HONG KONG -- China Unicom (Hong Kong) Limited ("China Unicom" or "the Company") (HKSE: 0762; NYSE: CHU) announced its 2008 annual results today. In 2008, faced with devastating natural disasters rarely seen in history of China, complex market competition and the impact of the global financial crisis, the Company successfully completed a series of significant strategic reorganizations of its assets and businesses. As such, the Company has become a nationwide telecommunications operator offering a full range of telecommunication services, with a long-term objective to become a "world-leading broadband communications and information service provider". Meanwhile, the Company has smoothly pushed forward internal integration following its reorganization and has achieved stable development for its business.

In 2008, revenue from continuing operations of the Company was RMB148.91 billion. Excluding deferred upfront connection fees of RMB0.89 billion, revenue from continuing operations of the Company would be RMB148.02 billion, representing a decrease of 0.8% over last year.

Consolidated net profit of the Company for the year was RMB33.91 billion, which included net profit from discontinued operations of RMB27.57 billion, deferred upfront connection fees of RMB0.89 billion and consolidated basic earnings per share of RMB1.43. The continuing operations of the Company were exposed to negative effects of factors such as the impairment of assets relating to the Personal Handyphone System ("PHS") business, integration and reorganization, natural disasters and adjustments of telecommunications tariffs. Excluding the effects of net profit from discontinued operations and the impairment loss on assets relating to the PHS business, the Company's adjusted net profit from continuing operations would be RMB14.33 billion, representing a decrease of 5.8% as compared to the adjusted net profit from continuing operations of last year after eliminating the effects of one-off items including tax refund for re-investment, changes in fair value of convertible bonds and deferred upfront connection fees. The adjusted basic earnings per share from continuing operations would be RMB0.60.

The Company's operating cash flow* generated from continuing operations was RMB62.01 billion for 2008. Capital expenditure was RMB70.49 billion. Taking into account the cash inflow from the disposal of CDMA business, the Company's financial position has become more stable.

Based on the Company's financial position and taking into account the continuing robust development opportunities in the mobile communication and fixed-line broadband businesses, the Board recommends the payment of a final dividend of RMB0.2 per share for the year ended 31 December 2008.

In 2008, the Company generated revenue of RMB65.25 billion from the mobile business, representing an increase of 4.3% over last year, out of which, service revenue of mobile business accounted for RMB64.70 billion. As at the end of 2008, the number of GSM subscribers reached 133.365 million, representing an increase of 10.6% over last year, with an annual net addition of 12.801 million subscribers. Revenue from the mobile value-added services accounted for 24.9% of total revenue from mobile business, representing an increase of 3.3 percentage points over last year.

During the year, the Company recorded revenue of RMB82.77 billion from its fixed-line business, a decrease of 4.4% over last year. Revenue from its fixed-line broadband and data communications businesses amounted to RMB 25.17 billion, an increase of 23.9% over last year. Revenue from its traditional fixed-line business was RMB53.23 billion, a decrease of 12.3% over last year. As at the end of 2008, the number of the Company's fixed-line broadband subscribers reached 25.416 million, an increase of 28.6% over last year, with an annual net addition of 5.648 million subscribers. The number of local telephone subscribers was 100.146 million, a decrease of 10.674 million subscribers over last year.

* Remark: Please refer to the section headed "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Announcement for the basis of financial reporting.

Looking forward, with new changes brought by telecommunication technology evolution, broadband mobile Internet development and market needs, the new opportunities arising from informatization and industrialization in the PRC and the initiative of "expanding domestic demand to sustain growth" notwithstanding the risks and challenges ahead brought by the international financial crisis, Chairman Chang Xiaobing expressed that the Company plans to capture every opportunity in 3G business development, further expanding its subscriber base, optimizing subscriber structure and facilitating the development of upgrading fixed line and mobile communications, in order to realize the objective of "creating new advantages through consolidation, and achieving new developments in 3G."

China Unicom Ltd. (NYSE: CHU)