China Unicom Buys New World

HONG KONG -- China Unicom Limited ("China Unicom" or the "Company", together with its subsidiaries referred to as the "Group") (HKSE: 0762; NYSE: CHU) announced that the Company has entered into a conditional Acquisition Agreement and agreed to acquire the entire issued share capital of Unicom New World (BVI) Limited from its immediate controlling shareholder, China Unicom (BVI) Limited. Unicom New World Telecommunications Corporation Limited (the "Target Company"), wholly-owned by Unicom New World (BVI) Limited, holds mobile telecommunications businesses of China United Telecommunications Corporation Limited ("Unicom Group") in Shanxi, Hunan, Hainan, Yunnan, Gansu and Qinghai provinces and Inner Mongolia, Ningxia Hui and Xizang autonomous regions in the PRC.

The total purchase price of the Acquisition amounts to HK$ 3.015 billion (RMB 3.2 billion). The Company will use its existing internal cash resources to finance the Acquisition. As of 30 June 2003, the aggregate amount of the net indebtedness of the Target Company was HK$ 7.6 billion (RMB 8.1 billion). Taking into account the above net indebtedness to be assumed by the Company and the total purchase price of the Acquisition, the enterprise value of the Target Company is HK$ 10.6 billion (RMB 11.3 billion). The total purchase price for the Acquisition represents a multiple of 12.8 times the forecasted net profit of RMB 251 million (approximately HK$ 234 million) of the Target Company for the year ending 31 December 2003. Upon the completion of the Acquisition, the Target Company will become an indirect wholly-owned subsidiary of the Company.

The Company also announced that China Unicom Corporation Limited ("CUCL), a wholly-owned subsidiary of the Company, has entered into a conditional Sale Agreement and agreed to sell the entire equity interests in Guoxin Paging to China United Telecommunications Corporation Limited (the "A Share Company").

The total sale price of the Sale amounts to HK$ 2.59 billion (RMB 2.75 billion). The proceeds from the Sale will be applied as general working capital of the Group. As of 30 June 2003, the aggregate amount of the net indebtedness of Guoxin Paging was HK$ -0.7 billion (RMB -0.78 billion). Taking into account the above net indebtedness to be assumed by the A Share Company and the total sale price of the Sale, the enterprise value of Guoxin Paging is HK$ 1.9 billion (RMB 1.97 billion). Upon the completion of the Sale, Guoxin Paging will become a direct wholly-owned subsidiary of the A Share Company.

Mr. Wang Jianzhou, Chairman, CEO and President of China Unicom said, "The Sale will enable the Group to concentrate its resources on the expansion of its cellular telecommunications operations, improve the quality of the Group's assets and allow strategic integration of the Group's customer services, as well as resolve the issue of competition between the Group and Unicom Group." With regard to the Acquisition, Mr. Wang further stated, "The Acquisition will enable the Group to enhance its competitive strength, improve its financial performance and management efficiency, as well as attain a stronger market position to benefit from the market potential offered by an expanded geographical coverage."

China Unicom Ltd.