horizon;

	(2)		The approval of the execution of this Agreement at the Unicom A Share Company’s general shareholder meeting having been obtained in accordance with the applicable laws, regulations and listing rules; and

	(3)		The satisfaction or waiver of other conditions precedent on closing under the Transfer Agreement on Relevant Telecommunications Businesses and Assets and of the conditions on the transfer of rights and obligations under the Transfer Agreement in relation to Transfer Agreement on Relevant Telecommunications Businesses and Assets.

3.2		The parties hereto agree to use their reasonable endeavors, if practicable and feasible, to satisfy each of the conditions precedent set forth in Clause 3.1 of this Agreement on or before 31 January 2009.

3.3		In case any condition precedent is not satisfied (or waived) before the date provided in Clause 3.2 or agreed by the parties hereto in writing, this Agreement shall terminate automatically, and each party has no right to raise any claim against any other party under this Agreement (except for the claims arising out of previous breaches of this Agreement).

4. LEASE TERM

4.1

The term of both this Agreement and the lease under this Agreement is two (2) years, from 1 January 2009 to 31 December 2010.

4.2

Subject to relevant laws and regulations of the government, upon the expiration of the term set forth hereto or any extended term, the Lessee shall have the right to extend the term of the lease of the Fixed-line Assets of 21 Provinces, Municipalities (Regions) according to the terms and conditions (excluding the lease fees) provided in this Agreement, on the condition that the Lessee has notified the Lesser at least 2 months before the expiration date.

5. DELAY IN LEASE

5.1

Where any event or condition renders the Lesser unable to provide any telecommunications network facility among the Fixed-Line Assets of 21 Provinces, Municipalities (Regions), which might adversely affect the provision of fixed-line services by the Lessee to end-users, the Lessor shall promptly (in any event within 5 business days after the Lessor becomes aware of the relevant event or condition) notify the Lessee in writing. The notice shall contain:

	5.1.1		The nature of the event or condition, and whether it is caused by the events set forth in Clause 5.4;

	5.1.2		The measures to be taken if the Lessor believes that measures could be taken to remedy such event or condition or to cause the networks to become operational; and

	5.1.3		The possible effects on the Lessee’s provision of Fixed-line Businesses caused by such event or condition, including the number of end-users who may be affected.

5.2		Upon receipt of any notice by Lessee in accordance with Clause 5.1, the Lessor and Lessee shall discuss in good faith the possible actions to be taken to remedy such situation.

5.3		Save and except for the situation set forth in Clause 5.4, in case the Lessor fails to provide any telecommunications network facilities of the Fixed-line Assets of 21 Provinces, Municipalities (Regions), which might adversely affect the Fixed-line Businesses of the Lessee, the Lessor shall give the following discount on the lease fees (the “Delay Discount”) to the Lessee:


Delay Discount		=		The number of users of the Fixed-line Business affected by the delay × period of delay (days) × ARPU (including basic telecommunication services and value-added services) contributed by users of Fixed-line Business / the number of days of the affected months

		In the above formula, “The number of users of the Fixed-line Businesses affected by the delay” shall be determined by the Lessee based on the Lessor’s report and substantial evidence; “ARPU (including basic telecommunication services and value-added services) contributed by the users of the Fixed-line Businesses”, as determined by the Lessee, shall be the average monthly ARPU contributed by the users of the Fixed-line Businesses of the areas affected by the delay for the 3 months before the delay.

		The Delay Discount shall be deducted from the lease fees of the next lease term paid by Lessee to Lessor.

5.4

In case any event or condition of which the Lessor notifies the Lessee under Clause 5.1 is caused by any of the following situations:

	5.4.1		Force majeure;

	5.4.2		The Lessee’s substantial breach of its obligations under this Agreement, which prevents the Lessor from performing its obligations under this Agreement; or

	5.4.3		any applicable laws or the mandatory requirements of any governmental entities or any other applicable mandatory rules;

Unless such situations (except as set forth in Clause 5.4.3) arise out of Lessor’s breach of this Agreement, the Lessor shall not assume any obligations to grant Delay Discount or pay damages or other compensation to the Lessee, if such situations cause the Lessor’s failure to provide the relevant telecommunications network facilities under the terms and conditions of this Agreement; but the Lessor shall provide the relevant telecommunications network facilities to the Lessee as soon as practicably after it can resume its lease of networks.

