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Content       Title Page1. Sale and Purchase  2 2. Purchase Consideration and its Adjustment Mechanism  3 3. Conditions to Completion  4 4. Joint Working Committee  6 5. Prior-Completion Undertakings  6 6. Completion and Final Transfer  7 7. Representations and Warranties  9 8. No Revocation or Termination Right  11 9. Employee  11 10. Arrangement after Completion Commencement Date  11 11. Payment  12 12. Announcement  12 13. Confidentiality  12 14. No Transfer  13 15. Further Assurances  13 16. Taxes and Expenses  14 17. Notice  14 18. Conflicts with Other Agreements  15 19. Waivers, Rights and Remedies  15 20. Counterparts  15 21. Effectiveness and Amendment  15 22. Invalidity  15 23. Governing Law and Arbitration  16 Schedule I Definitions and Interpretations    
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This Agreement was entered into by the following parties in Beijing, the People’s Republic of China(the “PRC” or “China”) on 2 June 2008:(1) China Unicom Corporation Limited, a foreign-invested enterprise incorporated in the PRC, withits address at 12/F, Henderson Center Office Tower 1, 18 Jianguomennei Avenue, DongchengDistrict, Beijing, the PRC (the “Seller”)(2) China Telecom Corporation Limited, a joint stock limited company incorporated in the PRC withlimited liability, with its address at 31 Financial Street, Xicheng District, Beijing , thePRC (the “Purchaser”)(3) China Unicom Limited, a company incorporated in Hong Kong with limited liability, at 75/F,The Centre, 99 Queen’s Road Central, Hong Kong, the PRC (“Unicom Listco”)Words and expressions used in this Agreement shall be defined and interpreted in accordance withSchedule 1.Whereas:(1) As of the date of this Agreement, Unicom Group is the sole telecom operator holding thelicense from the then Ministry of Information Industry to provide CDMA mobiletelecommunications services in the PRC. Unicom New Horizon, a wholly-owned subsidiary ofUnicom Group, is responsible for the development of CDMA Network in the PRC.(2) The Seller is a foreign-invested enterprise incorporated and existing in the PRC, with 100%of its equity rights held by Unicom Listco. In accordance with the Unicom CDMA Lease Agreementdated 26 October 2006 entered into between Unicom Group, Unicom New Horizon and Unicom A ShareCompany and the Transfer Agreement of the Unicom CDMA Lease Agreement entered into on the samedate between Unicom A Share Company and the Seller, the Seller operates CDMA business byleasing capacity on the CDMA Network exclusively from Unicom New Horizon.(3) The Purchaser is a joint stock limited company incorporated and existing in the PRC withlimited liability, whose shares are listed in Hong Kong and the United States of America, with70.89% of its shares held by Telecom Group.
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(4) To develop mobile business and accomplish comprehensive business operation, the Purchaserproposes to purchase from the Seller the CDMA Business and related assets and liabilities; toadjust business distribution and concentrate its strength on the development of GSM business,the Seller proposes to sell to the Purchaser the CDMA Business and related assets andliabilities owned and operated by it (the “Business Transaction”). Meanwhile, Telecom Groupproposes to purchase all assets owned by Unicom New Horizon, Unicom New Horizon proposes tosell all assets owned by it to Telecom Group, while Telecom Group proposes to purchase part ofCDMA assets owned by Unicom Group, and Unicom Group proposes to sell part of CDMA assets ownedby it to Telecom Group (the “Asset Transfer”).Therefore, the parties have reached the following framework agreement for the Business Transactionthrough friendly negotiation on an equality and mutual beneficial basis:1. Sale and Purchase1.1 The Seller shall sell all Businesses and related assets and liabilities owned and operated byit as of the Completion Commencement Date (the “Target Businesses”) in accordance with terms andconditions set out in this Agreement and the Detailed Agreements, including:(1) CDMA Subscribers and related rights and obligations (including but not limited to receivableusage fees due, prepayment by subscribers, balance relating to rechargeable cards underpre-payment arrangement for nationwide CDMA intelligent network, subscriber deposits,subscriber bonus costs, balance of handset price to be amortized that have actually occurredprior to the Completion Commencement Date);(2) Tangible and intangible assets related solely to the Businesses, including but not limited tosubscriber information and business information, handsets, accounts receivable, monetaryfunds, franchise shops for CDMA terminals (if any), telecom cards, rechargeable cards, andtrademarks, brand-names (including product names), copyrights, proprietary technologies,patent and other intellectual properties (if any), except as otherwise agreed upon by theSeller and the Purchaser;
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(3) Contractual relationships and business arrangements related solely to the Businesses,including but not limited to interconnection agreements, subscriber connection agreements,equipment supply agreements, IT service agreements, sales outlets operation agreements, salesoutlets investment agreements (if any), and existing cooperation, agency, and other businessesrelated to contractual relationships and business arrangements in respect of the Business ofvarious non-self-owned sales outlets;(4) Other contractual relationships and business arrangements related to the Businesses to bedefined in the Detailed Agreements by the Seller and the Purchaser;(5) Other assets including CDMA/GSM Shared Base Stations agreed upon by the Seller and thePurchaser; and(6) Such Liabilities directly related to the above mentioned Items (1)-(5) as of the CompletionCommencement Date, except any interest bearing liabilities and other liabilities to be definedin the Detailed Agreements by the Seller and the Purchaser. To avoid any doubt, assets relatedto the Assumed Liabilities shall be deemed to be included in Items (1)-(5) above.1.2 The parties shall consult with each other and agree separately in the Detailed Agreements as towhether China Unicom (Macau) Ltd. and Unicom Huasheng Telecommunications Technology Company Limitedshall be included in the Target Businesses.1.3 From the date of this Agreement to the Delivery Date, the parties shall, in accordance withprinciples set out in Article 1.1, confirm a list of the Target Businesses. In particular, theparties shall complete the preparation of the initial list of the Target Businesses prior to thesigning of the Detailed Agreements and update such initial list before the Completion CommencementDate in a manner as confirmed by the parties, so as to ensure the final list of the TargetBusinesses can be prepared within 20 days from the Completion Commencement Date or on another dateagreed upon by the parties. The final list may be adjusted within the Completion period, subject toagreement of the parties. The parties shall sign the final Completion list on the Delivery Date.2. Purchase Consideration and its Adjustment Mechanism
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2.1 The selling price of the Target Businesses (the “Initial Consideration”) shall be RMB 43.8billion.2.2 The parties agree that the Initial Consideration shall be adjusted pursuant to the followingmechanism, i.e., based on CDMA Service Revenue disclosed in 2008 Interim Report of Unicom Listco(R1) and CDMA Service Revenue disclosed in 2007 Interim Report of Unicom Listco (R2), with A as thecoefficient:Adjusted transaction consideration = A x the Initial ConsiderationIf (R1/R2+0.02) > or = 1, then A = 1,If (R1/R2+0.02) < 1, then A = (R1/R2+0.02).The price adjusted pursuant to the above mechanism shall be the Final Purchase Price (the “FinalPurchase Price”).2.3 The Purchaser shall pay the Final Purchase Price to the Seller in cash in three (3)installments as follows:(1) The Purchaser shall pay the Seller 70% of the Final Purchase Price (the “First Installment”)within three (3) days from the Unconditional Date;(2) The Purchaser shall pay the Seller 20% of the Final Purchase Price (the “Second Installment”)within three (3) days from the Delivery Date; and(3) The Purchaser shall pay the Seller 10% of the Final Purchase Price (the “Third Installment”)before 31 March 2009.Each of the above installments (if applicable) may be offset by such equal money amount payable bythe Seller to the Purchaser, subject to agreement by all parties to this Agreement.3. Conditions to Completion3.1 The Completion shall be subject to the fulfillment or waiver of the following conditions:
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(1) There being no Material Adverse Change in the operation of the Target Businesses;(2) The Business Transaction having been approved by shareholders of Unicom Listco pursuant toapplicable laws, regulations and the Listing Rules, and the CDMA Termination Agreement havingbeen approved by the independent shareholders of Unicom Listco;(3) The Business Transaction having been approved by the Purchaser pursuant to applicable lawsand regulations;(4) The Business Transaction having been approved by shareholders of Unicom A Share Companypursuant to applicable laws, regulations and the Listing Rules, and the CDMA TerminationAgreement having been approved by the non-connected shareholders of Unicom A Share Company;(5) The amendments to articles of association and changes to business scope having been approvedby the shareholders of the Purchaser at the general meeting pursuant to applicable laws,regulations and the Listing Rules, and the Telecom CDMA Lease Agreement having been approvedby the independent shareholders of the Purchaser;(6) all approvals, permits, filings and registrations in connection with the Business Transactionand the Asset Transfer Agreement having been obtained from the relevant governmental andregulatory authorities in the PRC and any other relevant jurisdictions, which shall includebut not limit to, the approval of the Ministry of Industry and Information for Telecom Groupto authorize the Purchaser to operate mobile telecommunications business and to use therelevant telecommunications resources such as CDMA bandwidth and network numbers, and suchapprovals remain in full force and effect without modification;(7) All necessary procedures required by applicable laws and binding agreements or documents inconnection with the Business Transaction having been performed by the Seller in accordancewith the Completion Plan, including but not limited to those regarding creditors’announcement/notification procedures or obtaining such consent from such creditors;
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(8) The Detailed Agreements in connection with the Business Transaction and the agreementregarding the arrangements in the Transition Period having been entered into by the Seller,the Purchaser and Unicom Listco; and(9) The Asset Transfer between Unicom New Horizon, Unicom Group and Telecom Group having beencommenced at the same time.3.2 Each party shall use its respective reasonable endeavors to procure the satisfaction of allconditions set out in Article 3.1 as soon as practicable before 30 September 2008.3.3 If the above conditions are not satisfied on or before 31 December 2008 (or such other date asthe parties may agree), this Agreement will automatically terminate (except for SurvivingProvisions). Under such circumstance, no party (or its Affiliate) shall be entitled to make a claimof any nature against any other party (or its Affiliate) pursuant to this Agreement, except forclaims related to rights or obligations accrued before the termination or under SurvivingProvisions.4. Joint Working CommitteeThe relevant parties shall consult with each other and establish a Joint Working Committee within 4Business Days after the signing of this Agreement. The duty of the Joint Working Committee is toensure the smooth operation and transfer of the Target Businesses in the transaction period.5. Pre-Completion Undertakings5.1 Except otherwise stipulated in the Transaction Documents or with the consent of the Purchaseror as approved or recognized by the Joint Working Committee, the Seller and Unicom Listco undertakethat before the Completion Commencement Date:(1) The operation and management of the Target Businesses will be conducted in the ordinarycourse, i.e., (i) it will not make any material change to the usual operation policies of theTarget Businesses (including but not limited to practice and policies relating to operation,marketing and pricing); (ii) it will not make any material change to its usual financialpolicy of the Target Businesses; (iii) it will actively protect the subscriber base of theTarget Businesses, and will expand the
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  subscriber base with its usual sales practice; (iv) it will ensure that the normal operation ofthe Target Businesses is maintained, and will ensure that services meeting the usual standardswill be provided to the subscribers of the Target Businesses;(2) It will not enter into any contract on the Target Businesses with a value in excess of RMB20million;(3) It will not make any investment in connection with the Target Businesses for an amountexceeding RMB20 million;(4) It will not make any disposal in connection with the Target Businesses (including but notlimited to transfer, acceptance, leasing, pledging or otherwise creating third party rightsthereon) for an amount exceeding RMB20 million;(5) It will not make any substantial adjustments to its labour relationship with, or thepositions and remuneration for, any of its employees working for the CDMA Business and staffto join the Purchaser; and(6) The Purchaser will not, at the Completion Commencement Date, have any liability foroutstanding benefits or social securities owed to Transferred Employees.5.2 The Seller will actively cooperate with the Purchaser to complete the due diligenceinvestigations, accounts verification, and stock-taking of assets of the Target Businesses inaccordance with reasonable requests from the Purchaser.6. Completion and Final Transfer6.1 The Completion Commencement Date shall be the date on which the Purchaser makes the payment ofthe First Installment pursuant to requirements of Article 2.3 of this Agreement.6.2 On the Completion Commencement Date, the Target Businesses will be deemed as legally owned bythe Purchaser. Unless the parties otherwise agree, any obligations and liabilities arising from theoperation and management of the Target Businesses before the Completion Commencement Date shall beborne by the Seller; from the Completion Commencement Date, any obligations or liabilities arisingfrom the
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operation and management of the Target Businesses shall be borne by the Purchaser.6.3 The Purchaser and the Seller agree to cooperate and complete, within 60 days from theCompletion Commencement Date, a substantial delivery of the Target Businesses pursuant to theCompletion Plan (the “Delivery Date”). To achieve the above mentioned target, the parties will,before the signing of the Detailed Agreements, jointly conduct the classification, due diligenceinvestigations, accounts verification, and stock-taking of the Target Businesses and related assetsand other follow-up jobs, and the confirmation of related lists (including those on assets,liabilities, staff, and material contracts), as well as the initial list of the Target Businessesas soon as practicable.6.4 To accomplish a full delivery of the Target Businesses, the Seller shall, pursuant to theCompletion Plan agreed upon by the parties, engage in actions including but not limited to thefollowings within 60 days from the Completion Commencement Date:(1) On the Completion Commencement Date, to issue an announcement regarding the transfer of CDMASubscribers due to the Business Transaction, stating that all CDMA Subscribers will betransferred to the Purchaser since the Completion Commencement Date;(2) On the Completion Commencement Date, to transfer the employment relationship of allTransferred Employees to the Purchaser;(3) To transfer all assets of the Target Businesses (including tangible and intangible assets) tothe Purchaser, to revise the present contractual relationships and business arrangements ofthe Seller related to the Target Businesses, so that all rights owned and obligations taken bythe Seller will be owned and taken by the Purchaser (or jointly owned and taken);(4) To deliver all business information (including but not limited to related contract copies,subscriber information, business records, financial and accounting records, operation records,statistical data, instruction books, maintenance handbooks, training handbooks and otherdocuments, data and information necessary and related to the proper operation of TargetBusinesses, including in paper, electronic and other forms) related to the Target Businessesand incidental to the transferred assets and transferred liabilities to the Purchaser on an“as is” basis;
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(5) Where the Target Business involves any change of the parties to any contract, to handle theprocedure for such changes; and(6) To transfer Assumed Liabilities, and change the contractual parties on any AssumedLiabilities to the Purchaser.The Seller and the Purchaser will further agree on detailed arrangements related to the Completionin the Detailed Agreements.6.5 The Seller agrees to cooperate with the Purchaser in the Completion pursuant to Article 6.4above.6.6 The Seller undertakes that, within the period from the Completion Commencement Date to theDelivery Date, Article 5.1 of this Agreement shall continue to be applicable to such part of theTarget Businesses that has not been transferred to the Purchaser has not been completed.7. Representations and Warranties7.1 Representations and Warranties of the SellerAs of the date of this Agreement, the Completion Commencement Date and the Delivery Date, exceptfor items disclosed in writing in the Transaction Documents or for which provisions have been madein the financial statements, the Seller makes the following representations and warranties (the“Warranties of the Seller”) to the Purchaser:(1) It holds all the relevant permits, licences or authorization from government authoritiesnecessary for the operation of the Target Businesses (including infrastructuretelecommunications business and value-added telecommunications business);(2) Its execution and implementation of this Agreement will not result in:(a) any breach of its constitutional documents and other related documents, or any laws, rulesand regulations applicable to the company; or(b) any breach of any material contract, agreement, licence, or other indenture entered
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  into by it as a party, or any order, judgment and decree issued by any court, governmentauthority and regulatory authority.(3) It legally owns and operates the Target Businesses and related assets, which are free of(including but not limited to) any charge, pledge, lien, reserved rights or any other thirdparty rights and other restriction to rights;(4) The Seller agrees that, in the Detailed Agreements to be entered into by the parties, it willmake detailed representations and warranties to the Purchaser on the conditions of the TargetBusinesses (including but not limited to those relating to business, technology, financialaffairs, law, and other aspects) and on the validity of its sale of the Target Businesses inaccordance with market practice and on terms mutually agreed by the Purchaser and the Seller.7.2 Warranties of Unicom ListcoUnicom Listco provides its warranty in respect of the representations and warranties made by theSeller in Article 7.1 of this Agreement.7.3 Representations and Warranties of the PurchaserAs of the date of this Agreement, the Completion Commencement Date and the Delivery Date, thePurchaser makes the following representations and warranties (the “Warranties of the Purchaser”) tothe Seller:(1) The execution and implementation of this Agreement will not result in:(a) any breach of its constitutional documents and other related documents, or any laws, rulesand regulations applicable to the company; or(b) any breach of any material contract, agreement, licence, or other indenture entered into byit as a party, or any order, judgment and decree issued by any court, government authority andregulatory authority.(2) The Purchaser has such immediately available financial resources (in cash or loan) asnecessary for payment of the purchase price on the due date pursuant to this Agreement andperform other obligations hereunder;
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(3) The Purchaser agrees to make detailed representations and warranties to Unicom Listco and theSeller on the validity of its purchase of the Target Businesses in the Detailed Agreements inaccordance with market practice and on terms mutually agreed by the Purchaser and the Seller.8. No Revocation or Termination RightUnless otherwise stipulated in this Agreement, no party shall have the right to revoke or terminatethis Agreement under any circumstance (whether before or after the Completion).9. Employees9.1 The total number of employees to be transferred from the Seller to the Purchaser will bedetermined based on the proportion of the CDMA Service Revenue for 2007 to the total servicerevenue of Unicom Listco for the same period. The scope of such transfer covers existingcontract-based employees of the Seller as at 31 December 2007. Professional employees directlyrelated to CDMA Network shall be transferred to the Purchaser and other employees providingmanagement and business support for the development of CDMA Network business shall be transferredproportionately. A specific plan will be determined by the parties through consultation, takinginto consideration the geographical differences between the South and the North and other factorsin present businesses of related enterprises, and the relevant agreement will be entered intobetween the parties separately. Retired employees, whether officially retired, retired with honoror retired before the stipulated age, shall not be included in the scope of such transfer.9.2 The services provided by the seconded employees to the Purchaser will be determined, after thePurchaser consulted the Seller, in a separate agreement based on the necessity of the CDAM Networkoperation and existing services provided by the seconded employees working with the Seller for CDAMNetwork business. Such employees shall be seconded to the Purchaser under new agreements enteredinto by them with intermediaries to ensure a smooth transition of the business operation.9.3 The parties shall finalize the list of Transferred Employees as soon as practicable so as tostabilize the workforce and facilitate the management.10. Arrangement after the Completion Commencement Date
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After the Completion, as the Seller and the Purchaser will each own certain CDMA Network/GSMNetwork Shared Assets, in order to ensure that the businesses of each party will be operatednormally and services to subscribers will not be affected, the Seller and the Purchaser shall, onthe principle of reciprocity, provide each other with such operation conditions and serviceassurance as necessary, including reciprocal use of the IT system and the value-added serviceplatform shared by CDMA Network and GSM Network until 31 March 2009.11. Payment11.1 All payments payable by the Purchaser pursuant to this Agreement and the Detailed Agreementsshall be paid to the bank account of the Seller set forth in the Detailed Agreements.11.2 Payments made pursuant to Article 11.1 shall be paid in immediately available fund throughtelegraphic transfer on the due date. Proper receipt of due payment shall be considered theeffective performance of related payment obligation.11.3 The parties shall agree separately upon arrangements with regard to late payments and relatedlate payment penalties.12. Announcement12.1 Neither party (nor any of its respective Affiliate) shall be allowed to issue any announcementor circular with regard to the existence of or the subject matter of this Agreement (or any otherTransaction Document) without prior written approval from the other party (such approval shall notto be unreasonably withheld or delayed).12.2 The restrictions in Article 12.1 shall not apply to the extent that the announcement orcircular is required by law, by any stock exchange or any regulatory or other supervisory body orauthority of competent jurisdiction, whether or not the requirement has the force of law. If thisexception applies, the party making the announcement or issuing the circular shall use itsreasonable endeavours to consult with the other party in advance as to its form, content andtiming.13. Confidentiality
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13.1 Each party shall (and shall ensure each of its representatives shall) keep ConfidentialInformation confidential, and shall not disclose to any person unless (a) permitted under thisArticle 13; or (b) upon written approval from the other party.13.2 Article 13.1 shall not prevent disclosure by a party or its representatives if and to theextent it can demonstrate that:(1) disclosure is required by law or by any stock exchange or any regulatory,governmental or antitrust body (including any tax authority) having competent jurisdiction(provided that the disclosing party shall first inform the other party of its intention todisclose such information and take into account the reasonable comments of the other party);(2) Confidential Information to be disclosed is lawfully in the possession of that partyor any of its representatives (in either case as evidenced by written records) without anyconfidential obligation prior to its being received or held;(3) Confidential Information to be disclosed become publicly available other than due tothat party’s fault (or that of its representatives); and(4) disclosure is required for the purpose of any arbitral or judicial proceedingsarising out of this Agreement (or any other Transaction Document).14. No TransferExcept as provided in this Agreement or unless the parties specifically agree in writing, no personshall assign, transfer, charge or otherwise deal with (collectively “Transfer” for the purpose ofthis Article 14) all or any of its rights under this Agreement, nor grant, declare, create ordispose of any right, interest or obligation it has. Any purported assignment in contravention ofthis Article 14 shall be void.15. Further Assurances15.1 Each of the parties shall execute (or procure the execution of) such further documents as maybe required by law or be necessary to implement and give effect to this Agreement.15.2 Each of the parties shall procure that its Affiliates comply with all obligations under thisAgreement which are expressed to apply to any such Affiliates.
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16. Taxes and Expenses16.1 Subject to Article 16.2 and except as otherwise provided in this Agreement (or any otherTransaction Document), each party shall be responsible for its own costs, charges and otherexpenses (including those of its Affiliates) incurred in connection with the Business Transaction.16.2 The Purchaser, Seller or their respective Affiliates shall, in accordance with provisions ofrelevant laws and regulations as well as rules or decisions of the state, bear all taxes arisingfrom this Agreement or any other Transaction Documents and all relevant levies imposed by anygovernment authority, regulatory body and stock exchange.17. Notice17.1 Any notice in connection with this Agreement shall be in writing in Chinese and delivered byhand, fax, registered post or courier services recognized by the parties. A notice shall beeffective upon receipt and shall be deemed to have been received (a) at the time of delivery, ifdelivered by hand, registered post or courier services or (b) at the time of transmission ifdelivered by fax, provided that in either case, where delivery occurs outside Working Hours, noticeshall be deemed to have been received at the start of working hours on the following Business Day.17.2 The addresses and fax numbers of the parties for the purpose of Article 17.1 are:The Seller: