Exhibit 4(ss)


Dated: 19 January 2005                                            EXECUTION COPY

Subscription Agreement

between
PCCW Limited
as Company


China Netcom Group Corporation (BVI) Limited

as Subscriber

and


China Network Communications Group Corporation
(GRAPHIC OMITTED)

as China Netcom

relating to

shares in the capital of PCCW Limited



Simmons&Simmons

35th Floor Cheung Kong Center 2 Queen's Road Central Hong Kong
T (852) 2868 1131 F (852) 2810 5040 DX 009121 Central 1


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                                    CONTENTS

1. Definitions and Interpretation .............................................1

2. Agreement to Subscribe .....................................................4

3. Conditions of the Subscription .............................................5

4. Completion of the Subscription .............................................6

5. Representations, Warranties and Undertakings of the Company ................9

6. Representations, Warranties and Undertakings of the Subscriber
   and China Netcom ..........................................................11

7. The Group's operations in the PRC .........................................15

8. Certain Company Undertakings ..............................................16

9. Guarantee .................................................................25

10. No "acting in concert" ...................................................26

11. Confidentiality ..........................................................26

12. Announcements ............................................................27

13. Notices ..................................................................28

14. Waiver of Immunity .......................................................29

15. Law and Arbitration ......................................................30

16. Contracts (Rights of Third Parties) Act 1999 .............................30

17. Provisions Relating to this Agreement ....................................30

SCHEDULE 1 : THE COMPANY WARRANTIES ..........................................33

SCHEDULE 2 : LIMITATIONS ON THE COMPANY'S LIABILITY ..........................36




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--------------------------------------------------------------------------------

THIS AGREEMENT is dated 19 January 2005 and made

BETWEEN:

(1)  PCCW LIMITED, (the "Company"), a company incorporated in Hong Kong with
     limited liability and whose registered office is at 39th Floor, PCCW Tower,
     TaiKoo Place, 979 King's Road, Quarry Bay, Hong Kong;

(2)  CHINA NETCOM GROUP CORPORATION (BVI) LIMITED, (the "Subscriber"), a company
     incorporated in the British Virgin Islands and whose registered office is
     at P.O. Box 3140, Wickhams Cay 1, Road Town, Tortola, British Virgin
     Islands (Business registration number 341457); and

(3)  CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (GRAPHIC OMITTED), ("China
     Netcom"), a state-owned enterprise established under the laws of the
     People's Republic of China and whose registered office is at No.1 Beihuan
     Donglu, Beijing Development Area, Beijing 100176, PRC.

Background:

(A)  At the date of this Agreement, the Company has an authorised share capital
     of HK$1,600,000,000 divided into 6,400,000,000 Shares, of which
     5,374,287,061 Shares have been issued and are fully paid up.

(B)  All of the issued Shares are currently listed on the Stock Exchange.

(C)  The Company has agreed to issue and the Subscriber has agreed to subscribe
     for the Subscription Shares on the terms and subject to the conditions set
     out in this Agreement.

(D)  China Netcom has agreed to guarantee the obligations of the Subscriber
     under this Agreement.

THE PARTIES AGREE THAT:

1.   Definitions and Interpretation

1.1  Definitions

     In this Agreement (including the recitals above), the following expressions
     shall, unless the context requires otherwise, have the following meanings:

     "Articles" means the Articles of Association of the Company;

     "associate" has the meaning ascribed to it in the Listing Rules;

     "Authority" means any competent governmental, administrative, supervisory,
     regulatory, judicial, determinative, disciplinary, enforcement or tax
     raising body, authority, agency, board, department, court or tribunal of
     any jurisdiction and whether supranational, national, regional or local;

     "Board" means the board of directors of the Company;


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     "Broadcasting Ordinance" means the Broadcasting Ordinance (Chapter 562 of
     the Laws of Hong Kong);

     "Business Day" means any day (excluding a Saturday) on which banks
     generally are open for business in Hong Kong;

     "CNC Group" means China Netcom and its Subsidiaries and "member of the CNC
     Group" shall be construed accordingly;

     "CNC HK" means China Netcom Group Corporation (Hong Kong) Limited, a
     Subsidiary of China Netcom, the shares of which are listed on the Stock
     Exchange;

     "Completion Date" means the second Business Day after the date upon which
     the last of the Conditions (except such Conditions which are expressed to
     be satisfied on or as at the Completion Date) has been satisfied or, where
     applicable, waived provided that it shall be a date no later than 15 June
     2005, or such other time and/or date as the Parties may agree in writing;

     "Companies Ordinance" means the Companies Ordinance (Chapter 32 of the Laws
     of Hong Kong);

     "Company Warranties" means the representations and warranties to be given
     by the Company set out in Schedule 1;

     "Conditions" means the conditions to completion of the Subscription set out
     in Clause 3.1;

     "Data Room" means the copy documents relating to the affairs of the Group
     to which the Subscriber has been afforded access and which are listed in
     the index to the Data Room provided to the Subscriber;

     "Disclosure Letter" means the letter dated the date hereof written and
     delivered by or on behalf of the Company to the Subscriber;

     "Disqualified Person" means a person who is, or who is considered by the
     Broadcasting Authority of Hong Kong to constitute, a "disqualified person"
     within the meaning of the Broadcasting Ordinance;

     "Encumbrances" means liens, charges and encumbrances, claims, options and
     third party rights;

     "Group" means the Company and its Subsidiaries and the expression "member
     of the Group" shall be construed accordingly;

     "Hong Kong" means the Hong Kong Special Administrative Region of the
     People's Republic of China;

     "HK$" means Hong Kong dollars, the lawful currency of Hong Kong;

     "Listing Rules" means the Rules Governing the Listing of Securities on the
     Stock Exchange and the expression "Listing Rule" shall be construed
     accordingly;

     "Parties" means the named parties to this Agreement and their respective
     successors and permitted assigns and the expression "Party" shall be
     construed accordingly;


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     "PRC" means the People's Republic of China excluding Hong Kong, the Macau
     Special Administrative Region of the People's Republic of China and Taiwan;

     "PRC Business Development Committee" shall have the meaning ascribed
     thereto in clause 7.1;

     "PRC Operations" shall have the meaning ascribed thereto in clause 7.1;

     "Principal Officer" means a person who is, or is considered by the
     Broadcasting Authority of Hong Kong to constitute, a "principal officer"
     within the meaning of the Broadcasting Ordinance;

     "Proceedings" means any legal action or proceedings, including arbitration,
     in connection with this Agreement;

     "SFC" means the Securities and Futures Commission of Hong Kong;

     "SFO" means the Securities and Futures Ordinance (Chapter 571 of the Laws
     of Hong Kong);

     "Shares" means shares of HK$0.25 each in the capital of the Company;

     "Stock Exchange" means The Stock Exchange of Hong Kong Limited;

     "Subscription" means the subscription by the Subscriber for the
     Subscription Shares on the terms and subject to the conditions set out in
     this Agreement;

     "Subscription Announcement" means the press announcement in agreed form to
     be issued jointly by the Company and China Netcom in substantially such
     form immediately following the execution of this Agreement (or with such
     amendments as agreed by the Parties or as may be required by the SFC and/or
     the Stock Exchange);

     "Subscription Price" means HK$5.90 per Subscription Share;

     "Subscription Shares" means 1,343,571,766 new Shares;

     "Subsidiary" has the same meaning as in Section 2 of the Companies
     Ordinance as at the date hereof;

     "Substantial Shareholders" means Pacific Century Regional Developments
     Limited, Pacific Century Group Holdings Limited and Pacific Century
     Diversified Limited and "Substantial Shareholder" means any one of them;

     "Substantial Shareholders Anti-Dilution Agreements" means the agreements
     dated the date hereof entered into between the Company and each Substantial
     Shareholder and pursuant to which each Substantial Shareholder has been
     granted anti-dilution rights substantially similar to those rights to be
     granted to the Subscriber pursuant to clause 8.5 of this Agreement (subject
     in each case to approval by the shareholders of the Company as referred to
     in clause 3.1(A) below);

     "Takeovers Code" means the Hong Kong Code on Takeovers and Mergers; and

     "US$" means United States dollars, the lawful currency of the United States
     of America.


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1.2  Construction and Certain References

     In this Agreement:

     (A)  any reference to a document being "in agreed form" means in the form
          of the document or the draft thereof signed for identification on
          behalf of the Parties (and such other parties as may be relevant) with
          (in the case of a draft) such alterations (if any) as may be agreed
          between the Parties (and such other parties as may be relevant);

     (B)  references to the singular shall include the plural and vice versa and
          references to the masculine, the feminine and the neuter shall include
          each other such gender;

     (C)  "person" includes any individual, partnership, body corporate,
          corporation sole or aggregate, state or agency of a state, and any
          unincorporated association or organisation, in each case whether or
          not having separate legal personality;

     (D)  "company" includes any body corporate, wherever incorporated or
          existing;

     (E)  references to recitals, clauses, sub-clauses and schedules are
          references to the recitals, clauses and sub-clauses of, and schedules
          to, this Agreement;

     (F)  (save as otherwise expressly stated herein), references to any
          statute, statutory provision, Listing Rule or rule of the Takeovers
          Code includes a reference to that statute, statutory provision,
          Listing Rule or rule of the Takeovers Code as from time to time,
          amended, extended or re-enacted;

     (G)  all references in this Agreement in relation to any time, date or
          period shall mean Hong Kong time;

     (H)  words introduced by the word "other" shall not be given a restrictive
          meaning because they are preceded by words referring to a particular
          class of acts, matters or things; and

     (I)  general words shall not be given a restrictive meaning because they
          are followed by words which are particular examples of the acts,
          matters or things covered by the general words and the word
          "including" shall be construed without limitation.

1.3  Headings

     Headings are inserted for convenience only and shall not affect the
     interpretation of this Agreement.

2.   Agreement to Subscribe

2.1  Subscription

     The Subscriber agrees to subscribe for, and the Company agrees to issue,
     the Subscription Shares at the Subscription Price, free from Encumbrances
     on the terms and subject to the conditions set out in this Agreement.


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2.2  Subscription Shares

     The Company agrees that the Subscription Shares will, when fully paid, rank
     pari passu in all respects with the other Shares in issue or to be issued
     by the Company on or prior to the Completion Date with the right to all
     dividends and other distributions declared or resolved to be paid at any
     time on or after the date of allotment.

3.   Conditions of the Subscription

3.1  Conditions

     Completion of the Subscription is conditional upon:

     (A)  the passing by the shareholders of the Company (being such
          shareholders as are allowed to vote under the Listing Rules or
          permitted by the Stock Exchange to vote) at an extraordinary general
          meeting of the Company of a resolution in agreed form (or with such
          changes as are required by the Stock Exchange or the SFC) to:

          (1)  increase the authorised share capital of the Company to
               HK$2,500,000,000 comprising of 10,000,000,000 Shares;

          (2)  grant to the directors of the Company a specific mandate to
               allot, issue and deal with the Subscription Shares; and

          (3)  approve the anti-dilution rights granted in favour of China
               Netcom contained in clause 8.5 below and the anti-dilution rights
               granted in favour of each of the Substantial Shareholders
               pursuant to the Substantial Shareholders Anti- Dilution
               Agreements;

     (B)  (1) listing of and permission to deal in all the Subscription Shares
              being granted by the Listing Committee of the Stock Exchange; and

          (2)  the listing and permission referred to in Condition 3.1(B)(1) not
               subsequently being revoked prior to the Completion Date;

     (C)  delivery by the Subscriber to the Company on the Completion Date of a
          legal opinion from British Virgin Islands counsel relating to, among
          other things, the capacity and authority of the Subscriber to enter
          into this Agreement and perform its obligations hereunder, such
          opinion to be in form and substance satisfactory to the Company;

     (D)  delivery by China Netcom to the Company on the Completion Date of a
          legal opinion from PRC counsel relating to, among other things, the
          capacity and authority of China Netcom to enter into this Agreement
          and perform its obligations hereunder and the governmental, regulatory
          or similar consents required from any Authority of the PRC required by
          the Subscriber and/or China Netcom to enter into, and to perform their
          respective obligations under this Agreement, such opinion to be in
          form and substance satisfactory to the Company;

     (E)  the obtaining by China Netcom of such consent or approval of a PRC
          governmental body or regulatory authority as is required for China
          Netcom and the Subscriber to enter into and perform their obligations
          under this Agreement; and


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     (F)  none of the Company Warranties being found to be, or no event
          occurring or matter arising which renders any of the Company
          Warranties, untrue or incorrect in any material respect on and as at
          the Completion Date (and, but without prejudice to any other rights of
          any of the Parties under this Agreement, for the purposes of this
          sub-clause, a Company Warranty will be deemed to be untrue or
          incorrect in a material respect if the liability of the Company from
          the resulting claim would be in excess of US$100 million).

3.2  Fulfilment

     (A)  The Subscriber and China Netcom shall use their reasonable endeavours
          to procure the fulfilment of the Conditions in clauses 3.1(C), 3.1(D)
          and 3.1(E), and in the case of the Condition in clause 3.1(E), shall
          notify the Company immediately upon the satisfaction thereof.

     (B)  The Company shall use its reasonable endeavours to procure the
          fulfilment of the Condition in clauses 3.1(A) and 3.1(B).

     (C)  The Company, China Netcom and the Subscriber shall each use its
          respective reasonable endeavours to procure the fulfilment of the
          Condition in clause 3.1(A) and in particular shall furnish such
          information, supply such documents, give such undertakings and do all
          such acts and things as may reasonably be required by each other, the
          SFC, the Stock Exchange and/or any Authority in connection with the
          fulfilment of such Conditions.

     (D)  Should any Party become aware of anything which will or is reasonably
          likely to prevent any of the Conditions from being satisfied, it shall
          forthwith disclose the same to the others.

3.3  Non-Fulfilment

     (A)  The Condition in clause 3.1(F) may be waived by the Subscriber. The
          Conditions in clauses 3.1(C) and 3.1(D) may be waived by the Company.

     (B)  If the Conditions (except such Conditions which are expressed to be
          satisfied on or as at the Completion Date) are not each fulfilled or
          waived in writing by the relevant Party on or before 13 June 2005 or
          such later date as may be agreed between the Company and the
          Subscriber, this Agreement shall terminate and none of the Parties
          will have any claim against the other for costs, damages, compensation
          or otherwise save for any antecedent breach (including, for the
          avoidance of doubt, any breach of clauses 3.2 or 6).

4.   Completion of the Subscription

4.1  Company's Obligations

     Subject to the fulfilment of the Conditions and subject to the performance
     by the Subscriber of its obligations under clause 4.2, completion of the
     Subscription shall take place at the offices of the Company (or at such
     other place as may be agreed upon in writing by the Parties) on the
     Completion Date, at which time the Company shall:

     (A)  allot and issue to the Subscriber the Subscription Shares and shall
          promptly thereafter register the Subscriber as a member of the Company
          and shall cause to


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          be delivered to the Subscriber definitive certificates of title in
          respect thereof in the name of the Subscriber in board lots (as nearly
          as practicable);

     (B)  procure that the following appointments be made, effective on the
          Completion Date:

          (1)  Mr. Zhang Chunjiang, Dr. Tian Suning and Dr. Fan Xingcha as
               members of the Board;

          (2)  Dr. Tian Suning as an additional deputy chairman of the Board;
               and

          (3)  each of the persons named in the left column below as a member of
               the committee referred to in the right column opposite his/her
               name:

               Dr. Tian Suning         The Executive Committee

               Dr. Fan Xingcha         The Finance and Management Committee

               Dr. Tian Suning         The Remuneration Committee

               Mr. Zhang Chunjiang     The Nomination Committee

               Mr. Zhang Chunjiang     The Regulatory Compliance Committee

               Dr. Tian Suning and
               Dr. Fan Xingcha         PRC Business Development Committee

     (C)  procure a resolution of the Board to be passed confirming the
          Company's intention that it shall, during the 18 month period
          commencing on the Completion Date, explore opportunities for expanding
          the PRC Operations and that, subject to satisfaction of the Group's
          capital investment approval procedures and the identification of
          appropriate investment opportunities, it presently intends to seek to
          invest up to HK$5 billion in expanding its PRC Operations;

     (D)  deliver to the Subscriber certified copies of the resolution passed by
          the Shareholders of the Company pursuant to clause 3.1(A);

     (E)  deliver to the Subscriber certified copies of the resolutions of the
          directors of the Company (or a committee) allotting the Subscription
          Shares pursuant to clause 4.1(A), making the appointments pursuant to
          clause 4.1(B) and confirming the Company's intentions in relation to
          the expansion of the PRC Operations pursuant to clause 4.1(C);

     (F)  deliver to the Subscriber a certificate in agreed form confirming,
          amongst other things, that there has been no material adverse change
          since 30 September 2004 and a letter from the Company in agreed form
          confirming the intention to reduce the number of directors on the
          Board; and

     (G)  deliver a certified true copy of the permission from the Listing
          Committee of the Stock Exchange referred to in clause 3.1(C).


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4.2  Subscriber's Obligations

     At completion of the Subscription the Subscriber shall make or procure the
     making of payment to the Company, in same day cleared funds, of the
     aggregate Subscription Price of the Subscription Shares, to the bank
     account nominated for that purpose by the Company not less than three
     Business Days prior to the Completion Date, or in such other manner as may
     be agreed in writing between the Parties.

4.3  Failure to Complete

     If the provisions of clause 4.2 are not complied with by the Subscriber,
     the Company may defer completion of the Subscription to a date determined
     at the Company's sole discretion or terminate this Agreement without
     liability of any kind and without prejudice to any rights the Company has
     against any other Party in respect of any antecedent breach of this
     Agreement.

4.4  Alternate Subscriber

     (A)  Provided that the Subscriber gives written notice in accordance with
          clause 4.4(B), the Subscriber shall be entitled to assign all (but not
          part only) of its rights in and to this Agreement (including the right
          to subscribe for and be issued and allotted the Subscription Shares at
          completion of the Subscription and the rights and benefit of and to
          the Company Warranties) to a company which is wholly-owned by the
          Subscriber (the "Alternate Subscriber"), provided that:

          (1)  at completion of the Subscription the Alternate Subscriber is a
               wholly-owned subsidiary of the Subscriber and an indirect
               wholly-owned subsidiary of China Netcom;

          (2)  on or before the Completion Date, the Alternate Subscriber enters
               into and delivers to China Netcom and to the Company an agreement
               in a form satisfactory to the Company undertaking to comply with
               the obligations of the Subscriber under this Agreement (including
               giving representations and warranties relating to itself similar
               to those contained in clause 6 of their Agreement relating to the
               Subscriber);

          (3)  the legal opinion referred to in clause 3.1(C) and (D) shall also
               relate to the Alternate Subscriber and the agreement referred to
               in paragraph (2) above; and

          (4)  the Subscriber shall remain liable for any breach by it of this
               Agreement prior to such assignment, and shall remain bound to
               perform and comply with all its covenants, undertakings and
               obligations under this Agreement.

     (B)  If the Subscriber intends to assign its rights and interest in and to
          this Agreement pursuant to clause 4.4(A), the Subscriber shall notify
          the Company in writing of its intention to do so not less than five
          Business Days prior to the Completion Date. For the avoidance of
          doubt, the Subscriber shall not be entitled to assign, transfer or
          otherwise dispose of all or any of its obligations under this
          Agreement. If the Subscription Shares are issued and allotted to an
          Alternate Subscriber pursuant to this clause, the references to the
          "Subscriber" in clauses 4.1, 6.3(B), 8.5(M), 8.7(A) and 8.7(B) shall
          be deemed thereafter to refer to the "Alternate Subscriber", and
          references to "Subscriber" in clause 6.4 shall be deemed to refer to
          both the Subscriber and Alternate Subscriber.


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5.   Representations, Warranties and Undertakings of the Company

5.1  Representations and Warranties of the Company

     (A)  The Company hereby warrants and represents, to and for the benefit of
          the Subscriber in the terms of the Company Warranties set out in
          Schedule 1, subject to the provisions of this Agreement and in
          particular the exclusions and limitations in Schedule 2.

     (B)  The Company Warranties are given subject to facts and matters
          disclosed in or by this Agreement, the Disclosure Letter and every
          document contained in the Data Room and the Subscriber shall
          accordingly have no claim in respect of any of the Company Warranties
          in relation to any fact or matter so disclosed.

     (C)  Any matter which would be or give rise to a breach of any of the
          Non-Accounts Warranties but for an express exclusion from, or
          qualification or limitation to, the terms of such Non-Accounts
          Warranty (whether such exclusion, qualification or limitation is in
          respect of the awareness of the Company, materiality, or any other
          matter) shall be deemed not to be or give rise to a breach of any of
          the Accounts Warranties. For this purpose, the "Accounts Warranties"
          are the Company Warranties set out in paragraphs 2, 3 and 13 of
          Schedule 1 and the "Non-Accounts Warranties" are all the Company
          Warranties other than the Accounts Warranties.

     (D)  Each of China Netcom and the Subscriber acknowledges that it has not
          been induced to enter into this Agreement by, and that it does not in
          connection with this Agreement or its subject matter rely on, any
          representation, warranty, promise or assurance by the Company or any
          other person save for those contained in this Agreement. Each of China
          Netcom and the Subscriber agrees that it shall have no right or remedy
          in respect of, and shall not in connection with any claim arising in
          relation to this Agreement or its subject matter, plead or assert the
          making or existence of, any representation, warranty, promise or
          assurance by the Company or its directors, employees, advisers or any
          other person save for those herein contained. Neither China Netcom nor
          the Subscriber shall have any right to rescind or terminate this
          Agreement and the only remedy of China Netcom and the Subscriber shall
          be damages for breach of this Agreement.

     (E)  The Subscriber shall be entitled to claim both before and after
          completion of the Subscription that any of the Company Warranties has
          or had been breached or is or was misleading and, without limitation,
          to claim under any covenant even if the Subscriber and/or China Netcom
          knew or could have discovered on or before Completion that the Company
          Warranty in question had been breached or was misleading and
          Completion shall not in any way constitute a waiver of any of the
          Subscriber's rights. Notwithstanding the preceding sentence, each of
          China Netcom and the Subscriber warrants and undertakes to the Company
          that, at the time of entering into this Agreement, neither China
          Netcom nor the Subscriber is aware of any facts or circumstances which
          will or may entitle the Subscriber to make a claim under any of the
          Company Warranties.

     (F)  The Subscriber and China Netcom acknowledge that neither the Company
          nor any of its directors, shareholders, employees or advisers owes to
          the Subscriber or China Netcom any duty of care in relation to the
          subject matter of this Agreement or any matter connected with it.
          Nothing in this sub-clause shall restrict or impair the rights of the
          Subscriber and/or China Netcom under this Agreement, or in the


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          event of fraud by any of the Company or any of its directors,
          shareholders, employees or advisers.

     (G)  The Company makes no representation or warranty to the Subscriber as
          to the completeness, truth or accuracy of the matters disclosed in the
          Disclosure Letter or in the Data Room other than the 2003 Accounts,
          the 30 September Accounts and the Previous Announcements (as such
          terms are defined in Schedule 1 and in respect of which the warranties
          in paragraphs 2, 3 and 4 of Schedule 1 apply) provided always that
          nothing in this sub-clause (G) shall exclude or limit any claim under
          or in respect of the Company Warranties.

     (H)  Notwithstanding any provision in this Agreement to the contrary,
          nothing in this clause 5.1 shall exclude or affect any right or remedy
          available to the Subscriber (or, if relevant, China Netcom) in respect
          of fraud. China Netcom and the Subscriber acknowledges that their
          legal advisers have explained to each of them the effect of this
          clause 5.1 and Schedule 2.

     (I)  The Company undertakes to disclose in writing to the Subscriber
          anything which will be or is reasonably likely to be a breach of any
          of the Company Warranties on and as at the Completion Date promptly
          after such thing comes to its notice both prior to and on the
          Completion Date. The Company agrees to promptly provide such
          information as may be reasonably requested by the Subscriber, from the
          date hereof until the Completion Date, in order to enable the
          Subscriber to assess whether a breach of the Company Warranty will
          occur on the Completion Date.

     (J)  Each of the Company Warranties shall be construed as a separate and
          independent warranty and shall not be limited or restricted by
          reference to or inference from the terms of any other Company Warranty
          or any other term of this Agreement.

     (K)  The Subscriber agrees and acknowledges that the Company will not be
          liable for any claim for any breach of the Company Warranties if and
          to the extent that the claim results from any act or circumstance
          which is carried out or arises as a result of the entering into of, or
          the performance by the Company of its obligations under, this
          Agreement.

5.2  Period

     Save as expressly provided otherwise, the representations and warranties
     set out in Schedule 1 are given as at the date hereof and shall be deemed
     to be repeated by the Company on the Completion Date as if given or made on
     such date, with reference in each case to the facts and circumstances then
     subsisting.

5.3  Claims against parties other than the Company

     Each of China Netcom and the Subscriber agrees and undertakes that (save in
     respect of fraud) it has no rights against and shall not make any claim
     against any Subsidiary of the Company or any present or former employee,
     director, shareholder, agent, officer or adviser of any member of the Group
     in connection with this Agreement or its subject matter.


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6.   Representations, Warranties and Undertakings of the Subscriber and China
     Netcom

6.1  Subscriber/China Netcom Warranties

     The Subscriber (in relation to itself only) and China Netcom each hereby
     undertakes, represents and warrants to the Company as follows:

     (A)  As at the date of this Agreement it has (subject to the obtaining by
          China Netcom of the approval of the PRC State Council), and on the
          Completion Date it will have, the full right, power and authority to
          enter into, and to perform its obligations under, this Agreement and
          this Agreement constitutes its legal, valid and binding obligations
          enforceable in accordance with its terms.

     (B)  As at the date of this Agreement it has (subject to the obtaining by
          China Netcom of the approval of the PRC State Council), and on the
          Completion Date it will have, obtained all governmental, regulatory
          or similar consents required from any Authority, authorities,
          approvals and permissions required to enter into, and to perform its
          obligations under, this Agreement and there are no regulatory or
          administrative obstacles to the remittance of the Subscription monies
          to the Company in Hong Kong in accordance with the terms of this
          Agreement.

     (C)  China Netcom is the legal and beneficial owner of the whole of the
          issued share capital of the Subscriber, and the Subscriber is the
          legal and beneficial owner of all the issued shares in CNC HK held by
          the CNC Group.

     (D)  The execution, delivery and performance by it of this Agreement does
          not and will not result in a material breach of any provision in its
          memorandum or articles of association or other constitutional
          documents.

     (E)  No order has been made and no resolution has been passed for the
          winding up of the Subscriber or China Netcom (as the case may be) or
          for a provisional liquidator to be appointed in respect of it and no
          petition has been presented and no meeting has been convened for the
          purposes of winding up the Subscriber or China Netcom (as the case
          may be).

     (F)  No administration order has been made and no petition for such an
          order has been presented in respect of the Subscriber or China Netcom
          (as the case may be).

     (G)  No receiver (which expression shall include an administrative
          receiver) has been appointed in respect of the Subscriber or China
          Netcom (as the case may be).

     (H)  It is not insolvent or unable to pay its debts and has not stopped
          paying its debts as they fall due.

     (I)  No event analogous to any described in paragraphs (E) to (H) has
          occurred in or outside the PRC with respect to the Subscriber or
          China Netcom (as the case may be).

     (J)  All statements of fact relating to the CNC Group contained in the
          Subscription Announcement are true and accurate in all material
          respects and not misleading in any material respect in the form and
          context in which they appear, all expressions of opinion, intention
          or expectation contained therein (which are stated to be held or
          expressed by any member of the CNC Group) are made on reasonable
          grounds and are truly and honestly held by the directors of the
          relevant member of CNC


                                       11
<PAGE>


          Group and are fairly based, and there are no other facts relating to
          the CNC Group omitted the omission of which makes any such statement
          or expression in the Subscription Announcement misleading in any
          material respect or which are or can reasonably be expected to be
          material in the context of the Subscription.

     (K)  Under the laws of the PRC, neither China Netcom nor any of its
          properties, assets or revenues are entitled to any right of immunity
          on the grounds of sovereignty from any legal action, suit or
          proceedings, from set-off or counter claim, from the jurisdiction of
          any court or arbitral tribunal, from service of process, from
          attachment prior to or in aid of execution of judgment or arbitral
          award, or from other legal process or proceedings for the giving of
          any relief or for the enforcement of any judgment or arbitral award.

     (L)  None of China Netcom, the Subscriber, and none of their respective
          directors (or equivalent) or Principal Officers, is a Disqualified
          Person.

6.2  Repetition of Subscriber/China Netcom Warranties, etc

     (A)  The representations and warranties set out in clause 6.1 are given as
          at the date hereof and shall be deemed to be repeated by the
          Subscriber and China Netcom on the Completion Date as if given or made
          on such date, with reference in each case to the facts and
          circumstances then subsisting.

     (B)  Each of China Netcom and the Subscriber undertakes to disclose in
          writing to the Company anything which will be or is reasonably likely
          to be a breach of any of the representations and warranties set out in
          clause 6.1 on and as at the Completion Date promptly after such thing
          comes to its notice both prior to and on the Completion Date. Each of
          China Netcom and the Subscriber agrees promptly to provide such
          information as may be reasonably requested by the Company, from the
          date hereof until the Completion Date, in order to enable the Company
          to assess whether a breach of any representations and warranties set
          out in clause 6.1 will occur on the Completion Date.

6.3  Other Undertakings of Subscriber and China Netcom

     (A)  Each of the Subscriber and China Netcom undertakes that it will, both
          prior to and following the Completion Date, furnish such information,
          supply such documents, give such undertakings and do all such acts and
          things as may reasonably be required by the Company to:

          (1)  facilitate the satisfaction of the Conditions;

          (2)  facilitate the obtaining by the Group of all consents, approvals
               and confirmations that may be required from any Authority in
               connection with this Agreement; and/or

          (3)  enable the Company to perform its obligations under this
               Agreement.

     (B)  China Netcom undertakes that it will remain at all times the direct or
          indirect holder of the entire issued share capital of the Subscriber
          provided that China Netcom may dispose to one or more third parties of
          not more than an aggregate of 25 per cent. (25%) of its direct or
          indirect interest in the issued share capital of the Subscriber
          provided that:


                                       12
<PAGE>


          (1)  any relevant third party which acquires an interest in the
               Subscriber ("Subscriber Investor") is not a Disqualified Person;
               and

          (2)  China Netcom will, after such disposal, retain voting control of
               the Subscriber and will also retain the direct or indirect right
               to appoint a majority of the board of directors of the
               Subscriber; and

          (3)  none of the Subscriber Investors shall have any right or
               understanding or arrangement (whether formal or informal) to
               nominate any person as a director of the Company.

6.4  Matters relating to the Broadcasting Ordinance

     General obligation - directors and Principal Officers of the Company/
     Subscriber

     (A)  China Netcom undertakes that it will not nominate any person who is a
          Disqualified Person as a director or Principal Officer of the Company.
          Each of China Netcom and the Subscriber undertakes that it will not
          nominate or appoint any person who is a Disqualified Person as a
          director or Principal Officer of the Subscriber.

     Certain proposed changes

     (B)  If:

          (1)  China Netcom proposes to nominate any person to replace any of
               the appointments made under clause 4.1(B); or

          (2)  China Netcom or the Subscriber proposes any change to the
               directors or Principal Officers of the Subscriber; or

          (3)  China Netcom or the Subscriber proposes to introduce a Subscriber
               Investor or if either of them proposes any change, or is aware of
               any proposed change, in the shareholders of the Subscriber and
               their respective interests in the Subscriber,

          China Netcom and the Subscriber shall promptly provide such
          information as the Company may reasonably request to enable the
          Company to deal with such issues (if any) as may arise in connection
          with the Broadcasting Ordinance and/or the Group's licences issued
          under the Broadcasting Ordinance.

     (C)  If the Company reasonably considers that a "disqualified person" issue
          will arise under the Broadcasting Ordinance as a result of any of the
          proposals referred to in clause 6.4(B)(1) to (3), the Company is not
          obliged to procure that China Netcom's proposed replacement Board
          nominee(s) is/are appointed (notwithstanding clause 8.6, but without
          prejudice to China Netcom's rights under clause 8.6 to nominate
          another person as a replacement Board nominee and to the Company's
          obligations thereunder in respect of such other nominee), and China
          Netcom and the Subscriber shall not make or permit to occur any of the
          changes referred to in clause 6.4(B)(2) and/or (3), until all
          information concerning such nominee(s) or Subscriber Investor(s) (as
          applicable) as is required by the Broadcasting Authority and the Chief
          Executive in Council has been provided to them, and the Broadcasting
          Authority and the Chief Executive in Council have confirmed in writing
          that the relevant person(s) (or, if applicable, the Subscriber
          Investor(s)) is/are not Disqualified Person(s).


                                       13
<PAGE>


     Changes in circumstances resulting in Disqualified Person issues

     (D)  If at any time any of:

          (1)  China Netcom;

          (2)  the Subscriber;

          (3)  the directors (or equivalent) or Principal Officers of China
               Netcom or of the Subscriber;

          (4)  the persons nominated by China Netcom as directors of the
               Company;

          (5)  a Subscriber Investor; or

          (6)  the persons nominated by a Subscriber Investor as directors of
               the Subscriber,

          is or becomes a Disqualified Person, or is reasonably considered by
          the Company, China Netcom or the Subscriber to be a "disqualified
          person" within the meaning of the Broadcasting Ordinance, the Company,
          China Netcom or the Subscriber (as applicable) shall immediately
          notify the others in writing of such issue (which notice shall set out
          reasonable details of the reasons why such person is or is reasonably
          considered to be a "disqualified person"). China Netcom shall assist
          and facilitate the Company in seeking such consents, approvals and
          confirmations as may be required from the Broadcasting Authority, the
          Chief Executive in Council or otherwise in connection with the
          Broadcasting Ordinance. China Netcom shall promptly provide such
          information as the Company may reasonably request to enable the
          Company to deal with such issues (if any) as may arise in connection
          with the Broadcasting Ordinance and/or the Group's licences issued
          under the Broadcasting Ordinance.

     (E)  Notwithstanding any provision in this Agreement to the contrary:

          (1)  if any person nominated by China Netcom as director of the
               Company is or becomes a Disqualified Person, and if requested by
               the Company so to do, China Netcom shall immediately procure his
               removal from office as a director of the Company;

          (2)  if a Subscriber Investor is or becomes a Disqualified Person, and
               if requested by the Company so to do, China Netcom shall
               immediately use all reasonable endeavours to procure that such
               third party ceases to be so interested; and

          (3)  if a person nominated by a Subscriber Investor as a director of
               the Subscriber is or becomes a Disqualified Person, China Netcom
               shall immediately procure that such person ceases to hold such
               office.

     (F)  China Netcom shall provide such information as the Company may from
          time to time reasonably request to ascertain whether (1) any director
          (or equivalent) or Principal Officer of any member of the CNC Group or
          (2) any person nominated by China Netcom as a director of the Company
          is or may be a "disqualified person" within the meaning of the
          Broadcasting Ordinance.


                                       14
<PAGE>

7.   The Group's operations in the PRC

7.1  PRC Business Development Committee

     (A)  On the Completion Date, a committee, to be called the "PRC Business
          Development Committee", shall be formed. The terms of reference of the
          PRC Business Development Committee shall include, as a principal
          function of such committee, advising on possible opportunities for the
          expansion of the Group's operations in the PRC ("PRC Operations")
          (including the potential investment of up to HK$5 billion and the
          investment fund of US$50-100 million referred to in clause 7.1(B)) and
          monitoring the use of funds allocated and approved by the Board or
          relevant committee in relation to opportunities approved by the Board
          or relevant committee in connection with the expansion of the Group's
          PRC Operations. The PRC Business Development Committee shall have four
          members, two of whom shall be members of the Board nominated by China
          Netcom. Except as determined by the Board from time to time, all
          decisions of the PRC Business Development Committee shall require the
          unanimous vote and approval of all members of such committee.

     (B)  The Company undertakes that, as soon as practicable after the
          Completion Date (and in any event within three months of the
          Completion Date), it will establish a separate investment fund with an
          initial capital investment by the Company as the founder of the fund
          of US$100 million, or such lesser amount above US$50 million as the
          Company may determine (and such investment shall be part of the HK$5
          billion referred to in clause 4.1(C)) and seek third party investors
          to contribute additional capital with a view to increasing the size of
          the fund to up to US$300 million. The investment objectives of the
          fund will be value added telecommunications services and operations in
          the PRC. The investment fund shall have its own investment guidelines
          and approval procedures (determined by the Board or relevant committee
          at the time of establishing the fund). Two members of the PRC Business
          Development Committee (of which only one shall be a member of the
          Board nominated by China Netcom) will be given responsi bility for
          establishing the investment fund and managing it thereafter in
          accordance with the applicable investment guidelines and approval
          procedures, together with such other managers as they shall recommend
          to the Board or relevant committee for approval.

7.2  Co-Group Managing Director

     (A)  If at any time after the Completion Date the Group's PRC Operations
          constitute a substantial part of the Group's operations, and for as
          long as such PRC Operations remain a substantial part of the Group's
          operations, China Netcom shall have the right to nominate a person who
          is for the time being a director of the Company and has the requisite
          qualifications and experience, as "Co-Group Managing Director", whose
          appointment shall be subject to the approval of the Board. In the
          event that the Board declines to appoint a director of the Company
          nominated by China Netcom on the grounds that such director does not
          have the requisite qualifications and experience, China Netcom may
          nominate another director of the Company as Co-Group Managing
          Director, whose appointment shall also be subject to the approval of
          the Board. The Co-Group Managing Director shall be in addition to such
          other managing director(s) of the Group as may be in office at the
          time and from time to time.


                                       15
<PAGE>


     (B)  For the purpose of clause 7.2(A), the PRC Operations shall be deemed
          to constitute a substantial part of the Group's Operations if:

          (1)  at any time during the twelve months commencing from the
               Completion Date, the PRC Business Development Committee (referred
               to in clause 7.1) resolves that the PRC Operations have become a
               substantial part of the Group's Operations; or

          (2)  the PRC Business Development Committee does not so resolve within
               the twelve months commencing from the Completion Date, and if at
               any time after such period China Netcom determines that the PRC
               Operations have become a substantial part of the Group's
               Operations.

7.3  Cessation

     The provisions of clauses 7.1 and 7.2 shall cease to be of any effect upon
     the earlier of:

     (A)  the Subscriber at any time ceasing to hold at least ten per cent.
          (10%) of the total issued share capital of the Company; and

     (B)  China Netcom ceasing to hold, directly or indirectly, at least 75% of
          the issued share capital of the Subscriber or China Netcom otherwise
          being in material breach of clause 6.3(B).

8.   Certain Company Undertakings

8.1  China Netcom's Obligations to CNC HK

     (A)  For so long as the CNC HK Non-Competition Agreement remains in effect,
          if the Company or any member of the Group proposes to establish,
          engage or be directly or indirectly interested in carrying on a
          Proposed Business, the Company shall, before doing so or agreeing to
          do so, inform China Netcom by notice in writing (a "Notice"), setting
          out the principal details of the Proposed Business. Upon receipt of
          such Notice (and any other relevant details which China Netcom may
          reasonably request), China Netcom and the Company shall discuss the
          Proposed Business. China Netcom shall, within 15 days of the giving of
          the Notice ("15 Day Period"), inform the Company in writing of its
          views as to whether or not the Proposed Business will or is reasonably
          likely to be considered to constitute a CNC HK Competing Business.

     (B)  If, within the 15 Day Period, China Netcom notifies the Company in
          writing that the Proposed Business will or is reasonably likely to be
          considered to constitute a CNC HK Competing Business, China Netcom and
          the Company shall immediately consult in good faith with a view to (1)
          determining to what extent and in what manner the Proposed Business
          constitutes or might constitute a CNC HK Competing Business, (2)
          determining to what extent it would be possible for the Proposed
          Business to be structured so that it or part of it does not constitute
          a CNC HK Competing Business, and (3) assisting China Netcom to seek
          the consent of CNC HK to the extent required under the CNC HK
          Non-Competition Agreement or to the extent such consent has not
          already been given in writing. The parties acknowledge that the
          purpose of this clause is to enable due and careful consideration to
          be given to the nature and extent of the obligations of China Netcom
          under the CNC HK Non-Competition Agreement, and to afford China Netcom
          an opportunity to comply fully with its obligations thereunder.


                                       16
<PAGE>


     (C)  For the purpose of this clause 8.1:

          (1)  "CNC HK Competing Business" means a business that falls within
               the meaning of paragraphs 3 and 4 of clause 1 of the CNC HK
               Non-Competition Agreement;

          (2)  "CNC HK Non-Competition Agreement" means the non-competition
               agreement dated 6 September 2004 made between, amongst others,
               China Netcom and CNC HK; and

          (3)  "Proposed Business" means a business which the PRC Business
               Development Committee considers will or may be in direct or
               indirect competition with the business of CNC HK or any of its
               Subsidiaries.

     (D)  Notwithstanding clause 8.1 (A), the Company and any member of the
          Group may hold or be interested in securities in another body
          corporate if such securities are listed on a recognised stock exchange
          and confer not more than ten per cent. (10%) of the votes which could
          normally be cast at a general meeting of the body corporate.

     (E)  For the avoidance of doubt, this clause 8.1 shall not:-

          (1)  prevent or delay the Company or any member of the Group from
               commencing or continuing any negotiations in relation to any
               business opportunity (whether or not such business opportunity
               constitutes or may constitute a CNC HK Competing Business); or

          (2)  prevent the Company or any member of the Group from entering into
               any contract or other arrangement in relation to any business
               opportunity (whether or not such business opportunity constitutes
               or may constitute a CNC HK Competing Business), provided that:

               (a)  if China Netcom gives notice in writing within the 15 Day
                    Period that the Proposed Business will or is reasonably
                    likely to be considered to constitute a CNC HK Competing
                    Business, the Company or the relevant member of the Group
                    does not do so within 30 days of the giving by China Netcom
                    of such notice; and

               (b)  if China Netcom gives notice in writing within the 15 Day
                    Period of its view that Proposed Business will not be
                    considered to constitute a CNC HK Competing Business, or if
                    China Netcom does not give a response to the Notice, the
                    Company or the relevant member of the Group does not do so
                    within the 15 Day Period.

8.2  Arrangements with CNC HK Competitor

     (A)  If the Company or any member of the Group either (i) intends to pursue
          or develop a business opportunity, or (ii) is offered an opportunity
          to participate in a business opportunity, in each case with any entity
          which is the holder of a licence currently required for the provision
          of basic fixed-line telecommunications services in the PRC (or a
          member of a group of which another member is the holder of such a
          licence) relating to (a) the establishment of a new joint venture
          (whether equity, co- operative or other profit sharing arrangement in
          the nature of a joint venture) to exploit a business opportunity
          within the PRC or (b) the sale by the Group of any


                                       17
<PAGE>


          business or assets constituting a business in the PRC (in each case, a
          "Relevant Opportunity"), the Company shall, before doing so or
          agreeing to do so, inform China Netcom by notice in writing (a "JV
          Notice") provided that:

          (1)  in the case of the establishment of a new joint venture, this
               clause 8.2 shall only apply if such joint venture (whether
               equity, co-operative or other profit sharing arrangement in the
               nature of a joint venture) (i) relates to basic fixed line
               telecommunications services as currently provided in the PRC and
               is considered in good faith by China Netcom (after having
               considered the details of the Relevant Opportunity submitted to
               it) to be of a strategic nature to the Group and/or involves an
               initial capital investment or commitment by the Group in excess
               of US$100 million; or (ii) relates to any non-regulated services
               which involves an initial capital investment or commitment by the
               Group in excess of US$100 million;

          (2)  in the case of a sale by the Group of any business or assets
               constituting a business in the PRC, this clause 8.2 shall only
               apply if such business or assets constituting a business is
               considered in good faith by China Netcom (after having considered
               the details of the Relevant Opportunity submitted to it) to be of
               a strategic business or a strategic business opportunity in the
               PRC;

          (3)  the provisions of clause 8.2 shall be subject to and limited by
               any pre- emption or other contractually binding obligations of
               the Company or the relevant member of the Group; and

          (4)  nothing in this clause 8.2 is intended to relate to contracts or
               arrangements in the ordinary course of business.

     (B)  The JV Notice shall outline the principal details of the Relevant
          Opportunity (whether contemplated by a member of the Group, or offered
          by the relevant third party) and invite China Netcom to notify the
          Company in writing within 30 days after the date on which the JV
          Notice is given (the "Exercise Period") whether (i) it (or a
          Subsidiary of China Netcom) wishes to be involved in the Relevant
          Opportunity or, (ii) where the Relevant Opportunity arises as a result
          of an offer or invitation from a third party of an opportunity to
          participate in a business opportunity, whether it (or a Subsidiary of
          China Netcom) wishes and is able to offer a similar business
          opportunity to the Group.

     (C)  If, within the Exercise Period, China Netcom notifies the Company in
          writing that it (or a Subsidiary of China Netcom) wishes to be
          involved in the Relevant Opportunity (or, as applicable, wishes and is
          able to offer a similar business opportunity to the Group), the
          Company will, or will procure that the relevant member of the Group
          (as the case may be) will, in good faith on an expeditious basis,
          enter into discussions and negotiations with China Netcom in relation
          to the Relevant Opportunity with a view to entering into a joint
          venture agreement or other binding arrangement, or (in the case of a
          sale referred to in clause 8.2(A)(2)) a sale and purchase agreement
          for the sale of the relevant business to China Netcom (or a Subsidiary
          of China Netcom), as soon as practicable.

     (D)  If:

          (1)  within the Exercise Period China Netcom notifies the Company in
               writing that neither it nor any of its Subsidiaries wishes to be
               involved in the Relevant


                                       18
<PAGE>


               Opportunity (or, as applicable, does not wish and/or is unable to
               offer a similar business opportunity to the Group), or

          (2)  China Netcom otherwise fails to notify the Company in writing
               within the Exercise Period as to whether or not it (or a
               Subsidiary of China Netcom) wishes to be involved in the Relevant
               Opportunity (or, as applicable, whether or not it (or a
               Subsidiary of China Netcom) wishes and is able to offer a similar
               business opportunity to the Group); or

          (3)  China Netcom having served notice pursuant to sub-clause (C), no
               heads of terms, letter of intent or similar outline of principal
               commercial terms (in each case whether binding or non-binding) is
               entered into between any member of the Group and China Netcom (or
               a Subsidiary of China Netcom) within 30 days from the date on
               which it served such notice,

          any member of the Group may enter into a joint venture agreement
          and/or other binding arrangement (including agreements relating to the
          sale of the relevant business) with a third party in relation to the
          Relevant Opportunity provided that such arrangement is on
          substantially the same terms as those set out in the JV Notice.

8.3  Existing Businesses

     Notwithstanding clause 8.2 and any other provision of this Agreement, the
     Group may continue to be interested and involved in its existing
     businesses, and may continue to make such further investments in, and to
     further develop and expand, its existing businesses, in each case as the
     Board may consider appropriate from time to time.

8.4  Non-disposal of certain assets

     (A)  The Company shall not without the written consent of China Netcom
          (such consent not to be unreasonably withheld or delayed) sell or
          dispose of more than ten per cent. (10%) of the Group's voting
          interest in PCCW-HKT Telephone Limited and 25 per cent. (25%) of the
          Group's voting interest in PCCW VOD Limited (other than in connection
          with a bona fide reorganisation, amalgamation or scheme of arrangement
          relating to the Group).

     (B)  The Company shall not, prior to the date falling 60 days after the
          Completion Date and without the written consent of China Netcom (such
          consent not to be unreasonably withheld or delayed), sell or dispose
          of any of its shareholding in Pacific Century Premium Developments
          Limited (other than in connection with a bona fide reorganisation,
          amalgamation or scheme of arrangement relating to the Group).
          Notwithstanding the foregoing, China Netcom shall not withhold or
          delay its consent if any such proposed sale or disposal has in good
          faith been determined by the Board to be in the best interests of the
          Company and the reasons for such determination have been provided to
          China Netcom in reasonable detail.

     (C)  Where the Group is considering any disposal of assets which does not
          fall under clause 8.4(A) or 8.4(B) but such disposal will require a
          circular to be issued by the Company to it shareholders under the
          Listing Rules, the members of the Board nominated by China Netcom
          shall be consulted in advance.


                                       19
<PAGE>


8.5  Anti-dilution

     General Anti-dilution

     (A)  Subject to clause 8.5(G), the Company will not without the prior
          written consent of China Netcom (such consent not to be unreasonably
          withheld or delayed) in the period from the date of this Agreement to
          the Completion Date issue any new Shares, any securities convertible
          into or exchangeable into Shares or any warrants or other rights to
          subscribe for Shares ("Relevant Securities").

     (B)  Subject to clauses 8.5(G) to 8.5(J), if the Company proposes,
          following the Completion Date, to issue any Relevant Securities, the
          Company shall notify China Netcom in writing of such proposal (an
          "Issue Notice"). The Issue Notice shall specify the number and type of
          Relevant Securities to be offered by the Company and the material
          terms of the proposed offer (including the proposed price per security
          to be paid by the proposed third party purchaser(s)).

     (C)  China Netcom shall have the right to purchase any number of the
          Relevant Securities which are the subject of the Issue Notice up to
          such number as shall represent the Pro Rata Share (as defined in
          clause 8.5(K)(2)) of the Relevant Securities, upon the same terms and
          conditions set forth in the Issue Notice, by giving written notice to
          the Company of the exercise of this right within ten Business Days of
          the giving of the Issue Notice. A notice given by China Netcom
          pursuant to this clause shall be irrevocable. If such notice is not
          given or deemed not to have been given by China Netcom within such ten
          Business Days, China Netcom shall be deemed to have elected not to
          exercise its rights under this clause 8.5(C).

     (D)  [Intentionally left blank]

     (E)  The completion of China Netcom's purchase of Relevant Securities
          pursuant to clause 8.5(C) shall occur either simultaneously with the
          completion of the offering of Relevant Securities or at such other
          time and place as shall be mutually agreed by the Company and China
          Netcom. At such completion, China Netcom shall deliver the aggregate
          purchase price for the Relevant Securities to be purchased by China
          Netcom pursuant to clause 8.5(C) against the Company's delivery of
          certificates representing the Relevant Securities to be issued to
          China Netcom pursuant to clause 8.5(C).

     (F)  Any Shares issued to China Netcom pursuant to clauses 8.5(B) to (E)
          shall be issued on the same terms as Shares are issued to any proposed
          third party purchaser, such terms being set out in the Issue Notice.

     Options, convertibles, etc

     (G)  The provisions of clauses 8.5(A) to 8.5(F) shall not apply to:

          (1)  the grant of any options, or the issue of any Relevant Securities
               pursuant to the exercise of share options granted (whether prior
               to or after the date of this Agreement), pursuant to any share
               option scheme of the Company in effect from time to time; or

          (2)  the issue of any Relevant Securities pursuant to any share
               incentive scheme operated by the Group from time to time; or


                                       20
<PAGE>


          (3)  the issue of any Relevant Securities pursuant to the terms of any
               bonds or other securities issued at any time by any member of the
               Group which are convertible or exchangeable into Shares, or the
               issue of any Relevant Securities as a result of the exercise of
               warrants or other rights to subscribe for Shares.

          For the avoidance of doubt, the anti-dilution right in clauses 8.5(B)
          to 8.5(E) will apply in respect of issues of securities that are
          convertible or exchangeable into Shares and in respect of issues of
          warrants or other rights to subscribe for Shares at the time of issue
          of those convertible or exchangeable securities or warrants or other
          rights to subscribe (as the case may be) save in the case of a
          Pro-Rata Offering or a Non-Cash Issuance (as defined in clauses
          8.5(H)(1) and 8.5(I)(1) respectively).

     Rights issues, open offers, bonus/capitalisation issues etc

     (H)  The provisions of clause 8.5(B) to 8.5(F) shall not apply to the issue
          of any Relevant Securities pursuant to:

          (1)  an offer of Relevant Securities open for a period fixed by the
               Board to holders of Shares on the register of members on a fixed
               record date in proportion to their then holdings of Shares
               (subject to such exclusions or other arrangements as the Board
               may deem necessary or expedient in relation to fractional
               entitlements or having regard to any restrictions or obligations
               under the laws of, or the requirements of any recognised
               regulatory body or any stock exchange in any territory outside
               Hong Kong) ("Pro-Rata Offering"); or

          (2)  an issue of Shares credited as fully paid to holders of Shares
               (including, without limitation, Shares paid up out of
               distributable profits or reserves and/or share premium account
               issued in lieu of the whole or any part of a cash dividend and
               free distributions or bonus issue of Shares).

     Consideration shares, top-up placings and subscriptions etc

     (I)  If following the Completion Date, the Company proposes to issue any
          Relevant Securities ("Relevant New Issue"):

          (1)  for non-cash consideration, credited as fully paid (including,
               without limitation, an issue of Relevant Securities as
               consideration for the acquisition of any interest in a company,
               business or other asset but excluding any issue of Relevant
               Securities as contemplated in clauses 8.5(G) and 8.5(H)) ("Non-
               Cash Issuance"); or

          (2)  in connection with a placing and "top-up" subscription of
               Relevant Securities,

          clause 8.5(J) shall apply (and for the avoidance of doubt, clauses
          8.5(B) to 8.5(F) shall not apply).

     (J)  The following provisions shall apply in the event of a Relevant New
          Issue:

          (1)  If the Company proposes to effect a Relevant New Issue, the
               Company shall notify China Netcom in writing of such proposal
               ("Relevant New Issue Notice").


                                       21
<PAGE>


          (2)  The Relevant New Issue Notice shall specify the number and (if
               relevant) the type of Relevant Securities to be issued or
               proposed to be issued by the Company and the material terms of
               the Relevant New Issue (including the proposed price per security
               ("Relevant Price")).

          (3)  China Netcom shall have the right to purchase or subscribe for
               such proportion as it may wish of the Relevant Number of new
               Relevant Securities at the Relevant Price by giving written
               notice to the Company of the exercise of this right within three
               Business Days of the giving of the Relevant New Issue Notice.
               China Netcom and the Company acknowledge that the "Relevant
               Number" will only be ascertainable after the three Business Day
               period, and that the actual Relevant Number will be set out in
               the notice to be given by the Company to China Netcom pursuant to
               clause 8.5(J)(5). A notice given by China Netcom pursuant to this
               clause 8.5(J)(3) shall be irrevocable. If such notice has not
               been given or deemed to have been given by China Netcom within
               such three Business Days, China Netcom shall be deemed to have
               elected not to exercise its rights under this clause 8.5(J)(3).

          (4)  [Intentionally left blank]

          (5)  If China Netcom shall give notice to the Company pursuant to, and
               in accordance with, clause 8.5(J)(3), the Company shall not later
               than three Business Days after expiry of the three Business Day
               period referred to in clause 8.5(J)(3) notify China Netcom in
               writing of the Relevant Number of new Relevant Securities which
               it is to purchase and the total consideration due for such
               securities. The completion of China Netcom's purchase of Relevant
               Securities pursuant to this clause 8.5(J) shall occur either
               simultaneously with the completion of the Relevant New Issue or,
               in the case of a placing and top-up subscription referred to in
               clause 8.5(I)(2), at the time of completion of the top-up
               subscription, or at such other time and place as shall be
               mutually agreed by the Company and China Netcom. At such
               completion, China Netcom shall deliver the aggregate purchase
               price for the Relevant Securities to be purchased by China Netcom
               pursuant to this clause 8.5(J) against the Company's delivery of
               certificates representing the Relevant Securities to be issued
               to China Netcom pursuant to this clause 8.5(J).

          (6)  In the case of a Non-cash Issuance, the Relevant Price shall be
               based on the value of the Relevant Securities or the
               consideration as stated in the agreements relating to Non-Cash
               Issuance. If such value or consideration is not stated, the
               Relevant Price shall be such amount as may be agreed between the
               Company and China Netcom or, in default of agreement, the average
               closing price of Shares on the Stock Exchange on the fifteen
               trading days prior to the date on which binding agreements
               relating to the Relevant New Issue were executed or, if earlier,
               the date on which the Relevant New Issue was announced by the
               Company in accordance with its obligations under the Listing
               Rules.

          (7)  For the avoidance of doubt, nothing in clause 8.5(J)(1) to (6)
               shall delay, impede or obstruct the completion of a Relevant New
               Issue.

     General Provisions

    (K)   For the purposes of this clause 8.5:


                                       22
<PAGE>


          (1)  "Other Anti-Dilution Issues" means the Relevant Securities to be
               issued as a result of the Relevant New Issue to other
               shareholders of the Company pursuant to anti-dilution rights
               substantially similar to those contained in this clause 8.5;

          (2)  "Pro Rata Share" shall mean the following ratio (measured as at
               the date of the relevant Issue Notice):

                        A
                       ---
                        B

               where:

               "A" is the number of Shares in which China Netcom is interested
               or deemed to be interested for the purposes of Part XV of the
               SFO, excluding Shares in which China Netcom has become interested
               other than pursuant to clause 2 or this clause 8.5 and excluding
               also any interests or deemed interests arising from Relevant
               Securities other than Shares; and

               "B" is the total number of Shares then in issue;

          (3)  "Relevant Number" shall mean:

               (a)  in the case of an issue of Shares, the number of Shares
                    required to be issued to China Netcom such that the Relevant
                    Ratio of China Netcom's interest or deemed interest under
                    Part XV of the SFO (whether notified or not) in the issued
                    Share capital of the Company will not be reduced as a result
                    of the Relevant New Issue and the Other Anti-Dilution
                    Issues; and

               (b)  in the case of an issue of Relevant Securities other than
                    Shares, the number of Relevant Securities which represents
                    the Relevant Ratio of the total number of such Relevant
                    Securities to be issued pursuant to the Relevant New Issue
                    and the Other Anti-Dilution Issues;

          (4)  "Relevant Ratio" shall mean the following ratio (measured as at
               the date of the relative Relevant New Issue Notice):

                        X
                       ---
                        Y
               where:

               "X" is the number of Shares in which China Netcom is interested
               or deemed to be interested for the purposes of Part XV of the
               SFO, excluding Shares in which China Netcom has become interested
               other than pursuant to clause 2 or this clause 8.5 and excluding
               also any interests or deemed interests arising from Relevant
               Securities other than Shares; and

               "Y" is the total number of Shares then in issue (excluding, for
               the avoidance of doubt, Shares issued under the Relevant New
               Issue and the Other Anti-Dilution Issues);


                                       23
<PAGE>


          (5)  for the purposes of sub-clauses (2) and (4) above and to avoid
               doubt, where China Netcom is interested or deemed interested in
               the Same Shares (as defined below) pursuant to Part XV of the
               SFO, the number of such Same Shares shall not be aggregated with
               the number of Shares in which China Netcom is or would already be
               interested or deemed interested pursuant to Part XV of the SFO.
               "Same Shares" shall mean Shares in which "associated
               corporations" (as defined in Part XV of the SFO) (other than the
               Subscriber) of China Netcom are interested or deemed interested
               pursuant to Part XV of the SFO.

     (L)  [Intentionally left blank]

     (M)  China Netcom shall be entitled to purchase Relevant Securities under
          this clause 8.5 directly or through the Subscriber, and the provisions
          of this clause 8.5 shall be construed accordingly.

     (N)  China Netcom acknowledges and agrees that its exercise of the rights
          in this clause 8.5 shall in all cases be subject to all applicable
          laws and regulations including the Listing Rules and the Takeovers
          Code (including, where applicable, any requirement to obtain the
          approval of the shareholders of the Company).

     (O)  The provisions of clauses 8.5(B) to 8.5(N) are conditional on the
          satisfaction of the Condition in clause 3.1(A).

8.6  Replacement of Directors

     China Netcom shall be entitled to nominate persons from time to time to
     replace any of the appointments made under clause 4.1(B) and the Company
     shall use its best endeavours to procure such new appointments to be made
     as soon as practicable. If any of the persons appointed as a member of the
     Board pursuant to clause 4.1(B)(1) or this clause 8.6, as the case may be,
     is employed by the Company as an executive or officer, such person shall be
     appointed as an executive director of the Company.

8.7  Cessation

     (A)  The provisions of this clause 8 (except clause 8.5 (Anti-dilution) and
          this clause 8.7) shall cease to be of any effect on the earlier of:

          (1)  the Subscriber at any time ceasing to hold at least ten per cent.
               (10%) of the total issued share capital of the Company; and

          (2)  China Netcom ceasing to hold, directly or indirectly, at least
               75% of the issued share capital of the Subscriber or China Netcom
               otherwise being in material breach of clause 6.3(B).

     (B)  The provisions of clause 8.5 (Anti-dilution)) shall cease to be of any
          effect on the earlier of:

          (1)  the third anniversary of the Completion Date;

          (2)  the Subscriber at any time ceasing to hold at least 15 per cent.
               (15%) of the total issued share capital of the Company; and


                                       24
<PAGE>


          (3)  China Netcom ceasing to hold, directly or indirectly, at least
               75% of the issued share capital of the Subscriber or China Netcom
               otherwise being in material breach of clause 6.3(B).

9.   Guarantee

9.1  Guarantee Obligations

     In consideration of the Company entering into this Agreement at the request
     of China Netcom (as China Netcom hereby acknowledges), China Netcom shall
     as primary obligations of it:

     (A)  procure that the Subscriber shall duly observe and perform all its
          obligations owed to the Company under this Agreement or any other
          agreement entered pursuant or ancillary hereto;

     (B)  if and whenever the Subscriber shall be in default in the payment when
          due of any amount payable to the Company under this Agreement or any
          other agreement entered into pursuant or ancillary hereto and within
          two Business Days after being given notice to that effect by the
          Company, pay to the Company all amounts then so payable by the
          Subscriber to the Company as though China Netcom instead of the
          Subscriber was expressed to be the principal debtor; and

     (C)  indemnify the Company against all costs and expenses (including legal
          fees) which the Company may pay or incur in collecting any amount
          payable by the Subscriber or China Netcom and referred to in clause
          9.1(B).

9.2  Indemnity

     Any amount not paid by the Subscriber and not recoverable from China Netcom
     on the basis of a guarantee (whether because of any legal limitation,
     disability or incapacity on the part of the Subscriber or any other matter
     or thing whether known to the Company or not) shall nevertheless be
     recoverable from China Netcom on the basis of an indemnity.

9.3  Indulgence etc.

     (A)  China Netcom acknowledges that its liability under this clause 9 shall
          not be discharged or affected in any way by time being given to the
          Subscriber or by any other indulgence or concession being granted to
          the Subscriber or by any other act, omission, dealing, matter or thing
          whatsoever (including without limitation any change in the
          constitution of the Subscriber or China Netcom, any amendment to this
          Agreement or any such other agreement entered pursuant or ancillary
          hereto or the liquidation, dissolution, reconstruction or amalgamation
          of the Subscriber or China Netcom or the illegality or
          unenforceability of this Agreement or such other agreement) which but
          for this provision might operate to release China Netcom from its
          obligations under this clause 9.

     (B)  China Netcom agrees that its liability under this clause 9 shall not
          be discharged or affected in any way by the assignment (if any) by the
          Subscriber of its rights in this Agreement to the Alternate Subscriber
          under clause 4.4.


                                       25
<PAGE>


9.4  Continuing Guarantee

     The guarantee contained in this clause 9 is a continuing guarantee and
     shall remain in full force and effect until all obligations of the
     Subscriber hereby guaranteed have been discharged in full. It is in
     addition to and shall not prejudice nor be prejudiced by any other
     guarantee, indemnity or other security or right against any third party
     which the Company may have for the due performance of the obligations
     concerned.

10.  No "acting in concert"

10.1 Nothing in this Agreement nor any action taken or proposed to be taken by
     the Subscriber, China Netcom and/or the Company under or in connection with
     this Agreement is intended to result in the Subscriber and/or China Netcom
     "acting in concert" (as defined in the Takeovers Code) with the Substantial
     Shareholders (or vice versa).

10.2 The Company and China Netcom agree that if at any time any Substantial
     Shareholder, the Subscriber or China Netcom (collectively, "Relevant
     Shareholders") considers that anything in or in connection with this
     Agreement, or any of the actions or proposed actions of any of the Relevant
     Shareholders, mean that the Subscriber and/or China Netcom are or will be
     "acting in concert" (as defined in the Takeovers Code) with the Substantial
     Shareholders (or vice versa) ("Concert Party Issue"), it shall notify the
     other Relevant Shareholders of the Concert Party Issue (including
     reasonable details of the issue and reasons for its concern), and each of
     China Netcom, the Subscriber and the Company agrees that:

     (A)  it will consult with each other and with the Substantial Shareholders
          on a timely basis and in good faith to discuss whether the proposed
          action or actions can be undertaken in a manner or to an extent that
          will not have such a result; and

     (B)  no action will be taken by it until the Concert Party Issue, together
          with the proposed action(s) (if any), have been resolved to the
          satisfaction of each of the Relevant Shareholders PROVIDED THAT if the
          SFC confirms that any of China Netcom or any of the Substantial
          Shareholders shall not itself or themselves be under an obligation to
          make a mandatory general offer for the shares in the Company not held
          by them (or parties acting in concert with them) (regardless of
          whether any of the other Relevant Shareholders may be under such an
          obligation), then the relevant Concert Party Issue shall be deemed for
          the purposes of this provision to have been resolved to the
          satisfaction of that or those Relevant Shareholders.

11.  Confidentiality

11.1 Confidentiality

     Subject to clauses 11.2, 11.3 and 12, each Party:-

     (A)  shall treat as strictly confidential the provisions of this Agreement
          and the process of their negotiation and all information about the
          other Parties obtained or received by it as a result of entering into
          or performing its obligations under this Agreement ("Confidential
          Information"); and

     (B)  shall not, except with the prior written consent of the other Party
          (which shall not be unreasonably withheld or delayed and the Company
          shall only require the consent of one of China Netcom of the
          Subscriber), make use of (save for the purposes of


                                       26
<PAGE>


          performing its obligations under this Agreement) or disclose to any
          person any Confidential Information.

11.2 Permitted disclosure or use

     Clause 11.1 shall not apply if and to the extent that the Party using or
     disclosing Confidential Information can demonstrate that:

     (A)  such disclosure is to a Substantial Shareholder or a company
          controlled by a Substantial Shareholder or under common control with a
          Substantial Shareholder (a "Related Party)

     (B)  such disclosure is required by law or by any supervisory, regulatory
          or governmental body having jurisdiction over it or a Related Party
          (including the Stock Exchange, the SFC, the Singapore Stock Exchange
          and the PRC State Council) and whether or not the requirement has the
          force of law; or

     (C)  such disclosure is to its professional advisers in relation to the
          negotiation, entry into or performance of this Agreement or any matter
          arising out of the same; or

     (D)  such disclosure is required to facilitate the satisfaction of any of
          the Conditions; or

     (E)  such disclosure is required in order to facilitate any assignment or
          proposed assignment of the whole or any part of the rights or benefits
          under this Agreement which is permitted by clause 17.7; or

     (F)  in the case of disclosure or use, the Confidential Information
          concerned was lawfully in its possession (as evidenced by written
          records) prior to its being obtained or received as described in
          clause 11.1(A); or

     (G)  in the case of disclosure or use, the Confidential Information
          concerned has come into the public domain other than through its fault
          or the fault of any person to whom such Confidential Information has
          been disclosed in accordance with clause 11.1(B).

11.3 Continuance of restrictions

     The restrictions contained in this clause 11 shall continue without limit
     of time.

12.  Announcements

12.1 Restrictions

     Subject to clause 12.2, no Party to this Agreement shall make any
     announcement or issue any communication concerning the provisions or
     subject matter of this Agreement or containing any information about the
     other Parties without the prior written approval of the other (which shall
     not be unreasonably withheld or delayed and the Company shall only require
     the consent of one of China Netcom or the Subscriber).

12.2 Permitted announcements

     Clause 12.1 shall not apply:

     (A)  to the Subscription Announcement; and


                                       27
<PAGE>


     (B)  if and to the extent that any announcement is required by law or by
          any supervisory, regulatory or governmental body having jurisdiction
          over it (including the Stock Exchange and the SFC), and whether or not
          the requirement has the force of law and provided that any such
          announcement shall be made only after consultation with the other
          Parties.

13.  Notices

     (A)  Any notice (which term shall in this clause include any other
          communication) required to be given under this Agreement or in
          connection with the matters contemplated by it shall, except where
          otherwise specifically provided, be in writing in the English
          language.

     (B)  Any such notice shall be addressed as provided in sub-clause (C) and
          may be:

          (1)  personally delivered, in which case it shall be deemed to have
               been given upon delivery at the relevant address; or

          (2)  if within Hong Kong, sent by pre-paid post, in which case it
               shall be deemed to have been given two Business Days after the
               date of posting; or

          (3)  if from or to any place outside Hong Kong, sent by pre-paid
               airmail, in which case it shall be deemed to have been given
               seven Business Days after the date of posting; or

          (4)  sent by facsimile, in which case it shall be deemed to have been
               given when despatched, subject to confirmation of uninterrupted
               transmission by a transmission report provided that any notice
               despatched by facsimile after 5:00 p.m. on any day shall be
               deemed to have been received at 9:00 a.m. on the next Business
               Day.

     (C)  The addresses and other details of the Parties referred to in
          sub-clause (B) are, subject to sub-clause (C):

          If to the Company, to:

          PCCW Limited

          39th Floor, PCCW Tower,
          TaiKoo Place,
          979 King's Road,
          Quarry Bay,
          Hong Kong

          Facsimile:     +852 2962 5725

          Attention:     The Company Secretary

          If to the Subscriber, to:

          China Netcom Group Corporation (BVI) Limited

          59/F, Bank of China Tower,
          1 Garden Road,
          Hong Kong


                                       28
<PAGE>


          Facsimile: +852 3108 3823

          Attention: Wang Chuanbao

          If to China Netcom, to:

          China Network Communications Group Corporation (GRAPHIC OMITTED)

          59/F, Bank of China Tower,
          1 Garden Road,
          Hong Kong

          Facsimile: +852 3108 3823

          Attention: Head of Business Development

     (D)  Any Party may notify the other Parties of any change to the address or
          any of the other details specified in sub-clause (C), provided that
          such notification shall only be effective on the date specified in
          such notice or five Business Days after the notice is given, whichever
          is later.

14.  Waiver of Immunity

14.1 Immunity

     It is acknowledged that the status of China Netcom in the PRC may afford
     it certain protections and immunities not available to entities wholly
     independent of any state body in the PRC and China Netcom has therefore
     agreed to waive such protections and immunities as set out below.

14.2 Waiver

     China Netcom irrevocably and unconditionally agrees with the Company that
     in respect of any Proceedings brought against China Netcom or its assets by
     the Company in relation to this Agreement or any other agreement entered
     into pursuant to or as a result of this Agreement:

     (A)  no immunity from those proceedings (including, without limitation,
          suit, attachment prior to judgement, other attachment, the obtaining
          of any judgement, execution or other enforcement, or the enforcement
          and execution of any award rendered by an arbitral tribunal
          constituted pursuant to this Agreement) will be claimed by or on
          behalf of itself or with respect to its assets;

     (B)  China Netcom shall (and hereby) waives any such right of immunity
          which it or its assets now has or may subsequently acquire; and

     (C)  China Netcom consents generally in respect of any such proceedings to
          the giving of any relief or the issue of any process in connection
          with those proceedings, including, without limitation, the making,
          enforcement or execution against any assets whatsoever (irrespective
          of its use or intended use) of any order or judgement which may be
          made or given in those proceedings or of any award rendered by an
          arbitral tribunal constituted pursuant to this Agreement.


                                       29
<PAGE>


15.  Law and Arbitration

15.1 Law

     This Agreement shall be governed by and construed in accordance with the
     laws of England for the time being in force.

15.2 Arbitration

     (A)  Any dispute, controversy or claim arising out of or in connection with
          this Agreement, including any question regarding its existence,
          validity or termination, shall be referred to and finally resolved by
          arbitration under the LCIA Rules, which Rules are deemed to be
          incorporated by reference into this clause. The arbitration commission
          shall be the LCIA.

     (B)  The number of arbitrators shall be three.

     (C)  The seat of the arbitration shall be London.

     (D)  The language to be used in the arbitral proceedings shall be English.

     (E)  By agreeing to arbitration pursuant to this clause, the Parties waive
          irrevocably their right to any form of appeal, review or recourse to
          any state court or other judicial authority, insofar as such waiver
          may validly be made. In particular, no Party may apply to the court to
          determine any question of law arising in the course of the arbitration
          pursuant to section 45 of the Arbitration Act 1996 or otherwise, and
          no Party may appeal to the court on a question of law arising out of
          an award made in the arbitration pursuant to section 69 of the
          Arbitration Act 1996 or otherwise.

     (F)  The Parties shall have the right to seek interim injunctive relief
          from a court of competent jurisdiction, both before and after the
          arbitrators have been appointed, at any time up until the arbitrators
          have made the final award.

16.  Contracts (Rights of Third Parties) Act 1999

16.1 Subject to clause 16.2, no person who is not for the time being a Party to
     this Agreement shall have any right under the Contracts (Rights of Third
     Parties) Act 1999 to enforce any term of this Agreement.

16.2 Each of the persons referred to in clauses 5.1(F) and 5.3 shall be entitled
     to enforce the benefits conferred on him by such clauses, provided that the
     consent of such persons shall not be required for the variation or
     termination of this Agreement.

17.  Provisions Relating to this Agreement

17.1 Counterparts

     This Agreement may be executed in any number of counterparts, which shall
     together constitute one Agreement. Any Party may enter into this Agreement
     by signing any such counterpart.


                                       30
<PAGE>


17.2 Whole agreement

     (A)  This Agreement, together with any documents referred to in it,
          constitutes the whole agreement between the Parties relating to its
          subject matter and supersedes and extinguishes any prior drafts,
          agreements, and undertakings, whether in writing or oral, relating to
          such subject matter, except to the extent that the same are repeated
          in this Agreement.

     (B)  Each of the Parties acknowledges that it has not been induced to enter
          into this Agreement by any representation, warranty, promise or
          assurance by any of the others or any other person save for those
          contained in this Agreement.

17.3 Variations

     No variation of this Agreement shall be effective unless made in writing
     and signed by each of the Parties.

17.4 Further assurance

     At any time after the Completion Date every Party hereto shall, at the
     request of any other Party and at such requesting Party's cost, execute or
     procure the execution of such documents and do or procure the doing of such
     acts and things as the requesting Party may reasonably require for the
     purpose of vesting in the requesting Party or its permitted assignees the
     full benefit of all its rights in this Agreement.

17.5 Costs

     Each Party shall bear its own costs arising out of or in connection with
     the preparation, negotiation and implementation of this Agreement. Any
     capital duty or fees payable to the Stock Exchange in relation to the
     Subscription shall be borne by the Company.

17.6 Time Of The Essence

     Any time, date or period mentioned in this Agreement may be extended by
     written agreement between the Parties but otherwise and except as
     expressly provided, as regards any time, date or period originally fixed
     or any date or period so extended as aforesaid, time shall be of the
     essence.

17.7 Agreement Binding and Assignment

     This Agreement shall be binding on and enure for the benefit of each
     Party's respective successors and permitted assigns. No Party shall assign
     any of its rights under this Agreement (all of which shall be incapable of
     assignment) or purport to do so without the prior written consent of the
     other Parties.

17.8 Waiver

     No failure or delay by any Party in exercising any right, power or remedy
     under this Agreement shall operate as a waiver thereof, nor shall any
     single or partial exercise of the same preclude any further exercise
     thereof or the exercise of any other right, power or remedy. Without
     limiting the foregoing, no waiver by any Party of any breach of any
     provision hereof shall be deemed to be a waiver of any subsequent breach of
     that or any other provision hereof.


                                       31
<PAGE>


17.9 Invalidity and Severance

     If any provision of this Agreement shall be held to be illegal, void,
     invalid or unenforceable under the laws of any jurisdiction, the legality,
     validity and enforceability of the remainder of this Agreement in that
     jurisdiction shall not be affected, and the legality, validity and
     enforceability of the whole of this Agreement in any other jurisdiction
     shall not be affected.


AS WITNESS the hands of the duly authorised representatives of the Parties on
the day and year first before written.

SIGNED by LI TZAR KAI, RICHARD     )
for and on behalf of               )
PCCW LIMITED                       )
in the presence of:                )



SIGNED by ZHANG CHUNJIANG          )
for and on behalf of               )
CHINA NETCOM GROUP                 )
CORPORATION (BVI) LIMITED          )
in the presence of:                )



SIGNED by ZHANG CHUNJIANG          )
for and on behalf of               )
CHINA NETWORK COMMUNICATIONS       )
GROUP CORPORATION                  )
in the presence of:                )


                                       32
<PAGE>


SCHEDULE 1: THE COMPANY WARRANTIES

The Company hereby represents and warrants to the Subscriber that:

1.   Subscription Announcement: All statements of fact contained in the
     Subscription Announcement (other than statements relating to the CNC Group
     or any member of the CNC Group) are true and accurate in all material
     respects and not misleading in any material respect in the form and context
     in which they appear, all expressions of opinion, intention or expectation
     contained therein (which are stated to be held or expressed by the Company)
     are made on reasonable grounds and are truly and honestly held by the
     directors of the Company and are fairly based and there are no other facts
     relating to the Company omitted the omission of which makes any such
     statement or expression in the Subscription Announcement misleading in any
     material respect or which are or can reasonably be expected to be material
     in the context of the Subscription.

2.   2003 Accounts: The consolidated balance sheet of the Group as at 31
     December 2003 and the consolidated income statement, the consolidated cash
     flow statement and the consolidated statement of changes in equity of the
     Group for the financial year ended on that date (including the notes
     thereto) as set out in the annual report and accounts of the Group for the
     year ended on 31 December 2003 (the "2003 Accounts") together gave a true
     and fair view of the state of affairs of the Group as at 31 December 2003
     and of the profits or losses, cash flows and changes in equity of the Group
     for the financial year ended on that date and were prepared on the basis
     set out therein.

3.   30 September Accounts: The unaudited consolidated results of the Group for
     the nine months ended 30 September 2004 published on 2 November 2004 (the
     "30 September Accounts") were carefully prepared in accordance with
     accounting policies consistent with those used in preparing the 2003
     Accounts and fairly reflect the results of operations for such nine months.

4.   Previous Announcements: All statements of fact contained in all
     announcements and circulars to shareholders made by or on behalf of the
     Company pursuant to the Listing Rules since 31 December 2003 to the date of
     this Agreement, except any announcement relating to the financial results
     of the Group (including without limitation any interim or financial results
     announcement), ("Previous Announcements") were true and accurate in all
     material respects as at the respective dates of such Previous Announcements
     and not misleading in any material respect. All expressions of opinion or
     intention contained in the Previous Announcements were made on reasonable
     grounds and were truly and honestly held by the directors of the Company
     and there were no other facts known to the directors of the Company the
     omission of which would make any such statement or expression in any of the
     Previous Announcements misleading in any material respect in the context in
     which the Previous Announcements were made and as at the respective dates
     of such Previous Announcements.

5.   Conduct of business: Save as disclosed in the Subscription Announcement or
     any public disclosures made by the Company prior to the date of this
     Agreement ("Previous Disclosures"), since 30 September 2004, the business
     of the Group has been carried on in the ordinary and normal course; no
     contracts or commitments of an unusual or unduly onerous nature have been
     entered into by any member of the Group; and there has been no material
     depletion in the net assets of the Group taken as a whole.

6.   Licences: The Group has obtained all material licences (including
     telecommunications and broadcasting licences) necessary to enable it to
     operate the material parts of its


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<PAGE>


     business as at the date of this Agreement, and each of those licences are
     valid and subsisting and, so far as the Company is aware, there are no
     facts or circumstances existing by reason of any breach by the licencees
     why any of such licences will not be renewed on their expiry. So far as the
     Company is aware, there are no governmental or regulatory investigations or
     proceedings which have been initiated prior to the date of this Agreement
     and have been notified in writing to any member of the Group and which are
     reasonably likely to have a material adverse effect on the business,
     prospects, assets, financial condition, or results of operations of the
     Group taken as a whole.

7.   No litigation: Save as disclosed in the Previous Disclosures, no member of
     the Group is a defendant in any litigation, arbitration or governmental
     proceeding which can reasonably be expected to have or have had during the
     twelve months preceding the date hereof a material adverse effect on the
     financial or trading position or prospects of the Group or which is
     material for disclosure in the context of the Subscription and no such
     litigation, arbitration or proceeding is threatened or pending; nor, to the
     best of the knowledge, information and belief of the directors of the
     Company, are there any circumstances which can reasonably be expected to
     give rise to any such litigation, arbitration or proceeding.

8.   Indebtedness and obligations: No circumstances or events have arisen or
     occurred or so far as the Company is aware are likely to arise or occur
     such that any person is (or would, with the giving of notice and/or lapse
     of time and/or fulfilment of any condition and/or the making of any
     determination, become) entitled to repayment of any material indebtedness
     prior to its due date for payment by any member of the Group, or to take
     any step to enforce any security for any such indebtedness of any member of
     the Group and no person to whom any indebtedness for borrowed money of any
     member of the Group which is payable on demand is owed has demanded or
     threatened to demand repayment of the same; no member of the Group is party
     to or under any obligation which is material and is of an unusual or unduly
     onerous nature; neither this Agreement nor the Subscription will constitute
     or give rise to a breach of or default under any agreement or other
     arrangement to which the Company or any other member of the Group is party
     or give rise to any rights of any third party in respect of any assets of
     the Group.

9.   Corporate power and consents: The Company has power under its
     constitutional documents to permit its entry into this Agreement and the
     Subscription in the manner set out herein and this Agreement (and its
     performance) has been duly authorised (such authorisation remaining in full
     force and effect), executed and delivered by, and constitutes legal, valid
     and binding obligations of the Company enforceable in accordance with its
     terms except as such enforceability may be limited under applicable
     bankruptcy, insolvency, fraudulent transfer, reorganisations or similar
     laws of general applicability relating to or affecting creditors rights and
     to general equitable principles; subject to satisfaction of the Conditions,
     there is no authorisation, consent, approval or notification required for
     the purposes of or as a consequence of the Subscription either from
     governmental, regulatory or other public bodies (including, without
     limitation, the Stock Exchange) or authorities or courts or from the
     respective sh areholders of the Company or from any third party pursuant to
     any contractual or other arrangement to which the Company or any other
     member of the Group is party; the Subscription and the compliance by the
     Company with all of the provisions of this Agreement will not conflict with
     or result in a material breach or violation of any of the terms or
     provisions of, or constitute a material default under, any agreement or
     instrument to which it is a party or by which it is bound or to which any
     of its property or assets is subject and will not contravene any law or
     regulation applicable to, or any order of any court or governmental agency
     with jurisdiction over the Company or any member of the Group, or any of
     their respective assets or properties.


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<PAGE>


10.  Subscription Shares: Upon completion of this Agreement, the Subscription
     Shares will be duly and validly authorised and issued and, when fully paid
     up, will rank pari passu in all respects with the other issued Shares.

11.  Stock Exchange and general compliance: The Company is not in material
     breach of any rules, regulations or requirements of the Stock Exchange, and
     the Company has complied in all material respects with all other applicable
     rules, regulations and other requirements material or relevant to the
     transactions contemplated by this Agreement as are required to be complied
     with at the date hereof.

12.  Incorporation and share capital: The Company has been duly incorporated and
     is validly existing under the laws of the jurisdiction of its incorporation
     with full corporate power and authority to conduct its business and the
     information contained in Recitals (A) and (B) to this Agreement is true and
     accurate; without limiting the foregoing, except for the Subscription or
     pursuant to the convertible securities listed below (the "Convertibles") or
     as specified in the Previous Disclosures, no person has any outstanding
     warrant, option, pre-emptive right or any other right of any description to
     require Shares to be allotted or issued by the Company. The Convertibles
     are: US$54,000,000 5% Mandatory Convertible Notes due 2005 issued by the
     Company - 28 June 2002, the US$450,000,000 1% Guaranteed Convertible Bonds
     due 2007 issued by PCCW Capital No.2 Limited and guaranteed by the Company
     and PCCW-HKT Telephone Limited and the US$1,100,000,000 3.5% Guaranteed
     Convertible Bonds due 2005 issued by PCCW Capital Limited and guaranteed by
     the Company - 6 December 2000. The terms and conditions attached to each of
     the Convertibles at the time of their original issue have not been amended
     or adjusted in any material manner which would affect the number of Shares
     to be issued on conversion.

13.  Certificate: The information and matters set out in the certificate
     referred to in clause 4.1(F), when issued, are true and accurate in all
     material respects.


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<PAGE>


               SCHEDULE 2: LIMITATIONS ON THE COMPANY'S LIABILITY

1.   Relevant Claims

     In this schedule, "Relevant Claim" means any claim under this Agreement.

2.   Financial Limits

2.1  Aggregate limit

     The aggregate liability of the Company under this Agreement, including the
     Company Warranties, shall be limited to US$350 million.

2.2  Thresholds

     The Company shall not be liable in respect of a Relevant Claim unless:

     (A)  the liability of the Company in respect of that Relevant Claim (and
          all other Relevant Claims arising out of or related to the same or
          similar subject matter) exceeds US$5 million;

     (B)  the aggregate liability of the Company in respect of all Relevant
          Claims in respect of the representations and warranties contained in
          paragraphs 2 (2003 Accounts), 3 (30 September Accounts) and 13
          (Certificate) of Schedule 1 exceeds US$20 million, in which case the
          Company shall be liable for the whole amount and not merely the excess
          over US$20 million; and

     (C)  the aggregate liability of the Company in respect of all Relevant
          Claims (other than in respect of the representations and warranties
          contained in paragraphs 2 (2003 Accounts), 3 (30 September Accounts)
          and 13 (Certificate) of Schedule 1) exceeds US$50 million (when
          aggregated with all Relevant Claims in respect of the representations
          and warranties contained in paragraphs 2 (2003 Accounts), 3 (30
          September Accounts) and 13 (Certificate) of Schedule 1, if
          applicable), in which case the Company shall be liable for the whole
          amount and not merely the excess over US$50 million.

3.   Time limits

     The Company shall have no liability in respect of any Relevant Claim in
     respect of a breach of the Company Warranties unless the Subscriber shall
     have given notice in writing to the Company of such claim specifying (in
     reasonable detail) the matter which gives rise to the claim, the nature of
     the claim and the amount claimed in respect thereof not later than 18
     months after the date of this Agreement (or, if later, 2 months after the
     date on which the audited consolidated financial statements of the Group
     covering the year ended 31 December, 2005 are published).

4.   No duplication of recovery

     The Subscriber shall not be entitled to recover damages or otherwise obtain
     reimbursement or restitution more than once in respect of the same loss.


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<PAGE>


5.   Legislation

     The Company will not be liable for any claim to the extent that the claim
     results from any act, matter, omission, transaction or circumstance which
     would not have occurred but for any legislation not in force at the date of
     this agreement, or any change of any law or administrative practice of any
     governmental agency including any legislation or change which takes place
     retrospectively.

6.   Insurance

     The Company will not be liable for any claim for breach of the Company
     Warranties unless the Subscriber has first made a claim under any insurance
     cover held by the Subscriber which may cover such claim and only then after
     that claim is denied whole or in part by the relevant insurer and if the
     Subscriber has still incurred some damage or loss will the Company be
     liable for any claims under the terms of this Agreement for that damage or
     loss. For the avoidance of doubt, the preceding sentence is not intended to
     impose any obligation on the Subscriber to take out any insurance cover in
     addition to that which it holds at the date of this Agreement.

7.   Impact of Tax

     In calculating the liability of the Company for a breach of Company
     Warranty, any tax benefit or reduction received by the Subscriber as a
     result of the loss or damage arising from that breach shall be taken into
     account.

8.   Consequential and Indirect Loss

     The Subscriber may not claim for any indirect or consequential loss.



                                       37