6. LEASE FEE AND PAYMENT

6.1

The lease fees for the lease term are:

	6.1.1		The lease fee for year 2009 is RMB 2 billion;

	6.1.2		The lease fee for year 2010 is RMB 2.2 billion.

		Unless otherwise agreed by the parties hereto in writing, all the payable lease fees shall be paid in RMB.

6.2		The lease fees shall be paid quarterly based on standards set out in Clause 6.1, and the Lessee shall pay the lease fee to the Lessor within 30 days after the end of every quarter.

6.3		In the event that the parties hereto extend the lease term in accordance with Clause 4.2 of this Agreement, the lease fees shall be otherwise negotiated and agreed by the parties.

7. OWNERSHIP AND RISK ALLOCATION

7.1		The parties agree that the Lessor owns the Fixed-line Telecommunications Networks for lease under this Agreement. The Lessee might at its liberty construct and expand the relevant Fixed-line Telecommunications Networks to meet the requirements of its business development since the Effective Date of the Lease. The Lessee is entitled to the network facilities and equipments constructed and expanded by it. In compliance with the applicable laws and regulations, every party shall insure the network facilities and equipments it owns, and it is entitled to the related insurance interests.

7.2		During the lease term, the Lessor shall bear all the risks of the loss, theft, damage and destruction of the assets of the leased Fixed-line Telecommunications Networks, whereas the Lessee shall bear all the loss and damages arising out of or in connection with the Fixed-line Telecommunications Networks within the Target Regions where it operates.

8. RESPONSIBILITIES

8.1		The responsibilities of the Lessor:

		Without any prejudice to any other responsibility of the Lessor under this Agreement, the Lessor shall assume the following responsibilities:

	8.1.1		Obtaining and retaining the necessary governmental and any other approval/authorization, permission, and other documents required or necessary to operate, maintain and upgrade the networks.

	8.1.2		Ensuring that the Fixed-line Assets of 21 Provinces, Municipalities (Regions) will be delivered to the Lessee during the lease term.

	8.1.3		Using best effort to assure that the quality indicators of the networks meet the standards agreed with the Lessee.

	8.1.4		Using best effort to meet such requirements of the Lessee when the Lessee requests the Lessor to upgrade the software or hardware of the networks.

	8.1.5		Not leasing or selling to any third party any part of the Fixed-line Telecommunications Networks within the Target Regions, nor allowing the third party to provide telecommunications services by using or operating such networks, unless such lease or sale has been agreed by the Lessee in writing or is a expected transfer under the Transfer Agreement on Relevant Telecommunications Businesses and Assets.

	8.1.6		Not providing telecommunications services to any third party by using or operating the telecommunications networks within the Target Regions, or competing with the listed group in any way, unless with prior written consent from the Lessee; and

	8.1.7		Upon the malfunction of any part of the Fixed-line Telecommunications Networks, providing necessary cooperation to the Lessee, including contacting the network facilities suppliers and coordinating with other parties.

8.2		The responsibilities of the Lessee:

		Without any prejudices to any other obligation of the Lessee under this Agreement, the Lessee shall assume the following responsibilities:

	8.2.1		Providing the Lessor with the documents in relation to the conditions, usage and operation of the networks to meet the reasonable requirements of the Lessor from time to time.

	8.2.2		Allowing the representatives from the Lessor to check the networks during business hours, if the Lessor has given reasonable notice.

	8.2.3		Ensuring the maintenance and safety of the networks, and maintenance of all the databases relating to the networks.

	8.2.4		Allowing the Lessor to make reasonable use of the leased premise to perform its obligations under this Agreement.

	8.2.5		(i) Taking necessary or conducive measures to protect the networks and maintain the networks in good condition, except for the reasonable wear and tear; and (ii) maintaining the networks in the way other PRC fixed-line operators generally accept as the best practice.

8.3		Other parties’ responsibilities

		Unicom Group and Netcom Group undertake to the Lessor and Lessee that:

	8.3.1		They will lawfully transfer the Fixed-line Telecommunications Networks they own to the Lessor before the conditions precedent under this Agreement are satisfied;

	8.3.2		The Unicom Group will take over all the rights and obligations of Netcom Group under this Agreement, upon the completion of the merger between the two groups.

9. REPRESENTATIONS AND WARRANTIES

9.1

The Lessee hereby makes the following representations and warranties to the Lessor:

	9.1.1		The Lessee is a company incorporated with limited liability under PRC laws, having the corporate power to own its assets and continue its existing operations;

	9.1.2		The Lessee has the corporate power to enter into this Agreement, perform its obligations and carry out transactions expected hereunder; the Lessee has obtained the approval to enter into, perform and deliver this Agreement and carry out the transactions expected hereunder by all the necessary actions of the Lessee;

	9.1.3		This Agreement has lawful, valid and binding effect on the Lessee;

	9.1.4		The Lessee’s entering into and observing this Agreement and carrying out the transactions expected hereunder will not presently and in the future (i) be in contradiction with the constituent documents of the Lessee; or (ii) be in contradiction with the documents binding on the Lessee or its assets, or result in the violation of such documents, and incur any security interests on any of its assets;

	9.1.5		The Lessee observes the civil and commercial laws related to its obligations under this Agreement; no immunity occurs on Lessee or its assets, and the entering into and carrying out this Agreement by the Lessee constitutes private and commercial action; and

	9.1.6		No litigation, arbitration, administrative proceeding against the Lessee which could result in a material adverse change in the financial conditions or businesses of the Lessee or produce adverse effect on Lessee’s observation of its obligations hereunder (if the Lessee loses) is taking place or pending.

9.2

The Lessor hereby makes the following representations and warranties to the Lessee:

	9.2.1		The Lessor is a company incorporated with limited liability under PRC laws, having the corporate power to own its assets and continue its existing operations;

	9.2.2		The Lessor has the corporate power to enter into this Agreement, perform its obligations and carry out transactions expected hereunder; the Lessor has obtained the approval to enter into, perform and deliver this Agreement and carry out the transactions expected hereunder by all the necessary actions of the Lessor;

	9.2.3		This Agreement has lawful, valid and binding effect on the Lessor;

	9.2.4		The Lessor’s entering into and observing this Agreement and carrying out the transactions expected hereunder will not presently and in the future (i) be in contradiction with the laws binding on the Lessor or (ii) be in contradiction with the constituent documents of the Lessor; or (iii) be in contradiction with the documents binding on the Lessee or its assets;

	9.2.5		The Lessor has fulfilled its obligations to obtain or complete full and valid approvals, consents, registrations and notices (when applicable) which are required under PRC laws for the Lessor’s entering into, validating, carrying out and enforcing this Agreement;

	9.2.6		The utility of the networks by the Lessee hereunder will not cause the Lessee to violate any law, regulation, order, permit, abstention, consent, registration, approval or authorization; and

	9.2.7		The Lessor observes the civil and commercial laws related to its obligations under this Agreement; no immunity occurs on Lessor or its assets, and the entering into and carrying out this Agreement by the Lessor constitutes private and commercial action.

9.3

Group Corporation hereby makes the following representations and warranties to the Lessor and Lessee:

9.3.1

Group Corporation is a company incorporated with limited liability under the PRC laws, having the corporate power to own its assets and continue its existing operations;

	9.3.2		Group Corporation has the corporate power to enter into this Agreement, perform its obligation and carry out transactions expected hereunder; the Group Corporation has obtained the approval to enter into, perform and deliver this Agreement and carry out the transactions expected hereunder by all the necessary actions of the Group Corporation;

	9.3.3		This Agreement has lawful, valid and binding effect on the Group Corporation;

	9.3.4		The Group Corporation’s entering into and observing this Agreement and carrying out the transactions expected hereunder will not presently and in the future (i) be in contradiction with the laws binding on the Group Corporation or (ii) be in contradiction with the constituent documents of the Group Corporation; or (iii) be in contradiction with the documents binding on the Group Corporation or its assets;

	9.3.5		The Group Corporation has fulfilled its obligations to obtain or complete full and valid approvals, consents, registrations and notices (when applicable) which are required by PRC laws by Group Corporation’s entering into, validating, carrying out and enforcing this Agreement; and

	9.3.6		The Group Corporation observes the civil and commercial laws related to its obligations under this Agreement; no immunity occurs on Group Corporation or its assets, and the entering into and carrying out this Agreement by the Group Corporation constitutes private and commercial action.

10. PURCHASE OPTION

10.1

The Lessor and Group Corporation hereby grant the Lessee the Purchase Option on the Fixed-line Telecommunications Networks within the Target Regions. The Lessee may give a written notice to the Lessor in the lease term to exercise the Purchase Option.

10.2		When practicable and feasible, the Lessor and Lessee shall on good faith negotiate and enter into a transfer agreement on the Fixed-line Telecommunications Networks within the Target Regions. The price of such networks shall be agreed by Lessor and Lessee, based on the evaluation results determined in compliance with the applicable PRC laws and regulations and the then fair market value.

10.3		The exercise of the Purchase Option by Lessee shall be subject to applicable laws, regulations and rules.

11. DEFAULT AND REMEDIES

11.1		A party will be in default under this Agreement if it makes any representation or warranty which is untrue, inaccurate, incomplete, false or misleading, or is in violation of its undertakings hereunder or any provisions hereof. Unless provided otherwise, the defaulting party shall give full and complete compensation for the actual loss of the non-defaulting parties.

11.2		In consideration of the Lessee’s entering into this Agreement, Group Corporation unconditionally and irrevocably undertakes that the Lessor will perform its obligations hereunder punctually and properly. When the Lessor fails to carry out or observe its obligations hereunder, Group Corporation shall promptly and unconditionally carry out (or cause to be carried out) the obligations the Lessor fails to perform in the way as set out in this Agreement and required by the Lessee, to ensure that the Lessee’s benefits will not be reduced, as if the Lessor had properly performed and/or observed such obligations.

11.3		Group Corporation agrees that where the negligence, breach, action or non-action in relation to the Fixed-line Telecommunications Networks with the Target Regions on the part of the Lessor and Group Corporation, results in the breakdown, loss or damage of the network facilities and the loss or damage of the Lessee, Group Corporation, at the request of the Lessee, shall compensate for all the loss the Lessee has suffered. All the liabilities the Group Corporation assumes hereunder shall not exceed the aggregate amount of (1) the total lease fee as set out in this Agreement; and (2) the consideration the Lessee paid for the Fixed-line Telecommunications Networks within the Target Regions when exercising the Purchase Option.

12. FORCE MAJEURE

Force majeure refers to events occurring after the effective date of this Agreement, whose occurrence and effects can not be predicted, avoided or eliminated. Such events lead to a party’s failure to perform all or parts of its obligations hereunder. If such force majeure prevents or delays the Lessor (including the Group Corporation) or Lessee (an “affected party”) carrying out its obligations under this Agreement,

12.1		The affected party may suspend performing its interrupted or delayed obligations under this Agreement during the continuance of the force majeure after giving notice of occurrence of force majeure in compliance with Clause 11.2 of this Agreement;

12.2		The affected party shall, upon the occurrence of the force majeure, promptly give the other parties a written notice of the occurrence of the force majeure, the date and time hereof and the effects on the performance of its obligations under this Agreement;

12.3		The affected party shall make its best effort to alleviate the effects caused by the force majeure on its performance of the obligations hereunder; and

12.4		The affected party shall, when the force majeure terminates, promptly give the other parties a written notice of the termination and duration of the force majeure, and resume its performance of the obligations hereunder.

13. CONFIDENTIALITY

13.1

Every party shall ensure or procure to ensure that its directors, senior management, employees and agents keep this Agreement and provisions hereof, as well as any document or information provided by any party or its representatives, confidential. Without obtaining the prior written consents from the other parties, a party shall not disclose this Agreement, the provisions hereof or above-mentioned documents or information to any third party. However, upon giving notices to the other parties, a party may make disclose confidential information in the following situations:

	13.1.1		Where suits arise out of or in connection with this Agreement, the party may make such disclosures to protect its lawful interests; or

	13.1.2		Disclosures (whether through the disclosure procedures set forth in the disclosed documents or through other ways) required by courts with jurisdiction, or by the laws, or at the request of any securities exchange or securities supervision agency; or

	13.1.3		Disclosures made to a party’s auditors, legal counsels or other professionals; or

	13.1.4		Disclosures made to any bank, financiers or potential financiers; or

	13.1.5		The disclosure required by applicable laws or observing its obligations hereunder.

13.2

No provision in Clause 13.1 will prevent the Lessee from disclosing any documents, information or other materials related to this Agreement to Unicom A Share Company and its subsidiaries.

14. TERMINATION

14.1		The Lessee may at any time give a written notice to terminate this Agreement at least 90 days before the termination, and the termination will take effect on the date as set out in the written notice.

14.2		Without any prejudice to the rights or remedies the Lessor or Lessee is entitled to, when the Lessor (including the Group Corporation) or the Lessee continuously or materially violates any provision (except for the intentional violation of this Agreement for the purpose of terminating this Agreement) and does not remedy the default, when possible, within 90 days after receiving the default notice and remedy request, the other party may terminate this Agreement at any time afterwards.

14.3		Where a defaulting party observes all the provisions hereunder, except for the performance time (and the performance time is not material), such default shall be deemed as remediable.

14.4		The exercise of the termination rights hereunder shall not prejudice against other rights or remedies the parties are entitled to when default occurs.

14.5		No party will assume any additional responsibilities hereunder to the other parties upon the termination of this Agreement, unless this Agreement provided otherwise or any right or obligation accrued before the termination.

14.6		Notwithstanding Clause 14.1, this Agreement may terminate at any time, if agreed by all the parties in writing.

14.7		Upon the termination of this agreement, the Lessee shall in good faith transfer the Fixed-line Telecommunications Networks to the Lessor and properly attend to unfinished customer services.

15. EXPENSE

15.1		Every party shall bear its own expenses and costs (including legal fees) incurred as a result of the negotiation, preparation and implementation of this Agreement, unless provided otherwise.

15.2		The Lessor and Lessee hereto shall each bear half of stamp tax and other taxes arising in connection with this Agreement or the transactions expected hereunder,

16. WAIVER, RIGHT AND INDEMNITY

No failure or delay by any party hereto in exercising any right, power or remedy pursuant to this Agreement or any other transaction document shall impair such right, power or remedy or operate or to be construed as a waiver of such right, power or remedy or preclude its exercise at any subsequent time and no single or partial exercise of any such right, power or remedy shall preclude any other or further exercise, unless provided otherwise. Any waiver of rights under this Agreement will be deemed invalid, unless it is explicitly expressed in writing and signed by the representatives party(ies) giving the waiver.

17. SEVERABILITY

The provisions under this Agreement and other transaction documents are severable. If any aspect of any provision of this Agreement is held to be invalid or unenforceable in accordance with applicable laws, then such provision shall be given no effect. The parties shall then use all reasonable efforts to replace the invalid or unenforceable provision by a valid and enforceable substitute provision the effect of which shall be as close as possible to the intended effect of the invalid or unenforceable provision.

18. NOTICE

18.1

Any notice to be given by one party to any other party under, or in connection with, this Agreement shall be in writing and signed by or on behalf of the party giving the notice. It shall be served by sending it by facsimile, delivery by hand, pre-paid recorded delivery or registered post to the address(es) or facsimile numbers set forth in Clause 18.2 (or to such other addresses or facsimile numbers officially notified in accordance with this Clause) and in each case marked for the attention of the relevant party(ies) set forth in Clause 18.2. Any notice so served by hand , facsimile or post shall be deemed to have been duly given:

	(1)		In the case of delivery by hand, when delivered;

	(2)		In the case of fax, upon confirmation of transmission; and

	(3)		In the case of prepaid recorded delivery or registered post, when delivered.

		Provided that in each case where delivery by hand or by facsimile occurs outside of business hours, service shall be deemed to occur on the following business day.

		References to time in this Clause are to the local time in country of the addressee.

