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                                                                     EXHIBIT 4.2

                                                    [LINKLATERS & ALLIANCE LOGO]

                                Dated 1 July 2002

                      CHINA MOBILE HONG KONG (BVI) LIMITED

                        CHINA MOBILE (HONG KONG) LIMITED

                     CHINA MOBILE COMMUNICATIONS CORPORATION

                                  TAX INDEMNITY

                                                     LINKLATERS
                                                     10th Floor, Alexandra House
                                                     Chater Road
                                                     Hong Kong

                                                     Telephone:(852)28424888
                                                     Facsmile: (852)28108133

                                                     Ref: PHMC/053801053

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THIS DEED OF TAX INDEMNITY is made on 1 July 2002

BETWEEN:

(1)      CHINA MOBILE HONG KONG (BVI) LIMITED a company incorporated under the
         laws of the British Virgin Islands whose registered office is at PO Box
         957, Offshore Incorporation Centre, Road Town, Tortola, British Virgin
         Islands (the "VENDOR");

(2)      CHINA MOBILE (HONG KONG) LIMITED a company incorporated under the laws
         of Hong Kong whose registered office is at 60th Floor, The Center, 99
         Queen's Road Central, Hong Kong (the "PURCHASER"); and

(3)      CHINA MOBILE COMMUNICATIONS CORPORATION a company incorporated under
         the laws of the PRC whose registered office is at 53A Xibianmennei
         Dajie, Xuanwuqu, Beijing, PRC (the "WARRANTOR").

WHEREAS:

(A)      By a Conditional Sale and Purchase Agreement dated 16 May 2002 (the
         "AGREEMENT") made between the Vendor, the Warrantor and the Purchaser,
         the Vendor has agreed to sell and the Purchaser has agreed to purchase
         the Target BVI Shares (as defined in the Agreement) on the terms and
         conditions therein contained.

(B)      It is a term of the Agreement that the Vendor and the Warrantor deliver
         to the Purchaser this Deed of Tax Indemnity on Completion (as defined
         in the Agreement).

NOW THIS DEED WITNESSES as follows:

1        INTERPRETATION

         1.1      In this Deed, unless the context requires otherwise:

                  (a)      words and expressions and other rules of
                           interpretation defined, used or set out in the
                           Agreement have the same meanings and application in
                           this Deed;

                  (b)      "TAXATION" means and includes all forms of tax, levy,
                           duty, charge, impost, fee, deduction or withholding
                           of any nature now or hereafter imposed, levied,
                           collected, withheld or assessed by any taxing or
                           other authority in any part of the world and includes
                           any interest, additional tax, penalty or other charge
                           payable or claimed in respect thereof,

                  (c)      "CLAIM" means any assessment, notice, demand, letter
                           or other document issued or action taken by or on
                           behalf of any person, authority or body whatsoever
                           and of whatever country from which it appears that
                           any member of the Target Companies Group is liable or
                           is sought to be made liable to make any payment or is
                           deprived or is sought to be deprived of any relief or
                           allowance or credit or right to repayment of
                           taxation;

                  (d)      "EVENT" includes (without limitation) the death of
                           any person, any action, omission or transaction
                           whether or not any member of the Target Companies
                           Group is a party thereto and includes completion of
                           the sale of the Target BVI Shares to the Purchaser
                           and references to the result of events on or before
                           the date hereof shall include the combined result of
                           two or more events one or more of which shall have
                           taken place before the date hereof;

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                  (e)      references to income or profits or gains earned,
                           accrued or received shall include income or profits
                           or gains deemed to have been or treated as or
                           regarded as earned, accrued or received for the
                           purposes of any legislation;

                  (f)      references to a Claim shall include any Claim whether
                           made before or after the date hereof and whether
                           satisfied or unsatisfied at the date hereof and shall
                           also include:

                           (i)      the loss of any relief, allowance or credit
                                    granted by or pursuant to any legislation or
                                    otherwise for taxation purposes which could
                                    but for the Claim in question have been
                                    available to the Purchaser or any member of
                                    the Target Companies Group whether or not
                                    the said loss results in any taxation being
                                    payable at the time of such loss; and

                           (ii)     the nullifying or cancellation of a right to
                                    repayment of taxation which would have been
                                    so available or is at the date hereof
                                    assumed by the Vendor, the Warrantor or the
                                    Purchaser to be available;

                           and in such a case the amount of taxation which could
                           otherwise have been relieved, allowed or credited by
                           the relief, allowance or credit so lost or the amount
                           of repayment which would otherwise have been obtained
                           shall be treated as an amount of taxation for which a
                           liability has arisen;

                  (g)      references to the Agreement shall be construed as
                           references to the Agreement as amended or
                           supplemented from time to time.

         1.2      The expressions the VENDOR, THE WARRANTOR, the TARGET
                  COMPANIES GROUP and the PURCHASER shall, where the context
                  permits, include their respective successors and assigns.

2        INDEMNITY

         Subject as hereinafter provided, each of the Vendor and the Warrantor
         hereby jointly and severally undertakes to indemnify and keep
         indemnified the Purchaser (for itself and as trustee for the Target
         Companies Group) against any loss or liability suffered by the
         Purchaser or any member of the Target Companies Group including, but
         not limited to, any diminution in the value of the assets of or shares
         in any member of the Target Companies Group, any payment made or
         required to be made by the Purchaser or any member of the Target
         Companies Group and any costs and expenses incurred as a result of or
         in connection with any Claim falling on any member of the Target
         Companies Group resulting from or by reference to any income, profits
         or gains earned, accrued or received on or before the date hereof or
         any event on or before the date hereof whether alone or in conjunction
         with other circumstances and whether or not such taxation is chargeable
         against or attributable to any other person, firm or company.

3        EXCEPTIONS

         The indemnities given by this Deed do not cover any Claim to the extent
         that provision or reserve in respect thereof has been made in the Last
         Accounts or to the extent that payment or discharge of such Claim has
         been taken into account therein.

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4        COSTS AND EXPENSES

         The indemnities given by this Deed shall cover all costs and expenses
         incurred by the Purchaser or any member of the Target Companies Group
         in connection with any Claim, and any penalties, fines or interest
         payable by the Purchaser or any member of the Target Companies Group
         relating to any Claim for which the Vendor or the Warrantor is liable
         under this Deed.

5        REIMBURSEMENT

         In the event that any Claim which is the subject of an indemnity
         hereunder is or has been discharged (whether by payment or by the loss
         of any relief, allowance, credit or right to repayment of taxation) or
         suffered by any member of the Target Companies Group, the indemnity
         given hereunder shall take effect as a covenant by the Vendor and the
         Warrantor forthwith to reimburse the relevant member of the Target
         Companies Group (through the Purchaser) for any amount so paid or to
         compensate the relevant member of Target Companies Group for any loss
         of relief, allowance, credit or right to repayment so suffered.

6        CONDUCT OF CLAIMS

         If the Purchaser becomes aware of a Claim relevant for the purposes of
         this Deed, it shall as soon as reasonably practicable give notice
         thereof to the Vendor and the Warrantor and shall (subject to the
         Purchaser and the Target Companies Group being indemnified to the
         Purchaser's satisfaction against any liability, costs, damages or
         expenses which may be incurred thereby) take such action and procure
         that the Target Companies Group shall take such action as the Vendor
         and the Warrantor may reasonably request to avoid, resist, dispute,
         defend, compromise or appeal against the Claim, provided that neither
         the Purchaser nor any member of the Target Companies Group shall be
         required to take any steps which would require any admission of guilt
         or liability relating to matters connected with the Claim in question
         or which would affect the future conduct of the business of the
         Purchaser or any member of the Target Companies Group or affect the
         rights or reputations of any of them nor shall they be required to take
         any such action unless the Vendor and the Warrantor shall have produced
         to them a leading barrister's opinion that such action is reasonable.

7        SET-OFF AND DEDUCTIONS

         All payments to be made by the Vendor and the Warrantor under this Deed
         shall be made in full without set-off or counterclaim or any
         restriction or condition and free and clear of any present or future
         taxes, duties, charges or other deductions or withholdings of any
         nature. If any deduction or withholding is required to be made from any
         such payment the Vendor and the Warrantor shall, together with such
         payment, pay such additional amount as is necessary to ensure that the
         recipient receives the full amount due hereunder.

8        WAIVER AND SEVERABILITY

         No failure or delay by the Purchaser or any member of the Target
         Companies Group in exercising any right, power or remedy under this
         Deed 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. If at any time any
         provision of this Deed is or becomes illegal, invalid or unenforceable
         in any respect, the legality, validity and enforceability of the
         remaining provisions of this Deed shall not be affected or impaired
         thereby.

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9        ASSIGNMENT

         The Purchaser and any member of the Target Companies Group may assign
         its respective rights and benefits under this Deed.

10       NOTICES

         Each notice, demand or other communication given or made hereunder
         shall be in writing and delivered or sent to the relevant party at its
         address or telex number or fax number set out in the Agreement. The
         provisions of clause 21 of the Agreement shall apply to this Deed as
         though they have been fully set out herein.

11       GOVERNING LAW AND JURISDICTION

         11.1     This Deed shall be governed by and construed in accordance
                  with the laws of Hong Kong.

         11.2     Any dispute arising out of or in connection with this Deed
                  shall be resolved by arbitration in Hong Kong International
                  Arbitration Centre by a single arbitrator in accordance with
                  the UNCITRAL Arbitration Rules in force from time to time. The
                  parties agree that the arbitral award will be final and
                  binding.

IN WITNESS WHEREOF this Deed has been executed on the day and year first above
written.

THE COMMON SEAL OF                             )
CHINA MOBILE HONG KONG (BVI) LIMITED           )    (Common Seal of China Mobile
was affixed hereto in the presence of:         )    Hong Kong (BVI) Limited)

/s/ Wang Xiaochu)
    ---------------------------------

Director

THE COMMON SEAL OF                             )
CHINA MOBILE (HONG KONG) LIMITED               )    (Common Seal of China Mobile
was affixed hereto in the presence of:         )    (Hong Kong) Limited)

/s/ Wang Xiaochu)
    ---------------------------------

Director

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SIGNED, SEALED AND DELIVERED                   )
BY                                             )      (/s/ Xue Taohai)
a duly authorised representative on behalf of  )
CHINA MOBILE COMMUNICATIONS CORPORATION        )

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