The China Netcom Group Corporation (Hong Kong) Limited (referred to as Company) announced yesterday that the China Netcom Group is planning to sell off some of its subsidiaries that are not involved with its core business in order to promote restructuring.

According to the Company, the number of properties to be sublet from the China Netcom Group to CNC China, a wholly owned subsidiary of the Company, is expected to be substantially reduced. In this way the total rent payable by CNC China to the China Netcom Group under the sub-lease agreements would be minimal.

CNC China entered into various connected transaction agreements with the China Netcom Group in order to, among other things, renew the term of the existing interconnected transaction agreements between CNC China, the China Netcom Group and New Horizon Communications, all of which have a term expiring on December 31, 2007.

The China Netcom System Integration and the China Netcom Group entered into a new agreement under the same terms and conditions as the Information and Communications Technology Agreement. Their new agreement goes into effect on January 1, 2008.

Officials from the China Netcom Group said that the agreement is part of the group's internal restructuring. They denied any link between this and a complete restructuring of the telecom industry.

An industry insider said on the condition of anonymity that for fix-line operators, which have seen sluggish profit increases in recent years, the peel off of some subsidiary assets would help them to develop their competitive businesses and finally garner a lucrative position in the future restructure of the telecom industry.

For more details, please read the full story in Chinese (http://www.bbtnews.com.cn/mainland/channel/31937.shtml).

(China.org.cn November 13, 2007)