18.2		The addressee and fax numbers of the parties for the purpose of clause 18.1 are as follows:

		China United Network Communications Corporation Limited Address: 21 Jinrong Street, Xicheng District, Beijing Postal Code:100140 For the attention of: Qin Shaojuan Fax: 010-8662 9184

		China Network Communications Group Corporation Address: 21 Jinrong Street, Xicheng District, Beijing Postal Code:100140 For the attention of: Qin Shaojuan Fax: 010-8662 9184

		Unicom New Horizon Mobile Telecommunications Company Limited Address: 21 Jinrong Street, Xicheng District, Beijing Postal Code:100140 For the attention of: Zhang Yumei Fax: 010-6625 8743

		China United Network Communications Group Company Limited Address: 21 Jinrong Street, Xicheng District, Beijing Postal Code:100140 For the attention of: Wang Tianpeng Fax: 010-6625 8743

19. GOVERNING LAW AND JURISDICTION

19.1		This Agreement shall be governed by, and interpreted in accordance with PRC laws.

19.2		The parties hereto shall resolve the disputes or claims (“Disputes”) arising out of or in connection with the interpretation or implementation of this Agreement by friendly negotiation. If the parties can not come to an agreement on the resolution to a Dispute within 60 days after one party raises the Dispute, then such Dispute shall be referred to arbitration.

19.3		The Dispute shall be resolved by arbitration in China International Economic and Trade Arbitration Commission (“CIETAC”) by three arbitrators in accordance with the CIETAC Arbitration Rules then in effect. Each party is entitled to appoint one arbitrator (except that the Lessor and Group Corporation collectively appoint one). The third arbitrator shall be jointly appointed by the two arbitrators. When the two arbitrators do not agree on the appointment of the third one, the CIETAC will appoint the third arbitrator.

19.4		The arbitration will be presided over by the CIETAC as the presiding body. The arbitration will be in Chinese, unless agreed otherwise, and will be in Beijing.

19.5		The arbitral award given in compliance with the arbitration procedures will be final and binding on all the parties and will be enforceable.

19.6		The arbitration fee shall be born by the losing party. The parties hereto agree, if any party deems it necessary to enforce the arbitral award through any legal enforcement procedure, the party against which the arbitral award is enforced shall bear all the reasonable expenses, costs and attorney fees.

19.7		When the Dispute is being resolved, the parties shall continue to implement other provisions of this Agreement which are not in dispute.

20. EFFECTIVENESS AND AMENDMENT

20.1		This Agreement shall become effective after it has been executed and stamped by the legal representatives of the parties or their authorized representatives. Upon the signing of this Agreement, any amendment to this Agreement (or other transaction documents) shall be in writing, and shall become effective after it has been executed and stamped by the legal representatives of the parties or their authorized representatives.

20.2		Unless explicitly agreed by the parties, any amendment to this Agreement shall not constitute a general waiver of any provision in this Agreement, and shall not impair any existing right, obligation or liability under this Agreement as of the date of amendment. Such existing right, obligation or liability shall continue to be in effect unless and only when the rights and obligations to which the parties hereto are entitled under this Agreement have been changed.

20.3

Any party and its successors shall not assign its rights or benefits under this Agreement, unless prior written consent has been given by the other parties under this Agreement.

21. APPENDIX

21.1		(For parties under this Agreement) In the event that there is any conflict with the provisions of other agreements, this Agreement shall prevail, unless (a) such other agreements explicitly provide that they take precedence over this Agreement in the relevant aspects; and (b) the parties under this Agreement are the parties of such agreements, or the parties under this Agreement agree in writing that provisions of such agreements take precedence over this Agreement in the relevant aspects.

21.2		This Agreement and its appendix constitute all the legal documents related to the lease set out in this Agreement, and replace all the previous oral discussion and written agreements in connection with such lease, unless the parties agree otherwise.

21.3		This Agreement has 12 original copies with the same legal effect, and every party has 2 copies. Other copies shall be used for disclosure and for approval by and filing (if applicable) in governmental supervision bodies.

(There is no text below and the next page is the signature page)

(There is no text in this page, and it is the signing page of the Lease Agreement on Relevant Telecommunications Network Facilities)

China United Network Communications Corporation Limited (stamp)

Legal representatives or the authorized representative:

China Network Communications Group Corporation (stamp)

Legal representatives or the authorized representative:

Unicom New Horizon Mobile Telecommunications Company Limited (stamp)

Legal representatives or the authorized representative:

China United Network Communications Group Company Limited (stamp)

Legal representatives or the authorized representative: