<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 20-F

[ ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                                       OR

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from__________ to __________

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

                         COMMISSION FILE NUMBER 1-14696

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

                        CHINA MOBILE (HONG KONG) LIMITED
             (Exact Name of Registrant as Specified in Its Charter)

                                       N/A
                 (Translation of Registrant's Name into English)

                                HONG KONG, CHINA
                 (Jurisdiction of Incorporation or Organization)

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

                             60TH FLOOR, THE CENTER
                             99 QUEEN'S ROAD CENTRAL
                                HONG KONG, CHINA
                    (Address of Principal Executive Offices)

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

     Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
             TITLE OF EACH CLASS                      NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                      -----------------------------------------
<S>                                                   <C>
Ordinary shares, par value HK$ 0.10 per share               New York Stock Exchange, Inc.*
</TABLE>

*    Not for trading, but only in connection with the listing on the New York
     Stock Exchange, Inc. of American depositary shares representing the
     ordinary shares.

     Securities registered or to be registered pursuant to Section 12(g) of
     the Act:

                                      None
                                (Title of Class)

     Securities for which there is a reporting obligation pursuant to Section
     15(d) of the Act:

                                      None
                                (Title of Class)

     Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report.

     As of December 31, 2002, 19,671,653,899 ordinary shares, par value HK$ 0.10
per share, were issued and outstanding.

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark which financial statement item the registrant has
elected to follow. Item 17 [ ] Item 18 [X]

================================================================================

<PAGE>

                                TABLE OF CONTENTS

                        CHINA MOBILE (HONG KONG) LIMITED

<TABLE>
<CAPTION>
                                                                                                   PAGE
<S>         <C>                                                                                    <C>
                                   PART I

Item 1.     Identity of Directors, Senior Management and Advisers...............................     3
Item 2.     Offer Statistics and Expected Timetable.............................................     3
Item 3.     Key Information.....................................................................     3
Item 4.     Information on the Company..........................................................    15
Item 5.     Operating and Financial Review and Prospects........................................    37
Item 6.     Directors, Senior Management and Employees..........................................    52
Item 7.     Shareholders and Related Party Transactions.........................................    59
Item 8.     Financial Information...............................................................    66
Item 9.     The Offer and Listing...............................................................    67
Item 10.    Additional Information..............................................................    68
Item 11.    Quantitative and Qualitative Disclosures about Market Risk..........................    75
Item 12.    Description of Securities Other than Equity Securities..............................    77

                                   PART II

Item 13.    Defaults, Dividend Arrearages and Delinquencies.....................................    77
Item 14.    Material Modifications to the Right of Security Holders and Use of Proceeds.........    77
Item 15.    Controls and Procedures.............................................................    77
Item 16A.   Audit Committee Financial Expert....................................................    77
Item 16B.   Code of Ethics......................................................................    78
Item 16C.   Principal Accountant Fees and Services..............................................    78

                                  PART III

Item 17.    Financial Statements................................................................    78
Item 18.    Financial Statements................................................................    78
Item 19.    Exhibits............................................................................    78
</TABLE>

                                      -i-

<PAGE>

                           FORWARD-LOOKING STATEMENTS

         This annual report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements are, by their nature, subject to significant risks
and uncertainties, and include, without limitation, statements relating to:

         -    our business strategies;

         -    network expansion plans and related capital expenditure plans;

         -    the planned development of new mobile technologies and other
              technologies and related applications;

         -    the expected impact of tariff changes on our business, financial
              condition and results of operations;

         -    the expected impact of new services on our business, financial
              condition and results of operations; and

         -    future developments in the telecommunications industry in Mainland
              China, including the restructuring of the industry and changes in
              government policies.

         The words "anticipate", "believe", "estimate", "expect", "intend" and
similar expressions, as they relate to us, are intended to identify certain of
such forward-looking statements. We do not intend to update these
forward-looking statements.

         These forward-looking statements reflect our current views with respect
to future events and are not a guarantee of future performance. Actual results
may differ materially from information contained in the forward-looking
statements as a result of a number of factors, including, without limitation:

         -    changes in the regulatory policies of the Ministry of Information
              Industry of China and other relevant government authorities, which
              could affect, among other things, the granting of requisite
              government approvals, licenses and permits, interconnection and
              transmission line arrangements, tariff policies, capital
              investment priorities, and spectrum allocation;

         -    the effect of competition on the demand for and price of our
              services;

         -    changes in mobile telephony and related technologies, which could
              affect the viability and competitiveness of our mobile
              telecommunications networks; and

         -    changes in political, economic, legal and social conditions in
              Mainland China, including, without limitation, the Chinese
              government's policies with respect to new entrants in the
              telecommunications industry, the entry of foreign companies into
              China's telecommunications market and China's economic growth.

              In addition, our future network expansion and other capital
expenditure and development plans are dependent on numerous factors, including,
among others:

         -    our ability to obtain adequate financing on acceptable terms;

         -    the adequacy of currently available spectrum or the availability
              of additional spectrum;

         -    the availability of transmission lines and equipment, and the
              availability of the requisite number of sites for locating network
              equipment, on reasonable commercial terms;

                                      -1-

<PAGE>

         -    our ability to develop or obtain new technology and related
              applications; and

         -    the availability of qualified management and technical personnel.

                  SPECIAL NOTE ON OUR FINANCIAL INFORMATION AND
         CERTAIN STATISTICAL INFORMATION PRESENTED IN THIS ANNUAL REPORT

              As required under generally accepted accounting principles in Hong
Kong, or Hong Kong GAAP, we adopted the purchase accounting method to account
for our acquisitions of various regional mobile telecommunications companies, as
described in "Item 4. Information on the Company -- The History and Development
of the Company". Accordingly, our consolidated financial statements and, except
as otherwise noted, all other Hong Kong GAAP financial information presented in
this annual report, include the results of these companies only from the
respective dates of acquisition.

              In prior years, positive goodwill arising from acquisitions was
eliminated against reserves, and negative goodwill arising from acquisitions was
credited to a capital reserve. Effective January 1, 2001, in order to comply
with Statement of Standard Accounting Practice, or SSAP, 30 "Business
combinations", issued by the Hong Kong Society of Accountants, we adopted a new
accounting policy for goodwill. For acquisitions after January 1, 2001, positive
goodwill arising from acquisitions is amortized to the consolidated statements
of income on a straight-line basis over its estimated useful life, which shall
not exceed 20 years. Positive goodwill is stated in the consolidated balance
sheet at cost less any accumulated amortization and any impairment losses.
Despite a change in accounting policy for goodwill, goodwill arising from
acquisitions prior to January, 2001 has not been adjusted as we have taken
advantage of the transitional provisions set out in paragraph 88 of SSAP 30 to
the effect that the new accounting policy has been adopted prospectively only
from January 1, 2001 onwards.

              Under generally accepted accounting principles in the United
States, or U.S. GAAP, as a result of our being under common control with each of
these companies prior to the acquisitions, each of the acquisitions was
considered to be a "combination of entities under common control". Under U.S.
GAAP, combinations of entities under common control are accounted for under the
"as if pooling-of-interests" method, whereby assets and liabilities are
accounted for at historical cost and the financial statements of previously
separate companies for periods prior to the combination generally are restated
on a combined basis. See "Item 5. Operating and Financial Review and Prospects".

              The presentation and classification of items in the consolidated
cash flow statement have been changed due to the adoption of the requirements of
SSAP 15 (revised 2001) "Cash flow statements", issued by the Hong Kong Society
of Accountants. As a result, the cash flow items "taxation", "returns on
investments" and "servicing of finance" have been reclassified into "operating",
"investing" and "financing" activities, respectively, and a detailed breakdown
of cash flows from operating activities has been included in the consolidated
cash flow statement. Comparative figures for all prior years have been
reclassified to comply with the requirements under SSAP 15.

              The statistical information set forth in this annual report
relating to Mainland China is taken or derived from various publicly available
government publications that have not been prepared or independently verified by
us. This statistical information may not be consistent with other statistical
information from other sources within or outside Mainland China.

                                      -2-

<PAGE>

                                     PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

              Not applicable.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.

              Not applicable.

ITEM 3.  KEY INFORMATION.

SELECTED FINANCIAL DATA

              The following tables present selected historical financial data of
our company as of and for each of the years in the five-year period ended
December 31, 2002. The selected historical income statement data for the years
ended December 31, 2000, 2001 and 2002 and the selected historical balance sheet
data as of December 31, 2001 and 2002 set forth below are derived from, and
should be read in conjunction with, and are qualified in their entirety by
reference to, our audited consolidated financial statements, including the
related notes, included elsewhere in this annual report. The selected historical
Hong Kong GAAP income statement data for the year ended December 31, 1998 and
1999 and the selected historical Hong Kong GAAP balance sheet data as of
December 31, 1998, 1999 and 2000 are derived from our audited financial
statements that are not included herein.

              Our consolidated financial statements are prepared and presented
in accordance with Hong Kong GAAP. As required under Hong Kong GAAP, we adopted
the purchase accounting method to account for our acquisitions of the various
regional mobile telecommunications companies, as described in "Item 4.
Information on the Company -- The History and Development of the Company".
Accordingly, our consolidated financial statements and, except as otherwise
noted, all other Hong Kong GAAP financial information presented in this annual
report, include the results of these companies only from the respective dates of
acquisition. In contrast, under U.S. GAAP, our acquisitions of these companies
are each considered a combination of entities under common control which would
be accounted for under the "as if pooling-of-interests" method, whereby assets
and liabilities are accounted for at historical cost and the accounts of
previously separate companies for periods prior to the combination generally are
restated on a combined basis. For a discussion of significant differences
between Hong Kong GAAP and U.S. GAAP as they relate to us, and the effects of
such differences on net profit for the years ended December 31, 2000, 2001 and
2002 and shareholders' equity as of December 31, 2001 and 2002, see note 33 to
our consolidated financial statements. In addition, our condensed consolidated
financial statements prepared and presented in accordance with U.S. GAAP for the
relevant periods are set forth in note 33 to our consolidated financial
statements.

                                      -3-

<PAGE>

<TABLE>
<CAPTION>
                                                          AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                        ---------------------------------------------------------------------------
                                           1998         1999         2000         2001         2002         2002
                                           RMB          RMB          RMB          RMB          RMB           US$
                                        ----------   ----------   ----------   ----------   ----------   ----------
                                              (in millions, except share, per share and per ADS information)
<S>                                     <C>          <C>          <C>          <C>          <C>          <C>
INCOME STATEMENT DATA:
HONG KONG GAAP
Operating revenue................           26,345       38,623       64,984      100,331      128,561       15,532
Operating expenses...............           18,410       24,983       38,158       59,319       79,765        9,637
Operating profit.................            7,935       13,640       26,826       41,012       48,796        5,895
Write-down and write-off of
    analog network equipment.....              282        8,242        1,525           --           --           --
Profit before tax and minority
    interests....................            9,387        6,444       26,393       41,717       48,978        5,917
Income tax.......................            2,486        1,647        8,366       13,703       16,234        1,961
Net profit.......................            6,900        4,797       18,027       28,015       32,742        3,956
Basic net profit per share(1)....             0.59         0.40         1.25         1.51         1.71         0.21
Diluted net profit per share(1)..             0.59         0.40         1.25         1.51         1.71         0.21
Basic net profit per ADS(1)......             2.93         1.99         6.26         7.53         8.55         1.03
Diluted net profit per ADS(1)....             2.93         1.99         6.26         7.53         8.54         1.03
Shares utilized in basic
    calculation (in thousands)...       11,780,788   12,069,108   14,394,313   18,605,371   19,151,322   19,151,322
Shares utilized in diluted
    calculation (in thousands)...       11,782,521   12,072,383   14,409,503   18,698,023   19,243,050   19,243,050
U.S. GAAP(2)
Operating revenue................           65,131       86,300      112,462      127,749      145,331       17,558
Operating expenses...............           46,051       59,659       77,289       78,598       91,040       10,999
Operating profit.................           19,080       26,641       35,173       49,151       54,291        6,559
Profit before tax and minority
    interest.....................           20,432       16,088       35,466       50,194       55,418        6,695
Income tax.......................            4,206        3,990       11,328       15,959       18,214        2,200
Net profit.......................           16,225       12,098       24,137       34,236       37,202        4,495
Basic net profit per share(1)....             0.92         0.68         1.31         1.76         1.90         0.23
Diluted net profit per share(1)..             0.92         0.68         1.30         1.76         1.90         0.23
Basic net profit per ADS(1)......             4.59         3.40         6.53         8.81         9.51         1.15
Diluted net profit per ADS(1)....             4.59         3.40         6.52         8.80         9.50         1.15
Share utilized in basic
    calculation (in thousands)...       17,660,905   17,771,326   18,493,862   19,432,886   19,561,679   19,561,679
Share utilized in diluted
    calculation (in thousands)...       17,662,638   17,774,601   18,509,052   19,525,538   19,653,406   19,653,406
BALANCE SHEET DATA:
HONG KONG GAAP
Current assets
    Cash and cash equivalents....           17,481       19,349       27,702       21,821       32,575        3,935
    Deposits with banks..........            1,311        8,227       12,204       14,970       11,069        1,337
    Accounts receivable..........            2,482        4,957        7,252        5,728        6,066          733
Fixed assets.....................           33,986       42,699       87,465      105,208      165,409       19,984
Total assets.....................           64,541       87,435      156,438      173,749      284,900       34,419
Total short-term debt(3).........            5,337        4,419       12,095        5,439        8,200          990
Total long-term debt(4)..........              991        2,332       13,708        6,739       12,676        1,531
Fixed rate notes.................                -        4,952        4,953        4,956        4,961          599
Convertible notes................                -            -        5,708        5,708        5,711          690
Bonds............................                -            -            -        5,000       13,000        1,571
Deferred payable(5)..............                -            -            -            -       15,176        1,833
Total liabilities(6).............           18,699       30,343       72,661       61,938      112,507       13,592
Shareholders' equity.............           45,827       57,092       83,760      111,779      172,202       20,804
</TABLE>

                                      -4-

<PAGE>

<TABLE>
<CAPTION>
                                                          AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                        ---------------------------------------------------------------------------
                                           1998         1999         2000         2001         2002         2002
                                           RMB          RMB          RMB          RMB          RMB           US$
                                           -------      -------      -------      -------      -------      -------
                                              (in millions, except share, per share and per ADS information)
<S>                                        <C>          <C>          <C>          <C>          <C>          <C>
U.S. GAAP(2)
Fixed assets.....................           82,978       96,658      110,284      141,396      163,232       19,721
Total assets.....................          135,391      172,062      198,418      234,264      249,141       30,100
Total long-term debt(4)..........           18,643       23,992       22,748        9,661       12,676        1,531
Fixed rate notes.................               --        4,952        4,953        4,956        4,961          599
Convertible notes................               --           --        5,708        5,708        5,711          690
Bonds............................               --           --           --        5,000       13,000        1,571
Deferred Payable(5)..............               --           --           --           --       15,176        1,833
Shareholders' equity.............           78,812       87,373       95,650      140,300      134,575       16,259
OTHER FINANCIAL DATA:
HONG KONG GAAP
Capital expenditures(7)..........           11,040       11,708       21,964       39,500       41,000        4,954
Net cash from operating
    activities(8)................           11,981       19,184       35,449       50,971       69,422        8,387
Net cash used in investing
    activities(8)................          (34,542)     (35,183)     (91,869)     (45,248)     (64,117)      (7,746)
Net cash from/(used in)
    financing activities(8)......              (27)      17,892       64,773      (11,604)       5,449          658
Dividend declared................               --           --           --           --        6,678          807
U.S. GAAP(2)
Net cash flow from operating
    activities...................           25,473       41,529       57,766       60,863       79,445        9,598
Dividend declared................               --           --           --           --        6,678          807
</TABLE>

-----------------------
(1)  The basic net profit per share and per ADS amounts under Hong Kong GAAP for
     the years ended December 31, 1998, 1999, 2000, 2001 and 2002 have been
     computed by dividing net profit by the weighted average number of shares
     and the weighted average number of ADSs, respectively, outstanding during
     1998, 1999, 2000, 2001 and 2002. The calculation of diluted net profit per
     share under Hong Kong GAAP for the years ended December 31, 1998, 1999,
     2000, 2001 and 2002 have been compiled after adjusting for the effects of
     all dilutive potential ordinary shares, respectively.

     The basic net profit per share and per ADS amounts under U.S. GAAP for the
     years ended December 31, 1998, 1999, 2000, 2001 and 2002 have been computed
     by dividing net profit by the weighted average number of shares and the
     weighted average number of ADSs, respectively, as if 1,273,195,021 ordinary
     shares representing 254,639,004 ADSs issued to China Mobile Hong Kong (BVI)
     Limited as part of the consideration in the acquisition of Fujian Mobile,
     Henan Mobile and Hainan Mobile, 3,779,407,375 ordinary shares representing
     755,881,475 ADSs issued to China Mobile Hong Kong (BVI) Limited as part of
     the consideration in the acquisition of Beijing Mobile, Shanghai Mobile,
     Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and Guangxi
     Mobile and 827,514,446 ordinary shares representing 165,502,889 ADSs issued
     to China Mobile Hong Kong (BVI) Limited as part of the consideration in the
     acquisition of Anhui Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan
     Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi Mobile were
     outstanding during these periods (in addition to shares actually issued
     during these years). The calculation of diluted net profit per share under
     U.S. GAAP for the years ended December 31, 1998, 1999, 2000, 2001 and 2002
     have been compiled after adjusting for the effects of all dilutive
     potential ordinary shares, respectively. For the years ended December 31,
     1998, 1999, 2000, 2001 and 2002, all dilutive potential ordinary shares
     resulting from the share options granted to the directors and employees
     under the share option scheme would decrease profit attributable to
     shareholders per share. In 2000, since all potential ordinary shares
     resulting from the convertible notes would increase profit attributable to
     shareholders per share as a result of savings on interest payable on the
     convertible notes, the anti-dilutive effects of potential ordinary shares
     were not taken into account in calculating diluted earnings per share. For
     the year ended December 31, 2001 and 2002, all dilutive potential ordinary
     shares resulting from convertible notes would decrease profit attributable
     to shareholders per share.

(2)  The amounts for the years ended December 31, 1998, 1999, 2000, 2001 and
     2002 are presented to reflect our acquisitions of the various regional
     mobile telecommunications companies under the "as if pooling-of-interests"
     method, as well as the effects of other differences between Hong Kong GAAP
     and U.S. GAAP.

(3)  Includes short-term bank and other loans, current portion of long-term bank
     and other loans and current portion of obligations under capital leases.

(4)  Includes long-term bank and other loans and obligations under capital
     leases, net of current portion.

                                      -5-

<PAGE>

(5)  Represents the balance of the purchase consideration payable to China
     Mobile Hong Kong (BVI) Limited for our acquisition of the eight regional
     mobile telecommunications companies in 2002. See "Item 4. Information on
     the Company".

(6)  Excludes minority interest.

(7)  Represents payments made for capital expenditures during the year.

(8)  The presentation and classification of items in the consolidated cash flow
     statement have been changed due to revisions to SSAP 15. Comparative
     figures for all prior years have been reclassified to comply with the
     requirements under SSAP 15. Please see note 32 to our consolidated
     financial statements included elsewhere in this annual report for a
     discussion of SSAP 15.

                                      -6-

<PAGE>

EXCHANGE RATE INFORMATION

              We publish our consolidated financial statements in Renminbi.
Solely for the convenience of the reader, this annual report contains
translations of certain Renminbi and Hong Kong dollar amounts into U.S. dollars
and vice versa at RMB 8.2772 = US$ 1.00 and HK$ 7.7988 = US$ 1.00, the
prevailing rate quoted by the People's Bank of China on December 31, 2002. These
translations should not be construed as representations that the Renminbi or
Hong Kong dollar amounts could actually be converted into U.S. dollars at such
rates or at all.

              The noon buying rates in New York City for cable transfers as
certified for customs purposes by the Federal Reserve Bank of New York were RMB
8.2800 = US$ 1.00 and HK$ 7.7988 = US$ 1.00, respectively, on December 31, 2002,
and the noon buying rates in New York City for cable transfers as certified for
customs purposes by the Federal Reserve Bank of New York were RMB 8.2768 = US$
1.00 and HK$ 7.7987 = US$ 1.00, respectively, on May 30, 2003. The following
table sets forth the high and low noon buying rates between Renminbi and U.S.
dollars and between Hong Kong dollars and U.S. dollars for each month during the
previous six months:

                                NOON BUYING RATE

<TABLE>
<CAPTION>
                                     RMB PER US$ 1.00                                         HK$ PER US$ 1.00
                                   ---------------------                                     -------------------
                                    HIGH           LOW                                        HIGH          LOW
                                    ----           ---                                        ----          ----
<S>                                <C>            <C>       <C>                              <C>          <C>
November 2002..............        8.2774         8.2771    November 2002..............      7.8000       7.7987
December 2002..............        8.2800         8.2771    December 2002..............      7.7992       7.7980
January 2003...............        8.2800         8.2766    January 2003...............      7.8001       7.7988
February 2003..............        8.2800         8.2768    February 2003..............      7.8000       7.7989
March 2003.................        8.2776         8.2770    March 2003.................      7.7995       7.7987
April 2003.................        8.2774         8.2769    April 2003.................      7.7998       7.7991
May 2003...................        8.2771         8.2768    May 2003...................      7.7995       7.7985
</TABLE>

              The following table sets forth the average noon buying rates
between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars
for each of 1998, 1999, 2000, 2001 and 2002, calculated by averaging the noon
buying rates on the last day of each month during the relevant year.

                            AVERAGE NOON BUYING RATE

<TABLE>
<CAPTION>
                                        RMB PER US$ 1.00               HK$ PER US$ 1.00
                                        ----------------               ----------------
<S>                                     <C>                            <C>
1998..............................          8.2991                          7.7465

1999..............................          8.2785                          7.7599

2000..............................          8.2784                          7.7936

2001..............................          8.2772                          7.7997

2002..............................          8.2772                          7.7996
</TABLE>

                                      -7-

<PAGE>

RISK FACTORS

         EXTENSIVE GOVERNMENT REGULATION MAY LIMIT OUR FLEXIBILITY TO RESPOND TO
         MARKET CONDITIONS, COMPETITION OR CHANGES IN OUR COST STRUCTURE.

              The Ministry of Information Industry of China regulates, among
other things, the following areas of the telecommunications industry under the
leadership of the State Council of China:

         -    formulating and enforcing industry policy, standards and
              regulations;

         -    granting telecommunications licenses;

         -    formulating interconnection and settlement standards for
              implementation between telecommunications networks;

         -    together with other relevant regulatory authorities, formulating
              tariff and service charge standards for certain telecommunications
              services;

         -    supervising the operations of telecommunications services
              providers;

         -    promoting fair and orderly market competition among operators; and

         -    allocating and administering public telecommunications resources,
              such as radio frequencies, number resources, domain names and
              addresses of telecommunications networks.

              Other Chinese government authorities also take part in regulating
tariff policies and foreign investment in the telecommunications industry. The
regulatory framework within which we operate may limit our flexibility to
respond to market conditions, competition or changes in our cost structure.
Moreover, we cannot predict when or if changes in tariff policies or rates may
occur, including, for example, the possible implementation of a
calling-party-pays tariff scheme. Although we and other telecommunications
services providers have, on a limited basis, offered certain localized or
promotional calling packages which incorporate calling-party-pays features, the
Chinese government has not yet implemented regulations to adopt the
calling-party-pays concept, and we cannot predict whether such regulations may
be forthcoming or, if passed, what requirements the new regulations might
entail. Future adverse changes in tariff policies and rates could decrease our
revenues and reduce our profitability.

              We operate our businesses with approvals granted by the State
Council and under licenses granted by the Ministry of Information Industry. If
these approvals or licenses are revoked or suspended, our business and
operations will be materially and adversely affected.

         WE MAY BE AFFECTED BY FUTURE REGULATORY CHANGES.

              To provide a uniform regulatory framework for the orderly
development of the telecommunications industry, the Ministry of Information
Industry, under the direction of the State Council, is preparing a draft
telecommunications law. If and when the telecommunications law is adopted by the
National People's Congress, it is expected to become the fundamental
telecommunications statute and the legal basis for telecommunications
regulations in Mainland China. The State Council has promulgated a set of new
telecommunications regulations. These regulations are substantially consistent
with the existing rules and guidelines for the telecommunications industry, and
are primarily intended to streamline and clarify the existing rules and
guidelines. They apply in the interim period prior to the adoption of the
telecommunications law. Although we expect that the telecommunications law will
positively affect the overall development of the telecommunications industry in
Mainland China, we do not fully know what the nature and scope of the
telecommunications law will be. The telecommunications law and other new
telecommunications regulations or rules may contain provisions that could
materially and adversely affect our business, financial condition and results of
operations.

                                      -8-

<PAGE>

         COMPETITION FROM OTHER TELECOMMUNICATIONS SERVICES PROVIDERS MAY AFFECT
         OUR SUBSCRIBER GROWTH AND PROFITABILITY BY CAUSING THE RATE OF OUR
         SUBSCRIBER GROWTH TO DECLINE AND BRINGING ABOUT DECREASES IN TARIFF
         RATES AND INCREASES IN SELLING AND PROMOTIONAL EXPENSES.

              We compete with other telecommunications services providers in all
of the provinces, municipalities and the autonomous region in which we operate.
The Chinese government encourages orderly competition in the telecommunications
industry in Mainland China. In particular, the Chinese government has extended
favorable regulatory policies to some of our competitors, such as China United
Telecommunications Corporation, or China Unicom, in order to help them become
more viable competitors. For example, the Chinese government has permitted China
Unicom to lower its mobile telecommunications services tariffs by up to 10%
below the government standard rates. We believe this policy has helped China
Unicom capture a significant number of price-sensitive mobile telecommunications
services subscribers. As a result, China Unicom's market share has increased
over the past few years.

              In addition, China Telecommunications Corporation, or China
Telecom, and China Netcom Communications Group Corporation, or China Netcom,
provide Xiaolingtong services to their customers. Xiaolingtong is a local area
wireless telephone service with limited mobility and limited coverage.
Xiaolingtong offers lower-priced services. As a result, Xiaolingtong's services
have, to a certain extent, attracted customers principally in the low-end
markets. Increased competition from Xiaolingtong or other wireless
telecommunications services could materially affect our business and prospects.

              Increased competition from other telecommunications services
providers, including China Unicom, China Netcom and China Telecom, and any
introduction of new competitors through the issuance of additional mobile
telecommunications services licenses could adversely affect our business by,
among other factors, causing the rate of our subscriber growth to decline and
bringing about decreases in tariff rates and increases in selling and
promotional expenses. This could in turn have a material adverse effect on our
financial condition and results of operations.

         NEW ENTRANTS IN THE TELECOMMUNICATIONS INDUSTRY IN CHINA MAY FURTHER
         INTENSIFY COMPETITION AND ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

              Current Chinese government policy concerning the
telecommunications sector is to encourage orderly competition. In November 2001,
the State Council formally approved the restructuring of the former China
Telecommunications Corporation, China Netcom Corporation Limited and Jitong
Network Communications Company Limited. Under the restructuring plan, China
Netcom was formed in May 2002 and consists of ten regional telecommunications
companies originally owned by the former China Telecommunications Corporation in
Beijing, Tianjin and eight provinces, China Netcom Corporation Limited and
Jitong Network Communications Company Limited. China Telecom retained the
telecommunications companies originally owned by the former China
Telecommunications Corporation in the remaining provinces, directly-administered
municipalities and autonomous regions. See "Item 4. Information on the Company
-- The History and Development of the Company -- Industry Restructuring and
Changes in Our Shareholding Structure". We cannot assure you that the State
Council will not approve additional telecommunications services providers in the
future, including providers of mobile telecommunications services, that may
compete against us. Increased competition from new entrants in China's
telecommunications industry could adversely affect our financial condition and
results of operations as a result of, among others, decreases in the rate of
subscriber growth or tariff rates or increases in selling and promotional
expenses.

              In addition, we may also be subject to competition from new
providers of telecommunication services as a result of technological
developments and the convergence of various telecommunications services.

         CHINA'S ACCESSION INTO THE WORLD TRADE ORGANIZATION WILL EASE CURRENT
         RESTRICTIONS ON FOREIGN OWNERSHIP IN THE TELECOMMUNICATIONS INDUSTRY
         AND MAY INCREASE COMPETITION IN THE MOBILE TELECOMMUNICATIONS SERVICES
         SECTOR.

              On December 11, 2001, China officially joined the World Trade
Organization, or WTO. On January 1, 2002, the Administration of Foreign-Funded
Telecommunications Enterprises Provisions was also adopted, thereby

                                      -9-

<PAGE>

implementing China's commitments to the WTO. Those commitments include the
gradual reduction of foreign ownership restrictions in the telecommunications
industry and the opening of the telecommunications market in Mainland China to
foreign investors. See "Item 4. Information on the Company -- Business Overview
-- Competition". This could lead to increased foreign investment in the
telecommunications market in Mainland China, which may in turn increase
competition and foreign participation in the mobile telecommunications services
sector in Mainland China. Increased competition and foreign participation may
have a material adverse effect on our financial conditions and results of
operation.

         WE ARE CONTROLLED BY CHINA MOBILE COMMUNICATIONS CORPORATION, WHICH MAY
         NOT ALWAYS ACT IN OUR BEST INTEREST.

              As of May 31, 2003 China Mobile Communications Corporation
indirectly owned an aggregate of approximately 75.7% of our shares. Accordingly,
China Mobile Communications Corporation is, and will be, able to:

         -    nominate our entire board of directors and, in turn, indirectly
              influence the selection of our senior management;

         -    determine the timing and amount of our dividend payments; and

         -    otherwise control or influence actions that require the approval
              of our shareholders.

              The interests of China Mobile Communications Corporation as our
ultimate controlling person could conflict with the interests of our minority
shareholders.

              In addition, China Mobile Communications Corporation also provides
our operating subsidiaries with services that are necessary for our business
activities, including:

         -    interconnection arrangements with its other subsidiaries' mobile
              telecommunications networks and roaming arrangements; and

         -    the coordination of the provision of inter-provincial transmission
              leased lines from other operators to us.

              The interests of China Mobile Communications Corporation as the
provider of these services to our operating subsidiaries may conflict with our
interests.

         THE LIMITED SPECTRUM ALLOCATED TO US MAY CONSTRAIN OUR FUTURE NETWORK
         CAPACITY GROWTH.

              A mobile telecommunications network's capacity is to a certain
extent limited by the amount of frequency spectrum available for its use. Since
the Ministry of Information Industry allocates frequency spectrum to mobile
telecommunications operators in Mainland China, the capacity of our mobile
telecommunications network is limited by the amount of spectrum that the
Ministry of Information Industry allocates to us. The Ministry of Information
Industry allocated a total of 34 MHz in the 900 MHz frequency band and the 1800
MHz frequency band to our parent company, China Mobile Communications
Corporation. Under the existing agreement between China Mobile Communications
Corporation and us, we have the exclusive rights to use those frequency spectrum
in our service regions.

              We believe that our current spectrum allocation is sufficient for
anticipated subscriber growth in the near term, but we may need additional
spectrum to accommodate future subscriber growth or to develop mobile
telecommunications services using new wireless telecommunications technologies.
However, the Ministry of Information Industry may determine not to allocate
additional spectrum to us. Our network expansion plans may be affected if we are
unable to obtain additional spectrum. This could in turn constrain our future
network capacity growth and materially and adversely affect our business,
financial condition and results of operations.

                                      -10-

<PAGE>

         CHANGES TO OUR INTERCONNECTION AND LEASED LINE ARRANGEMENTS MAY
         INCREASE OUR OPERATING EXPENSES AND ADVERSELY AFFECT OUR PROFITABILITY.

              Our mobile telecommunications services depend, in large part, upon
our interconnection arrangements and access to the fixed line network.
Interconnection is necessary in the case of all local calls between our
subscribers and subscribers of fixed line or other mobile telecommunications
networks. Interconnection and leased line arrangements are also necessary for
international and certain domestic calls. We have entered into interconnection
and transmission line leasing agreements with other operators, including China
Mobile Communications Corporation and its other subsidiaries. We cannot assure
you that increasing usage of the fixed line networks would not result in
additional strain on its switching capacity, or that the existing quality of the
fixed line networks will remain adequate.

              The terms of our interconnection arrangements and leased line
arrangements have a material effect on our operating revenue and expenses. In
addition, our business and operations may be materially and adversely affected
if we cannot enter into future interconnection and leased line agreements on
commercially acceptable terms or on a timely basis.

         WE MAY BE UNABLE TO OBTAIN SUFFICIENT FINANCING TO FUND OUR SUBSTANTIAL
         CAPITAL REQUIREMENTS, WHICH COULD LIMIT OUR GROWTH POTENTIAL AND FUTURE
         PROSPECTS.

              We estimate that we will require approximately RMB 124 billion
(US$ 15 billion) for capital expenditures from 2003 through the end of 2005 for
a range of projects.

              We believe that cash from operations, together with any necessary
borrowings, will provide sufficient financial resources to meet our projected
capital and other expenditure requirements. We may require additional funds to
the extent we have underestimated our capital requirements or overestimated our
future cash flows. In addition, a significant feature of our business strategy
is to continue exploring opportunities for strategic investments in the
telecommunications industry in Mainland China, which may require additional
capital resources. The cost of implementing new technologies, upgrading our
networks or expanding capacity may also be significant. In particular, in order
for us to effectively respond to technological changes, we may be required to
make substantial capital expenditures in the near future.

              Financing may not be available to us on acceptable terms. In
addition, any future issuance of equity securities, including securities
convertible or exchangeable into or that represent the right to receive equity
securities, will require approval from the relevant government authorities. If
adequate capital is not available, our growth potential and future prospects
could be adversely affected.

         CHANGES IN TECHNOLOGY MAY RENDER OUR CURRENT TECHNOLOGIES OBSOLETE AND
         THUS AFFECT OUR BUSINESS AND MARKET POSITION.

              The telecommunications industry is dependent upon rapidly changing
and increasingly complex technologies. Accordingly, although we strive to keep
our technologies up to international standards, the mobile telecommunications
technologies that we currently employ may become obsolete or subject to
competition from new technologies in the future, including new wireless
telecommunications technologies. In addition, the development and application of
new technologies involves time, substantial costs and risks, and the new
technologies we implement, such as wireless data applications, may not generate
an acceptable rate of return.

         FAILURE TO CAPITALIZE ON NEW BUSINESS OPPORTUNITIES MAY HAVE AN ADVERSE
         EFFECT ON OUR GROWTH POTENTIAL.

              We intend to pursue a number of new growth opportunities in the
broader telecommunications industry, including wireless data. Our success will
depend in large part on our ability to offer services that address the market
demand arising from these opportunities. In addition, our ability to deploy and
deliver these services depends, in many instances, on new and unproven
technologies. Our wireless telecommunications technologies may not perform as
expected. We may not be able to successfully develop or obtain new technologies
to effectively and economically deliver these services. Furthermore, we may not
be able to compete successfully in the delivery of telecommunications services
based on new technologies. Any failure to capitalize on new business
opportunities may

                                      -11-

<PAGE>

adversely affect our competitive position and future profitability.

         ACTUAL OR PERCEIVED HEALTH RISKS ASSOCIATED WITH THE USE OF MOBILE
         DEVICES COULD IMPAIR OUR ABILITY TO RETAIN AND ATTRACT CUSTOMERS,
         REDUCE WIRELESS TELECOMMUNICATIONS USAGE OR RESULT IN LITIGATION.

              There has been public speculation about possible health risks to
individuals from exposure to electromagnetic fields from base stations and from
the use of wireless telephone handsets. While a substantial amount of scientific
research conducted to date by various independent research bodies has shown that
radio signals, at levels within the limits prescribed by public health authority
safety standards and recommendations, present no adverse effect to human health,
we cannot be certain that future studies, irrespective of their relative
reliability or trustworthiness, will not impute a link between electromagnetic
fields and adverse health effects. Research into these issues is ongoing by
government agencies, international health organizations and other scientific
bodies in order to develop a better scientific understanding and public
awareness of these issues. In addition, several wireless industry participants
have become the targets of lawsuits alleging various health consequences as a
result of wireless phone usage or seeking protective measures. While we are not
aware of any scientific studies or objective evidence which substantiates such
alleged health risks, we cannot assure you that the actual, or perceived, risks
associated with radiowave transmission will not impair our ability to retain
customers and attract new customers, reduce wireless telecommunications usage or
result in litigation.

         WE CANNOT ASSURE YOU THAT THE HISTORICAL RATE OF GROWTH IN MAINLAND
         CHINA WILL CONTINUE IN THE FUTURE AND THAT AN ECONOMIC SLOWDOWN IN
         MAINLAND CHINA WILL NOT MATERIALLY AND ADVERSELY AFFECT OUR FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS, AS WELL AS OUR FUTURE PROSPECTS.

             We conduct most of our business and generate substantially all our
revenues in Mainland China. As a result, economic conditions in Mainland China
have a significant effect on our financial condition and results of operations,
as well as our future prospects. In the past twenty years or so, the People's
Republic of China has been one of the world's fastest growing economies in terms
of GDP growth. We cannot assure you, however, that such growth will be sustained
in the future. Moreover, the slowdown in the economies of the United States, the
European Union and certain Asian countries in recent years may adversely affect
economic growth in Mainland China. We cannot assure you that our financial
condition and results of operations, as well as our future prospects, will not
be materially and adversely affected by an economic downturn in Mainland China.

         WE CANNOT ASSURE YOU THAT THE RECENT OUTBREAK OF SEVERE ACUTE
         RESPIRATORY SYNDROME, OR SARS, IN VARIOUS PARTS OF MAINLAND CHINA WILL
         NOT MATERIALLY AND ADVERSELY AFFECT THE CHINESE ECONOMY, AND THAT OUR
         BUSINESS AND OPERATIONS, AS WELL AS OUR FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS WILL NOT BE MATERIALLY AND ADVERSELY AFFECTED.

             Since early 2003, Mainland China, Hong Kong, Taiwan, Singapore,
Canada and certain other countries and regions have been experiencing an
outbreak of a new and highly contagious form of atypical pneumonia now known as
SARS. According to the World Health Organization, over 8,360 cases of SARS and
more than 760 deaths had been reported worldwide as of May 31, 2003. Although
this outbreak occurred in early 2003, and, since April 2003, has particularly
impacted the regions where we operate, many aspects of SARS, including its
cause, means of transmission and ability to survive in different environments,
are still not well understood by the international medical community.
Consequently, we cannot predict at this time the effect this outbreak could have
on the Chinese economy and our company. In particular, this outbreak may
significantly disrupt our ability to adequately staff our business, and may
generally disrupt our operations. Furthermore, this outbreak may severely
restrict the level of economic activity in affected areas, which may in turn
adversely affect our business and prospects. As a result, we cannot assure you
that the recent outbreak of SARS would not have a material adverse effect on our
financial condition and results of operations.

                                      -12-

<PAGE>

         ADVERSE CHANGES IN THE ECONOMIC POLICIES OF THE CHINESE GOVERNMENT
         COULD HAVE A MATERIAL ADVERSE EFFECT ON THE OVERALL ECONOMIC GROWTH OF
         MAINLAND CHINA, WHICH COULD REDUCE THE DEMAND FOR OUR SERVICES AND
         ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
         OPERATIONS.

              Since the late 1970s, the Chinese government has been reforming
the Chinese economic system. These reforms have resulted in significant economic
growth and social progress. Although we believe that economic reform and
macroeconomic policies and measures adopted by the Chinese government will
continue to have a positive effect on the economic development of Mainland China
and that we will continue to benefit from such policies and measures, these
policies and measures may from time to time be modified or revised. Adverse
changes in economic and social conditions in Mainland China, in the policies of
the Chinese government or in the laws and regulations in Mainland China, if any,
could have a material adverse effect on the overall economic growth of Mainland
China and investment in the telecommunications industry in Mainland China. These
developments could adversely affect our business, such as reducing the demand
for our services, as well as our financial condition and results of operations.

         THE RENMINBI IS NOT A FREELY CONVERTIBLE CURRENCY, WHICH COULD LIMIT
         THE ABILITY OF OUR SUBSIDIARIES IN MAINLAND CHINA TO OBTAIN SUFFICIENT
         FOREIGN CURRENCY TO SATISFY THEIR FOREIGN CURRENCY REQUIREMENTS OR PAY
         DIVIDENDS TO US.

              Substantially all of our revenues and operating expenses are
denominated in Renminbi, while a portion of our capital expenditures and
indebtedness is denominated in U.S. dollars and other foreign currencies. The
Renminbi is currently freely convertible under the "current account", which
includes dividends, trade and service-related foreign currency transactions, but
not under the "capital account", which includes foreign direct investment,
unless the prior approval of the State Administration for Foreign Exchange is
obtained.

              Our operating subsidiaries are foreign invested enterprises.
Currently, they may purchase foreign currency without the approval of the State
Administration for Foreign Exchange for settlement of "current account
transactions", including payment of dividends, by providing commercial documents
evidencing these transactions. They may also retain foreign exchange in their
current accounts (subject to a cap approved by the State Administration for
Foreign Exchange) to satisfy foreign currency liabilities or to pay dividends.
However, the relevant Chinese government authorities may limit or eliminate our
ability to purchase and retain foreign currencies in the future. Also, our
subsidiaries incorporated in Mainland China may not be able to obtain sufficient
foreign currency to satisfy their foreign currency requirements or pay dividends
to us for our use in making any future dividend payments or to satisfy other
foreign currency payment requirements. Foreign currency transactions under the
capital account are still subject to limitations and require approvals from the
State Administration for Foreign Exchange. This could affect our subsidiaries'
ability to obtain foreign currency through debt or equity financing, including
by means of loans or capital contributions from us.

         FLUCTUATIONS IN EXCHANGE RATES COULD ADVERSELY AFFECT OUR FINANCIAL
         RESULTS.

              Substantially all of our operating revenue is denominated in
Renminbi, while a portion of our capital expenditures and some of our financing
expenses are denominated in foreign currencies, such as U.S. dollars and Hong
Kong dollars. Future devaluations or movements in the exchange rate of Renminbi
and other currencies could have an adverse effect on our financial condition and
results of operations.

         THE CHINESE LEGAL SYSTEM EMBODIES UNCERTAINTIES WHICH COULD LIMIT THE
         LEGAL PROTECTIONS AVAILABLE TO OUR SHAREHOLDERS.

              The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which decided legal cases
have little precedential value. In 1979, the Chinese government began to
promulgate a comprehensive system of laws and regulations governing economic
matters in general. Legislation over the past 20 years has significantly
enhanced the protection afforded to foreign investment in Mainland China. Our
existing subsidiaries are "wholly foreign-owned enterprises" which are
enterprises incorporated in Mainland China and wholly-owned by Hong Kong, Macau,
Taiwan or foreign investors, and subject to the laws and regulations applicable
to foreign investment in Mainland China. However, the interpretation and
enforcement of some of these laws, regulations and other legal requirements
involve uncertainties that could limit the legal protection available to

                                      -13-

<PAGE>

our shareholders. Moreover, China's entry into the WTO has resulted and may in
the future result in the abolition or substantial amendment of the existing
laws, regulations and other legal requirements. See "Item 4. Information on the
Company -- Business Overview -- World Trade Organization".

         OUR SHARE PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE IN RESPONSE TO
         CONDITIONS IN THE GLOBAL SECURITIES MARKETS GENERALLY AND IN THE
         TELECOMMUNICATIONS AND TECHNOLOGY SECTORS IN PARTICULAR.

              Our share price has been subject to significant volatility, in
part due to highly volatile securities markets generally, particularly for
telecommunications companies' shares, as well as developments in our sales and
operating profit. Factors other than our results of operations that may affect
our share price include, among other things, overall market conditions and
performance, market expectations of our performance, projected growth in the
mobile telecommunications market in Mainland China and adverse changes in our
brand value. In addition, our share price may be affected by factors such as the
level of business activity or perceived growth (or the lack thereof) in the
telecommunications market in general, the performance of other
telecommunications companies, announcements by or the results of operations of
our competitors, customers and suppliers, the success of third generation mobile
networks and new technologies, products and services, as well as general market
volatility. See "Item 9. Offer and Listing Details" for information regarding
the trading price history of our ordinary shares and ADSs.

                                      -14-

<PAGE>

ITEM 4.  INFORMATION ON THE COMPANY.

              We provide a full range of mobile telecommunications services in
21 service regions in Mainland China, consisting of sixteen provinces
(Guangdong, Zhejiang, Jiangsu, Fujian, Henan, Hainan, Hebei, Liaoning, Shandong,
Anhui, Jiangxi, Sichuan, Hubei, Hunan, Shaanxi and Shanxi), four municipalities
(Beijing, Shanghai, Tianjin and Chongqing) and one autonomous region (Guangxi
Zhuang Autonomous Region). Our service regions cover many of the economically
more advanced provinces, municipalities and autonomous region in Mainland China.
The total population residing within our service area exceeds one billion. Based
on publicly available information, we are the leading provider of mobile
telecommunications services in each of these regions and the largest provider of
mobile telecommunications services in the world as measured by total number of
subscribers as of December 31, 2002. As of December 31, 2002, our total number
of subscribers was approximately 117.7 million, representing approximately 67%
of all mobile telecommunications services subscribers in our service regions. In
addition, based on information compiled by the Ministry of Information Industry,
our total number of subscribers represented approximately 57% of all mobile
telecommunications services subscribers in Mainland China as of December 31,
2002. As of April 30, 2003, our total number of subscribers reached 125.5
million.

THE HISTORY AND DEVELOPMENT OF THE COMPANY

              We were incorporated under the laws of Hong Kong on September 3,
1997 as a limited liability company under the name "China Telecom (Hong Kong)
Limited". We changed our name to "China Mobile (Hong Kong) Limited" on June 28,
2000 after obtaining the approval of our shareholders.

              We completed our initial public offering in October 1997. Our
ordinary shares are listed on the Hong Kong Stock Exchange, and our American
Depositary Shares, or ADSs, each currently representing the right to receive
five ordinary shares, are listed on the New York Stock Exchange. Our agent for
service of process in the United States is CT Corporation System, and their
address is 111 Eighth Avenue, 13th Floor, New York, NY 10011.

         EXPANSION THROUGH ACQUISITIONS

              Our initial mobile telecommunications operations included those in
Guangdong province conducted by Guangdong Mobile Communication Company Limited,
or Guangdong Mobile, and in Zhejiang province conducted by Zhejiang Mobile
Communication Company Limited, or Zhejiang Mobile. As part of the restructuring
in preparation for our initial public offering in 1997, the former Ministry of
Posts and Telecommunications transferred to us a 100% equity interest in
Guangdong Mobile and a 99.63% equity interest in Zhejiang Mobile. Since then, we
have significantly expanded the geographical coverage of our operations through
a series of acquisitions from China Mobile Communications Corporation, our
indirect controlling shareholder, of mobile telecommunications operations
conducted by its regional subsidiaries. In particular:

         -    We acquired the entire equity interest in Jiangsu Mobile
              Communication Company Limited, or Jiangsu Mobile, on June 4, 1998
              for a cash consideration of HK$ 22.5 billion.

         -    We acquired the entire equity interest in each of Fujian Mobile
              Communication Company Limited, or Fujian Mobile, Henan Mobile
              Communication Company Limited, or Henan Mobile, and Hainan Mobile
              Communication Company Limited, or Hainan Mobile, on November 12,
              1999 for a total purchase price of HK$ 49.7 billion, consisting of
              HK$ 19.0 billion in cash and the remaining HK$ 30.7 billion in the
              form of 1,273,195,021 new shares. In addition, we acquired the
              remaining 0.37% equity interest in Zhejiang Mobile in June 1999.

         -    We acquired the entire equity interest in each of Beijing Mobile
              Communication Company Limited, or Beijing Mobile, Shanghai Mobile
              Communication Company Limited, or Shanghai Mobile, Tianjin Mobile
              Communication Company Limited, or Tianjin Mobile, Hebei Mobile
              Communication Company Limited, or Hebei Mobile, Liaoning Mobile
              Communication Company Limited, or Liaoning Mobile, Shandong Mobile
              Communication Company Limited, or Shandong Mobile, and Guangxi
              Mobile Communication Company Limited, or Guangxi Mobile, on
              November 13, 2000 for a total purchase

                                      -15-

<PAGE>

              price of HK$ 256.0 billion, consisting of HK$ 74.6 billion in cash
              and the remaining HK$ 181.4 billion in the form of 3,779,407,375
              new shares.

         -    We acquired the entire equity interest in each of Anhui Mobile
              Communication Company Limited, or Anhui Mobile, Jiangxi Mobile
              Communication Company Limited, or Jiangxi Mobile, Chongqing Mobile
              Communication Company Limited, or Chongqing Mobile, Sichuan Mobile
              Communication Company Limited, or Sichuan Mobile, Hubei Mobile
              Communication Company Limited, or Hubei Mobile, Hunan Mobile
              Communication Company Limited, or Hunan Mobile, Shaanxi Mobile
              Communication Company Limited, or Shaanxi Mobile, and Shanxi
              Mobile Communication Company Limited, or Shanxi Mobile, on July 1,
              2002 for a total purchase price of US$ 8,573 million, consisting
              of an initial consideration of US$ 5,773 million and a deferred
              consideration of US$ 2,800 million. The initial consideration of
              US$ 5,773 million consists of a cash payment of US$ 3,150 million
              and the issuance of new shares for the remaining US$ 2,623 million
              to China Mobile Hong Kong (BVI) Limited on the completion of
              acquisition. We financed the cash portion of the initial
              consideration by applying a portion of our existing internal cash
              resources, in the amount of US$ 2,400 million, combined with
              proceeds from the issuance of new shares in the amount of HK$ 5.85
              billion (equivalent to approximately US$ 750 million) to Vodafone
              Holdings (Jersey) Limited, or Vodafone Jersey, a wholly owned
              subsidiary of Vodafone Group Plc, or Vodafone. After the share
              placement, Vodafone's share holding in us increased from 2.18% to
              approximately 3.27%. The deferred consideration of US$ 2,800
              million is payable by the fifteenth anniversary of the date of the
              completion of acquisition, and we may make an early payment of all
              or part of the deferred consideration at any time. We used the
              entire proceeds from the RMB 3 billion guaranteed bonds due 2007
              and RMB 5 billion guaranteed bonds due 2017, both issued on
              October 28, 2002 by Guangdong Mobile, our wholly-owned subsidiary,
              to satisfy part of the US$ 2,800 million deferred consideration.

              These acquisitions have significantly enlarged our subscriber
base, expanded the geographical coverage of our business and enhanced the
economy of scale of our operations. In addition, the integration of these
acquired operations has enabled us to realize certain synergies and economies of
scale. A discussion of the financial impact of these acquisitions is set forth
in "Item 5. Operating and Financial Review and Prospects".

         INDUSTRY RESTRUCTURING AND CHANGES IN OUR SHAREHOLDING STRUCTURE

              Prior to 1993, all public telecommunications networks and services
in Mainland China were controlled and operated by the former Ministry of Posts
and Telecommunications through the former Directorate General of
Telecommunications, provincial telecommunications administrations and their city
and county level bureaus.

              As part of the Chinese government's restructuring of the
telecommunications industry, the Ministry of Information Industry was formed in
March 1998 to assume, among others, the responsibilities of the former Ministry
of Posts and Telecommunications. One of the principal objectives of the
restructuring was to separate the government's regulatory function from its
business management functions in respect of state-owned enterprises. In the
first half of 2000, the Chinese government substantially completed the industry
restructuring. As a result, the Ministry of Information Industry ceased to have
an indirect controlling interest in us, and no longer exercises control over
telecommunications operations, but continues in its capacity as industry
regulator providing industry policy guidance as well as exercising regulatory
authority over all telecommunications services providers in Mainland China.

              In addition, as part of the restructuring, the telecommunications
operations previously controlled by the former Ministry of Posts and
Telecommunications were separated along four business lines: fixed line
telecommunications, mobile telecommunications, paging and satellite
telecommunications. China Mobile Communications Corporation was established in
July 1999 as a state-owned company to hold and operate the mobile
telecommunications business nationwide resulting from the separation. As part of
this separation, in July 1999 China Mobile Communications Corporation obtained
the approximately 57% holding of voting shares and economic interest in China
Mobile (Hong Kong) Group Limited, our indirect controlling shareholder,
previously held by Telpo Communications (Group) Limited, an entity 100%
controlled by the former Ministry of Posts and Telecommunications. In addition,
in May 2000, the remaining 43% interest in China Mobile (Hong Kong) Group
Limited previously held by the Directorate General of Telecommunications was
transferred to China Mobile Communications Corporation. As a result, China
Mobile Communications Corporation has become the owner of all

                                      -16-

<PAGE>

voting shares and economic interest in China Mobile (Hong Kong) Group Limited
and thus all of the Chinese government's interest in us. As of May 31, 2003,
China Mobile Communications Corporation indirectly owned approximately 75.7% of
all our outstanding shares, including shares represented by ADSs.

              As a state-owned company, the former China Telecommunications
Corporation owns and operates fixed line telephone and data telecommunications
networks. In November 2001, the State Council formally approved the
restructuring of the former China Telecommunications Corporation, China Netcom
Corporation Limited and Jitong Network Communications Company Limited. Under the
restructuring plan, China Netcom was formed in May 2002 and consists of ten
regional telecommunications companies originally owned by the former China
Telecommunications Corporation in Beijing, Tianjin and eight provinces, China
Netcom Corporation Limited and Jitong Network Communications Company Limited.
China Telecom retained the telecommunications companies originally owned by the
former China Telecommunications Corporation in the remaining provinces,
directly-administered municipalities and autonomous regions. As a result, apart
from China Mobile Communications Corporation, principal participants in the
telecommunications industry in Mainland China also include China Telecom, China
Netcom, China Unicom, China Satellite Communications Corporation and China
Railcom. Among those six participants, China Mobile Communications Corporation
(including us) and China Unicom are the two operators that provide mobile
telecommunications services in Mainland China.

                                      -17-

<PAGE>

ORGANIZATIONAL STRUCTURE

              As of May 31, 2003, China Mobile Communications Corporation, a
company incorporated in China, owned 75.7% equity interest in us through
intermediate holding companies. As of May 31, 2003, we owned 100% equity
interest in Guangdong Mobile, Zhejiang Mobile, Jiangsu Mobile, Fujian Mobile,
Henan Mobile, Hainan Mobile, Beijing Mobile, Shanghai Mobile, Tianjin Mobile,
Hebei Mobile, Liaoning Mobile, Shandong Mobile, Guangxi Mobile, Anhui Mobile,
Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile,
Shaanxi Mobile and Shanxi Mobile through intermediate holding companies, and
66.4% equity interest in Aspire Holdings Limited, a company incorporated in the
Cayman Islands.

              In addition to its shareholding interest in us, China Mobile
Communications Corporation operates the leading mobile telecommunications
businesses in Mainland China outside our 21 service regions.

GENERAL INFORMATION

              Our principal executive offices are located at 60th Floor, The
Center, 99 Queen's Road Central, Hong Kong, China; telephone: 852-3121-8888. We
also maintain a regional headquarters in each of the 21 regions in Mainland
China where we operate. Our web site address is www.chinamobilehk.com. The
information on our web site is not a part of this annual report.

BUSINESS OVERVIEW

              We offer mobile telecommunications services principally using the
Global System for Mobile Communications, or GSM, standard. GSM is a pan-European
mobile telephone system based on digital transmission and mobile
telecommunications network architecture with roaming capabilities. Our GSM
networks reach all cities and counties and major roads and highways within our
service regions.

         OUR STRATEGY

              As a pioneer and the market leader in the world's largest mobile
telecommunications market, we intend to leverage our extensive and high quality
mobile telecommunications network and our subscriber base and maintain our
position as the only operator in Mainland China exclusively specialized in
mobile telecommunications.

              We believe the mobile telecommunications market in Mainland China
will continue to expand rapidly, and we have designed our business strategy
accordingly to include the following key elements:

         -    continue to actively grow our core mobile telecommunications
              services by:

              -    maintaining focus on developing a high-quality subscriber
                   base;

              -    broadening our subscriber base and increasing market
                   penetration;

              -    adopting rational and effective strategies to maintain our
                   competitiveness;

              -    addressing different needs of brand-conscious customers,
                   "technophiles" and value-conscious customers;

              -    enhancing customer satisfaction and loyalty;

              -    enhancing brand value;

              -    providing personalized and high-quality services;

                                      -18-

<PAGE>

              -    developing new products; and

              -    nurturing our human capital; and

         -    take advantage of our current leadership position and increase our
              operational efficiency by:

              -    realizing economies of scale in procuring equipment and
                   services, including leased lines and network infrastructure
                   equipment;

              -    centralizing our research and development efforts;

              -    exploring new technologies; and

              -    maintaining and utilizing the "CHINA MOBILE" brand name to
                   promote our products and services.

         SUBSCRIBERS AND USAGE

              Our subscriber base has grown substantially from 6.5 million at
the end of 1998 to 117.7 million at the end of 2002. As of December 31, 2002, we
had a market share of approximately 67% in our 21 service regions. Our
acquisition of a total of 19 regional mobile telecommunications companies
between June 1998 and July 2002 has substantially expanded our subscriber base.
As of April 30, 2003, our total number of subscribers reached approximately
125.5 million. In addition to our acquisitions, our subscriber growth is also
attributable to a number of other factors, including:

         -    significant economic growth in our markets;

         -    our network expansion and development;

         -    our increased marketing and sales efforts and improved
              distribution channels;

         -    decreased cost of initiating services due to a decline in handset
              prices as well as the gradual decrease and final elimination of
              the connection fees and the adjustments in other tariffs for our
              services; and

         -    our new service initiatives, enhanced roaming capabilities and
              value added services.

              The following table sets forth selected historical information
about our subscriber base and subscriber usage for the periods indicated.

<TABLE>
<CAPTION>
                                                   AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                   ----------------------------------------
                                                             2000     2001     2002
                                                            -----    -----    -----
<S>                                                         <C>      <C>      <C>
Subscribers (in millions)
    Contract subscribers.......................              32.4     34.0     49.0
    Prepaid subscribers........................              12.7     35.6     68.7
                                                            -----    -----    -----
          Total................................              45.1     69.6    117.7
                                                            =====    =====    =====
Minutes of Usage (in billions) (1)
    Contract subscribers.......................             118.2    130.8    192.6
    Prepaid subscribers........................               6.9     30.5     67.5
                                                            -----    -----    -----
          Total................................             125.1    161.3    260.1
                                                            =====    =====    =====
Average Minutes of Usage Per Subscriber
   Per Month (2)
    Contract subscribers.......................               326      329      334
    Prepaid subscribers........................               125      103       99
          Blended..............................               299      233      207
</TABLE>

                                      -19-

<PAGE>

<TABLE>
<CAPTION>
                                                                       AS OF OR FOR THE YEAR ENDED DECEMBER 31,
                                                                      -----------------------------------------
                                                                       2000              2001              2002
                                                                      -----             -----             -----
<S>                                                                   <C>               <C>               <C>
Average Revenue Per Subscriber Per
  Month (RMB) (3)
    Contract subscribers.......................                         241               199               176
    Prepaid subscribers........................                          87                72                63
          Blended..............................                         221               145               115
Average Monthly Churn Rate (%) (4).............                           0.45              0.55              0.69
</TABLE>

-----------------------
(1)  The total minutes of usage for each of 2000 and 2002 include the full year
     minutes of usages of the regional mobile telecommunications companies we
     acquired for each year as if the respective acquisition occurred at the
     beginning of that year and are presented for ease of comparison.

(2)  Calculated by (A) dividing the total minutes of usage (calculated in the
     manner as set forth in note (1) above) during the relevant year by the
     average number of subscribers during the year (calculated as the average of
     the numbers of subscribers at the end of each of the thirteen calendar
     months from the end of the previous year to the end of the current year)
     and (B) dividing the result by 12.

(3)  Calculated by (A) dividing the operating revenue during the relevant year
     by the average number of subscribers during the year (calculated in the
     same manner as in note (2) above) and (B) dividing the result by 12. For
     purposes of this note (3) only, for 2000 and 2002, both operating revenue
     and average number of subscribers take into account the full year effect of
     the regional mobile telecommunications companies we acquired for each year
     as if the respective acquisition occurred at the beginning of that year.

(4)  Measures the monthly rate of subscriber disconnections from mobile
     telecommunications services, determined by dividing: (A) the result
     obtained by dividing (i) the sum of voluntary and involuntary terminations
     from our network (excluding internal transfer) during the relevant year by
     (ii) the average number of subscribers during the year, calculated as the
     average of the numbers of subscribers at the end of each of the thirteen
     calendar months from the end of the previous year to the end of the current
     year by (B) 12. On this basis, our calculated average monthly churn rate
     will be affected by the number of voluntary and involuntary terminations
     and the significant growth in our subscriber base.

     The average monthly churn rate for each of 2000 and 2002 is calculated
     based on the full year information pertaining to the relevant
     newly-acquired regional mobile telecommunications companies as if the
     respective acquisition occurred at the beginning of that year and is
     presented for ease of comparison.

              The size and composition of our subscriber base and subscribers'
usage patterns have changed over the last few years. The cost of initiating
services has decreased due to a decline in handset prices, the connection fees
have been reduced and ultimately eliminated, other tariffs for our services have
been adjusted, and mobile telecommunications technologies have improved over
time. As a result, mobile telecommunications services have become increasingly
popular for both business and social uses. In general, the highest usage
subscribers with the greatest telecommunications needs have tended to be the
early subscribers of mobile services. As penetration increases, newer
subscribers on average incur lower monthly usage, and are generally more
price-sensitive. Accordingly, as is typical in many countries with developing
mobile telecommunications markets, the average usage and revenue per subscriber
have declined over the last few years as our mobile penetration has increased.
However, total minutes of usage of our subscribers continued to grow
significantly in 2000, 2001 and 2002.

         PREPAID SERVICES

              Beginning in the second half of 1999, we introduced prepaid
services. We market a substantial portion of our prepaid services under the
"Shenzhouxing" brand. We also market other types of prepaid services to our
subscribers. Our prepaid subscribers can make and receive local and domestic and
international long distance calls, and most of those subscribers also enjoy
nationwide domestic roaming services.

              Our prepaid services complement our traditional contract services
and are an important means of expanding our subscriber base. In addition,
continued economic growth, the benefits of mobility and current low mobile
penetration rates in Mainland China compared to demographically and culturally
similar markets are among the important factors that will further drive mobile
telecommunications services subscriber growth towards eventual mass
popularization. Furthermore, prepaid services represent an effective tool for
capturing additional subscribers and driving penetration in developing markets,
such as Mainland China, while keeping credit quality in check.

                                      -20-

<PAGE>

Prepaid services also help introduce the enhanced benefit of mobility to
non-mobile users.

              Our prepaid services experienced rapid and significant growth in
2002. As of December 31, 2002, we had an aggregate of approximately 68.7 million
subscribers for our prepaid service, representing an increase of 92.7% from
December 31, 2001. This increase was also partially due to our acquisition of
the eight regional mobile telecommunications companies in 2002. Our prepaid
subscribers represented 58.3% of our total subscriber base as of December 31,
2002, and our net additional prepaid subscribers represented 68.7% of our net
additional subscribers in 2002.

         TARIFFS

              The tariffs payable by our subscribers include primarily usage
charges, monthly fees and service fees for value added services. Usage charges
for both our contract and prepaid subscribers include base usage charges plus,
where applicable, an additional component reflecting domestic and international
long distance tariffs. When using roaming services, subscribers incur a roaming
charge instead of the base usage charges, plus applicable domestic and
international long distance charges.

              We have flexible long distance tariff plans distinguishing between
day time and night time, and offer tailored service plans based upon customer
requirements as well as our network resources.

              Our tariffs are subject to regulation by various government
authorities, including the Ministry of Information Industry, the State
Development and Reform Commission (the successor to the former State Development
and Planning Commission) and the relevant price regulatory authorities in our
service regions. The actual price range in each service region is proposed by a
network operator in that service region and must be approved by the relevant
price regulatory authorities in that service region. In general, base usage
charges, monthly fees, domestic roaming charges and applicable long distance
tariffs (other than tariffs for Internet Protocol phone calls) are also
determined by the Ministry of Information Industry in consultation with the
State Development and Reform Commission.

              Connection fees in all our service regions were eliminated on July
1, 2001. While the elimination of connection fees may have adversely affected
our revenue growth in the short term, we believe that such elimination will help
to further expand our subscriber base and increase total subscriber usage of our
mobile telecommunications services, thereby contributing to our revenue growth
in the long term.

              TARIFF ADJUSTMENTS. As part of the efforts to further rationalize
the tariff structure of telecommunications services, the Chinese government
announced a wide range of tariff adjustments, which took effect at various dates
in the first half of 2001. The tariff adjustments that affect our mobile
telecommunications services include the shortening of a billing unit from one
minute to six seconds for long distance call rates (other than rates for
Internet Protocol phone calls), the general reduction in domestic and
international long distance call rates, the elimination of various surcharges
and a general reduction in leased line tariffs. In particular, domestic long
distance call rates have been adjusted from the range of RMB 0.50 to RMB 1.00
per minute to the uniform rate of RMB 0.07 per six-second billing unit. Although
the adjustments in long distance call rates and the elimination of surcharges
may reduce our revenue in the short term, we expect that they are likely to
stimulate increased subscriber usage and contribute to our overall revenue
growth in the long run. In addition, we will be able to achieve savings in
leased line expenses as a result of the reduction in leased line tariffs.

         INTERCONNECTION

              Interconnection refers to various arrangements that permit the
connection of our networks to other networks such as the fixed line networks.

              INTERCONNECTION WITH OTHER OPERATORS (FOR LOCAL AND LONG DISTANCE
CALLS). Our networks interconnect with the public fixed line networks of fixed
line operators, allowing our subscribers to communicate with fixed line
subscribers and to make and receive local, domestic and international long
distance calls. Each of our operating subsidiaries has interconnection
agreements with fixed line operators in its service region. The economic

                                      -21-

<PAGE>

terms of these agreements are standardized from province to province.

              On March 21, 2001, we began paying fixed line operators RMB 0.03
per minute of the base usage charge for all calls from our subscribers to China
Unicom's subscribers connected through their networks. Prior to March 21, 2001,
we paid these fixed line operators RMB 0.05 per minute of the base usage charge
for calls connected through their networks when our subscriber was the calling
party.

              INTERCONNECTION WITH CHINA MOBILE COMMUNICATIONS CORPORATION (FOR
LONG DISTANCE CALLS AND ROAMING CALLS). We also have an inter-provincial
interconnection and roaming agreement with China Mobile Communications
Corporation, under which the other subsidiaries of China Mobile Communications
Corporation and us provide each other with domestic inter-provincial network
interconnection services and domestic and international roaming services.

              INTERCONNECTION REVENUE SHARING AND SETTLEMENT. Where calls
involve interconnection with the network of the fixed line operators or China
Mobile Communications Corporation's network, our interconnection arrangement
with the fixed line operators or China Mobile Communications Corporation
provides for the sharing and settlement of revenues from the base usage charge
and, if applicable, roaming charges and domestic and international long distance
charges.

              A number of the settlement rates have been adjusted effective
March 21, 2001. The following table summarizes the terms of our interconnection
arrangement with fixed line operators for non-roaming local calls, including the
rates after adjustment and, in parenthesis, the rates prior to adjustment.

                        REVENUE SHARING AND SETTLEMENT OF
                 BASE USAGE CHARGES FOR NON-ROAMING LOCAL CALLS

<TABLE>
<CAPTION>
    ORIGINATING SUBSCRIBER                 TERMINATING SUBSCRIBER                SETTLEMENT ARRANGEMENTS
    ----------------------                 ----------------------                ------------------------
<S>                                      <C>                                <C>
Our subscriber                           Subscriber of fixed line           We pay RMB 0.06 (previously RMB 0.05)
                                         operators                          per minute to fixed line operators

Subscriber of fixed line operators       Our subscriber                     No revenue sharing or settlement
</TABLE>

              Where applicable, we collect domestic long distance charges in
addition to the base usage charges. The following table summarizes the terms of
our interconnection arrangement with fixed line operators and China Mobile
Communications Corporation for domestic long distance calls.

                                      -22-

<PAGE>

         REVENUE SHARING AND SETTLEMENT OF DOMESTIC LONG DISTANCE CALLS

<TABLE>
<CAPTION>
      ORIGINATING SUBSCRIBER               TERMINATING SUBSCRIBER                           SETTLEMENT ARRANGEMENTS
      ----------------------               ----------------------                           ------------------------
<S>                                      <C>                                <C>
Our subscriber                           Subscriber of fixed line           If the call is routed through the transmission lines
                                         operators                          of the fixed line operators, we keep RMB 0.06
                                                                            (previously RMB 0.14) per minute of the domestic
                                                                            long distance calling charges(1) and pay the
                                                                            remaining portion to the fixed line operators. If
                                                                            the call is routed through our network, we pay the
                                                                            fixed line operators RMB 0.06 (previously RMB
                                                                            0.05) per minute and keep the remaining portion.

Subscriber of fixed line                 Our subscriber or China            If the call is routed through our transmission lines,
operators in our service                 Mobile Communications              the fixed line operators keep RMB 0.06 (previously
regions                                  Corporation's subscriber           RMB 0.14) per minute of the domestic long distance
                                                                            charges(1) and pay the remaining portion to us.

Our subscriber                           China Mobile Communications        We collect the domestic long distance charge of
                                         Corporation's subscriber           RMB 0.07 per six seconds (previously RMB 0.50-1.00
                                                                            per minute), and there is no revenue sharing or
                                                                            settlement.(2)

China Mobile Communications              Our subscriber                     China Mobile Communications Corporation collects the
Corporation's subscriber                                                    domestic long distance charge of RMB 0.07 per six
                                                                            seconds (previously RMB 0.50-1.00 per minute), and
                                                                            there is no revenue sharing or settlement.(2)
</TABLE>

-----------------------
(1)  The adjusted rates are billed at six-second units.

(2)  Except for roaming calls. See table under "-- Roaming" for revenue sharing
     and settlement for roaming calls.

              Where applicable, we collect international long distance charges
in addition to base usage charges. The following table summarizes the terms of
our interconnection arrangement with international gateway operators for
international long distance calls, including the rates after adjustment and, in
parenthesis, the rates before adjustment.

     REVENUE SHARING AND SETTLEMENT OF INTERNATIONAL LONG DISTANCE CHARGES

<TABLE>
<CAPTION>
     TYPE OF CALL                             SETTLEMENT ARRANGEMENTS
     ------------                             -----------------------
<S>                                   <C>
Outgoing calls from our               We keep RMB 0.54 (previously RMB 0.20) per
subscriber                            minute(1) (if the call is routed through
                                      our domestic long distance transmission
                                      lines) or RMB 0.06 (previously RMB 0.20)
                                      per minute(1) (if the call is not routed
                                      through our domestic long distance
                                      transmission lines) of the international
                                      long distance charge and pay the remaining
                                      portion to international gateway
                                      operators.

Incoming calls to our                 We receive from the international
subscriber                            telecommunications operator of the calling
                                      party RMB 0.54 (previously RMB 0.63) per
                                      minute (if the call is routed through our
                                      domestic long distance transmission lines)
                                      or RMB 0.06

                                      (previously RMB 0.07) per minute of the
                                      calling charge (if the call is not routed
                                      through our domestic long distance
                                      transmission lines).
</TABLE>

-----------------------
(1)  The adjusted rates are billed at six-second units.

                                      -23-

<PAGE>

         ROAMING

              We provide roaming services to our subscribers, which allow them
to access our telecommunications services while they are physically outside of
their registered service area and are in other parts of our service regions or
in the coverage areas of other mobile telecommunications networks with which we
have roaming arrangement.

              Under our domestic roaming arrangement with China Mobile
Communications Corporation, our subscribers can make and receive calls while
they are located in the coverage areas of China Mobile Communications
Corporation in the rest of Mainland China outside our service regions.
Conversely, we offer roaming services to China Mobile Communications
Corporation's subscribers while they are in our service regions. As of December
31, 2002, we offered roaming capabilities in 116 countries and regions around
the world under our roaming arrangements with relevant local operators.

              A mobile telecommunications services subscriber using roaming
services is charged at our per-minute roaming charge (instead of the base usage
charge) for both incoming and outgoing calls, plus applicable long distance
charges. The following table sets forth our revenue sharing and settlement
arrangement with China Mobile Communications Corporation for base roaming
charges. We currently do not have a roaming arrangement with China Unicom.

           REVENUE SHARING AND SETTLEMENT OF THE BASE ROAMING CHARGES

<TABLE>
<CAPTION>
          TYPE OF ROAMING                                    SETTLEMENT AGREEMENTS
          --------------                                     ---------------------
<S>                                                  <C>
Our subscriber roaming into the mobile               We pay China Mobile Communications
network China Mobile Communications                  Corporation 80% of the base of roaming
Corporation                                          charge payable by our subscribers.

Subscriber of China Mobile                           China Mobile Communications Corporation
Communications Corporation roaming into              pays us 80% of the base roaming charge
our network                                          charged to its subscribers.
</TABLE>

              REVENUE SHARING AND SETTLEMENT OF LONG DISTANCE CHARGE WHEN
ROAMING. In addition to the base roaming charge, long distance charges may be
assessed when a subscriber is roaming. Where a mobile telecommunications
services subscriber makes a call while roaming, the home network operator
collects all long distance charges incurred and pays all such charges to the
operator of the visited network. The visited network operator then settles those
long distance charges, if settlement applies, in accordance with the long
distance revenue sharing and settlement arrangements described above. Where a
mobile telecommunications services subscriber receives a call while roaming, the
home network operator receives and keeps all long distance charges incurred by
that subscriber.

         NEW SERVICES

              In addition to basic mobile telecommunications services, we offer
a number of new services such as wireless data and voice functions.

              VOICE FUNCTIONS. We offer a variety of basic value added services
with voice functions, including call forwarding, call waiting, conference
calling, call limitation, voice mail and "Chinese Secretary", a live answering
service.

              WIRELESS DATA AND MOBILE INTERNET SERVICES. We believe that
wireless data will be one of the fastest growing segments of the
telecommunications market in Mainland China over the next several years. We
intend to further expand our wireless data services. As of December 31, 2002,
our wireless data services subscribers reached 57.7 million, which represented a
171% increase compared to 21.3 million subscribers as of December 31, 2001, and
accounted for 49.1% of our total subscribers.

              In 1999, we began using our short message service platform to
develop new value added services in

                                      -24-

<PAGE>

selected cities in our service areas, including stock price quotations, sports
news, weather forecasts and online payments. The short message usage volume has
grown rapidly since then and has reached 40.4 billion in 2002 from 6.1 billion
in 2001. We plan to continue utilizing our GSM network to provide data services
based on the current short message service platform where consumer demands can
be more economically served by short message service. These data services
include, for example, the transmission of short messages to facsimile and e-mail
addresses.

              In the last quarter of 2000, we introduced our "Monternet" mobile
data businesses based on the mobile information service platform, making us the
first mobile service provider in Mainland China to combine mobile data
businesses with mobile telecommunications services. For our "Monternet" service,
we collect 100% of the communication fees, and between 9% to 15% of the
messaging service fees from the service providers. In 2001, we began to provide
extensive "Monternet" applications and services. In addition, by providing
corporate subscribers with an integrated, unified mobile voice-data solution,
including through the utilization of a combination of technologies such as the
virtual private mobile network, or VPMN, and group short messaging services, we
believe "Monternet" will stimulate the further development of our wireless data
businesses, make our services more appealing to customers and help us attract
and keep corporate subscribers.

              In 2001, we completed the construction of an Internet Protocol
backbone network, known as CMNet, and launched Internet Protocol-based, or
IP-based, long distance call services over CMNet. We expect that CMNet will also
serve as an important component of our wireless data and mobile Internet
services.

              We commercially launched General Packet Radio Services, or GPRS,
in the first half of the year 2002. GPRS technology enables operators to provide
end-to-end packet-switched data transmission on the existing GSM network, which
improves wireless network utilization and enhances the wireless access rate for
a variety of data applications.

              We also provide other mobile data services to our customers, such
as e-Freedom, Multimedia Messaging Service, or MMS, mobile Internet, M-commerce,
GPRS applications-based and intelligent network-based value-added services and
corporate applications. We provide e-Freedom services to customers so that they
can enjoy the freedom of wireless access to the Internet or intranet by
inserting a network card (including GPRS card or Wireless Local Area Network, or
WLAN, card) and an exclusive data subscriber identity module card, or SIM card,
into a notebook computer or personal digital assistant, or PDA, without the need
of other external devices. Customers use our MMS to deliver messages with
animated color pictures, sounds, text and motion pictures. As of December 31,
2002, over 500 service providers provided mobile Internet content and services
for Monternet through our mobile telecommunications channels and mobile
information service platform.

              ISP SERVICES. We began providing Internet service provider, or
ISP, services in 2000. ISP services enable both mobile and fixed line
subscribers to access the Internet via our networks by dialing the prefix
"172XX". We are planning to provide integrated voice, data and video access to
both mobile telecommunications services subscribers and non-mobile
telecommunications services subscribers through such services in the near
future.

         RESEARCH AND DEVELOPMENT

              Our research and development efforts focus on:

         -    developing advanced data application solutions suitable for the
              particulars of the consumer markets in Mainland China; and

         -    monitoring technological trends, including advancement in third
              generation mobile telecommunications technology, that may have an
              impact on the development of our current business and the
              implementation of our wireless data strategy.

              In light of the increasingly competitive and rapidly evolving
telecommunications market in Mainland China, we expect to continue to devote
resources to the research and development of new products, services and
technology applications.

                                      -25-

<PAGE>

              To focus our mobile data activities and consolidate related
research and development efforts, we formed Aspire Holdings Limited, or Aspire,
as a majority-owned subsidiary with operations based in Shenzhen, China, in June
2000. The principal business focuses of Aspire include systems integration,
product development, and technical support for mobile data systems and related
applications in Mainland China. Aspire also operates our mobile data research
and development center in Shenzhen, China.

              In January 2001, Aspire formed a business alliance with
Hewlett-Packard Company to develop wireless data and Internet and related
applications. Hewlett-Packard assists with the design, implementation and
support of Aspire's services in China, and has been designated as the preferred
provider of hardware and related services to Aspire if these products and
services are of at least the same quality and pricing terms as other competing
products and services. Conversely, Hewlett-Packard has designated Aspire as its
preferred customer, which entitles Aspire to the best customer price and
financing options available for Hewlett-Packard's products and services under
Hewlett-Packard's preferred partner programs prevailing in Mainland China. As
part of the business alliance, Hanover Asia-Pacific Investments Limited, an
indirectly wholly-owned subsidiary of Hewlett-Packard, agreed to make an equity
investment of up to 7% in Aspire. In January 2002, Vodafone Jersey, a
wholly-owned subsidiary of Vodafone invested US$ 34.965 million in Aspire, and
as a result, Hanover invested an additional US$ 16 million in Aspire to maintain
its equity holding in Aspire at 7%.

              Also in January 2001, Aspire entered into a master agreement with
each of us and China Mobile Communications Corporation for the development of
our mobile information service center platform and that of China Mobile
Communications Corporation. Under each of the master agreements, Aspire will
provide system and gateway integration services, hardware, software and system
development, technical support and major overhaul services of data centers to us
and China Mobile Communications Corporation.

              As part of our strategic alliance with Vodafone, Vodafone Americas
Asia Inc., a subsidiary of Vodafone, entered into a business alliance agreement
with Aspire. Under the business alliance agreement between Aspire and Vodafone
Americas, Aspire will engage Vodafone Global Platform and Internet Services, a
unit of Vodafone Americas, as a preferred provider of wireless data application
software in relation to the Aspire Mobile Information Service Center Platform,
provided that the software supplied to Aspire has at least equivalent technical
specifications on the same or better commercial terms. Aspire and Vodafone
Global Platform and Internet Services also agreed to use their reasonable
efforts to coordinate the development of their respective wireless data
platforms with the intention of providing seamless delivery of services to their
respective roaming customers on their wireless data platforms and enabling
content and application providers to use a single application programming
interface.

              In addition to developing, constructing and marketing the
Platform, Aspire also conducts research and development activities related to
new data services and products. Aspire is an important part of our overall
strategy to capture the fast growing wireless data sector in Mainland China.

         CUSTOMER SERVICE, BILLING AND CREDIT CONTROL

              We provide a full range of services that emphasize customer care
from the point of sale onward. At the point of sale, after all application
procedures have been completed, we are generally able to immediately activate
new subscriber connections for our GSM services. Our after-sales customer
support services include a general customer service hotline for all of our 21
service regions, which offers an interactive voice response system as well as
live operator assistance.

              We consider high-usage corporate and individual subscribers to be
our most valuable customers. To better serve these valuable customers, we
introduced a corporate client account relationship manager system, whereby
account managers provide personalized products and services to our corporate
customers and high-value customers. In addition, we established designated
service centers, service and complaint hotlines to serve these customers.

              We also issue VIP cards to our high-value subscribers so that they
may enjoy privileges in other industries. In addition, we provide complimentary
training on the use of new services to our high-value subscribers, as well as
preferential trial use of new services. Furthermore, for certain corporate
customers, we provide virtual private mobile network services.

                                      -26-

<PAGE>

              In 2002, we began to implement a "Customer Point Reward Program",
which is a bonus point based scheme that rewards customers according to their
service consumption, loyalty and payment history. Based on customers' annual
point accumulations, high-value customers are further classified into four
categories: "GoTone Diamond", "GoTone Gold", "GoTone Silver" and "GoTone VIP"
cardholders. Customers in these four classifications are eligible to receive
targeted rewards, including some of our own products and services, as well as
those of our business partners.

              While contract subscribers are not required to deposit funds
before the initiation of local service, these subscribers may choose to make
deposits, and may implement direct debit instructions with their banks to make
such deposits for the purpose of facilitating account payments. Our prepaid
subscribers may also choose to authorize the automatic adding of value to their
stored value cards through direct debit arrangements. Despite the lack of widely
available consumer credit information services in Mainland China, we have
implemented certain subscriber registration procedures, such as identity checks
and background checks for corporate customers, to enhance credit control.

              Generally, we have the same settlement policy for all of our
subscribers. This policy requires our subscribers to settle their individual
accounts on a monthly basis. Subscribers may make payments through various
means, including:

         -    through direct debit accounts established at certain banks and
              certain post offices;

         -    in person at numerous retail outlets and authorized dealers;

         -    by using top-off cards; or

         -    by prepayment.

Detailed statements are provided to subscribers upon request.

              We impose a late payment fee on each subscriber whose account is
not paid by the monthly due date. Our current policy is to deactivate the
subscriber's services if the subscriber's account remains overdue after one
month. Subscribers whose services have been involuntarily deactivated must pay
all overdue amounts, including applicable late payment fees, to reactivate
services.

              We make provision for doubtful accounts based on our assessment of
the recoverability of accounts receivable on maturity. In particular, we make
full provision for accounts receivable older than three months. The total amount
of the provision for doubtful accounts for each of 2000, 2001 and 2002 was RMB
1,346 million, RMB 1,737 million and RMB 1,749 million, respectively, or 2.1%,
1.7% and 1.4% of total operating revenue, respectively.

         INFORMATION SYSTEMS

              Our information systems primarily consist of a business operation
support system, a management information system, a network management system and
our internal communications network. The business operation support system
provides day-to-day operational support to each business unit, and is a unified
and comprehensive system that enables the sharing of information resources. This
system standardizes and integrates each of our sales, billing, settlement,
customer service and network failure handling databases in a centralized and
orderly manner. The management information system collects and processes our
management information and provides support to our management personnel. In
addition, this system has computerized and automated our management in finance,
inventory, procurement and projects. The network management system collects and
processes the operating data from each network and manages, supervises and
controls our networks for safe and efficient operation. Our internal
communications network consists of our internal computer network, video
conference system, telephone system and others, the combination of which
supports our internal communications.

              We have upgraded and integrated our information systems several
times to keep up with our operational

                                      -27-

<PAGE>

and management needs. Our investment in information systems was increased in
2002, and is expected to be further increased in the near future. In particular,
we have been successfully operating our management information system since 2000
in our regional companies in Guangdong, Jiangsu and Zhejiang. During 2001, we
began to extend this system to ten other regional mobile telecommunications
companies and have achieved good results, and we are in the process of extending
this system to the remaining regional mobile telecommunications companies.

         SALES NETWORK AND MARKETING

              Since early 1997, we have significantly expanded our marketing and
distribution efforts to attract an increasingly diverse base of new subscribers.
We have focused on expanding our distribution channels while emphasizing our
brand name, superior network and service quality.

              Our sales network was restructured in 2002 to form the following
sales and service channels:

         -    proprietary or co-operative sales outlets, franchise stores and
              designated specialty stores, which serve as our main sales and
              services network;

         -    general sales agency outlets, which provide the principal sales
              force; and

         -    online and hotline services.

              In addition, we also set up concept stores in major cities within
our service regions to showcase our services and products, particularly our
mobile data services, and to facilitate certain sales and marketing activities.

              At December 31, 2002, we had a sales network consisting of over
61,000 outlets, representing an increase of 76.8% over 2001, mainly due to our
acquisition of the eight regional mobile telecommunications companies in 2002.
Among these outlets, approximately 3,700 were our proprietary sales outlets.

         BRAND NAME

              As a pioneer and the market leader in our markets, we believe we
are well positioned to further develop our brand name. We market our services
under the "CHINA MOBILE" brand name, which is a registered trademark in Mainland
China owned by China Mobile Communications Corporation and the marketing name
used by it throughout Mainland China. As a result of promotional and marketing
initiatives by us and China Mobile Communications Corporation's other operating
subsidiaries, the brand has attained wide recognition and is closely identified
with us by consumers. In addition, China Mobile Communications Corporation has
filed applications in Hong Kong to register the "CHINA MOBILE" name and logo as
a trademark for certain classes of goods and services. As of December 31, 2002,
the " CHINA MOBILE" name has been registered as a trademark for a majority of
such classes of goods and services. Furthermore, China Mobile Communications
Corporation has filed applications to register the "CHINA MOBILE" name and logo
as a trademark in Bangladesh, Canada, India, Indonesia, Macau, Malaysia,
Philippines, South Korea, Taiwan, Thailand and the United States, and the "CHINA
MOBILE" name has been registered as a trademark in Cambodia and New Zealand.

              In July 2002, we entered into a new non-exclusive licensing
agreement with China Mobile Communications Corporation for the use of the "CHINA
MOBILE" name and logo by us and our operating subsidiaries. Under this
agreement, no license fee is payable by us for the first five years from the
effective date of the trademark registration in China and any fees payable after
that will be no less favorable than fees paid by other affiliates of China
Mobile Communications Corporation.

              We market our wireless data services under the "MONTERNET" brand
name throughout Mainland China. We have filed applications in Mainland China,
Hong Kong, Canada, the European Union and the United States to register the
"MONTERNET" name and logo as a trademark for certain classes of goods and
services.

                                      -28-

<PAGE>

         MOBILE TELECOMMUNICATIONS NETWORKS

              We offer mobile telecommunications services using the GSM
standard. Each of our GSM networks consists of:

         -    base stations or base transceiver stations, which are transmitters
              and receivers that serve as a bridge between all mobile users in a
              cell and connect mobile calls to the mobile switching center;

         -    base station controllers, which connect to, and monitor and
              control, the base transceiver station within each cell, performing
              the functions of message exchange and frequency administration;

         -    mobile switching centers, which are central switching points to
              which each call is connected, and which control the base station
              controllers and the routing of calls;

         -    transmission lines, which link the mobile switching centers, base
              station controllers, base transceiver stations and other
              telecommunications networks; and

         -    software applications that drive the mobile telecommunications
              infrastructure.

              The following table sets forth certain selected information
regarding our GSM networks as of December 31, 2000, 2001 and 2002:

<TABLE>
<CAPTION>
                                                           2000             2001            2002
                                                           ----             ----            ----
<S>                                                       <C>              <C>            <C>
Subscribers (in thousands)......................          43,185           69,643         117,676
Voice channels (in thousands)...................           1,860            2,787           4,712
Mobile switching centers........................             470              599           1,020
Base station controllers........................           1,162            1,480           2,493
Base transceiver stations.......................          31,593           43,223          84,824
</TABLE>

              GSM NETWORK CAPACITY EXPANSION PLANS. As of January 1, 2002, all
of our subscribers use digital GSM services. We intend to continue our network
expansion and improvement with an emphasis on increasing the coverage and
capacity and improving the operating efficiency of our GSM networks. Our network
expansion plans depend to a large extent upon the availability of sufficient
spectrum. In addition, in order to improve the capacity of our mobile
telecommunications networks in certain major urban centers, we introduced the
GSM-compatible 1800 MHz Digital Cellular System.

              MIGRATION FROM ANALOG TO DIGITAL NETWORK. Recent advances in GSM
technologies have substantially increased network capacity and service quality.
The economic life cycle of our analog network equipment was also much more
limited than that of our digital networks. We terminated our analog services on
December 31, 2001 in order to utilize our spectrum resources more efficiently
and accelerate the enhancement of our network. As of December 31, 2001,
substantially all of our analog service subscribers migrated to our GSM network.

              SPECTRUM. A mobile telecommunications network's capacity is to a
certain extent limited by the amount of frequency spectrum available. The
Ministry of Information Industry allocated a total of 34 MHz in the 900 MHz
frequency band and the 1800 MHz frequency band to our parent company, China
Mobile Communications Corporation. Under the existing agreement between China
Mobile Communications Corporation and us, we have the exclusive right to use
such frequency spectrum in our service regions.

              TRANSMISSION INFRASTRUCTURE. The physical infrastructure linking
our base transceiver stations, base station controllers and mobile switching
centers and interconnecting our networks to the fixed line network consists of
transmissions lines, which provide the backbone infrastructure by which mobile
call traffic is carried.

                                      -29-

<PAGE>

              INTRA-PROVINCIAL TRANSMISSION LINES. We currently lease
intra-provincial and local transmission lines principally from fixed line
operators in our 21 service regions and pay them fees based on tariff schedules
stipulated by the relevant regulatory authorities after adjusting for the
discounts that we have negotiated.

              We have also built our own infrastructure in certain areas where
the fixed line network operators do not currently have any transmission lines in
place or where the leasing of existing lines is not economical. As part of our
network operation strategy, we have allocated funds, and have planned certain
capital expenditures, for the construction of our own transmission lines where
economically advantageous, such as in high call traffic areas. In areas where
the leasing of transmission lines makes more economic sense, we intend to
continue to leverage our group buying capacity to negotiate preferential leasing
rates.

              INTER-PROVINCIAL TRANSMISSION LINES. In May 2000, we entered into
an inter-provincial leased line agreement with China Mobile Communications
Corporation, which was supplemented in September 2000, extending the application
of this agreement to the seven regional mobile telecommunications companies we
acquired in 2000 effective upon our acquisition. We entered into a further
supplemental agreement in April 2002, which extended the application of this
agreement to the eight regional mobile telecommunications companies we acquired
in 2002. The leased inter-provincial transmission lines link our mobile
switching centers with each other and with China Mobile Communications
Corporation's other mobile switching centers.

              Prior to these arrangements, we leased intra-provincial
transmission lines to link our network to the fixed line network, but did not
lease any inter-provincial transmission lines. Instead, we paid China Mobile
Communications Corporation an inter-provincial interconnection fee. The leasing
charge payable by us is determined based on the standard leasing fee stipulated
by the relevant regulatory authorities after adjusting for the discounts that we
have negotiated, and the mobile telecommunications network operators at both
ends of the transmission lines will share the leasing fees equally.

              NETWORK OPERATIONS AND MAINTENANCE. We believe that we have
considerable network operation and maintenance experience and technical
expertise. Day-to-day traffic management, troubleshooting, system maintenance
and network optimization are conducted by our experienced team of engineers and
technicians. Technical staff are available for emergency repair work 24 hours a
day and we employ specialist teams for central maintenance of the networks. We
continue to seek to attract and retain qualified technical staff. Currently,
most technical difficulties relating to the networks are resolved by our staff,
although our equipment suppliers also provide back-up maintenance and technical
support.

              BASE STATION SITES. In urban areas, our base transceiver station
sites are located mostly on existing structures, typically at the top of tall
buildings. In rural areas, masts are often constructed for locating base
transceiver stations. Typically, base station sites are of limited size, as base
transceiver station equipment does not generally require significant space.
Generally, depending on the length of time required for negotiation with respect
to use of the land or buildings, construction of a base transceiver station
takes approximately one to three months in an urban area and approximately three
to six months in a rural area. We anticipate that we will need a significant
number of new sites in connection with the expansion of our mobile
telecommunications networks. There can be no assurance that we will be able to
obtain the requisite number of sites on reasonable commercial terms.

              EQUIPMENT SUPPLIERS. We select our principal suppliers from among
leading international and domestic manufacturers of mobile telecommunications
equipment and in accordance with technical standards set by the Ministry of
Information Industry. Our GSM networks use equipment primarily supplied by
Ericsson, Nokia, Huawei Technologies, Motorola and Siemens.

         STRATEGIC ALLIANCE WITH VODAFONE

              On October 4, 2000, we entered into a non-binding memorandum of
understanding with Vodafone, which sets forth the principal terms of alliance
and cooperation between the two parties. In connection with the alliance,
Vodafone purchased US$ 2.5 billion of our ordinary shares as part of our share
offering in November 2000, representing approximately 2.18% of our issued and
outstanding share capital following the offering.

                                      -30-

<PAGE>

              On February 27, 2001, we entered into a binding strategic alliance
agreement with Vodafone. The agreement has formalized a number of cooperation
arrangements set forth in the memorandum of understanding, including:

         -    the exchange and sharing of corporate management, technical and
              operational expertise and resources;

         -    joint research and development;

         -    the introduction of global products and services for the mobile
              community; and

         -    the development and implementation of standards and protocols
              relevant to mobile telecommunications.

              Under the agreement, we have agreed to make Vodafone our preferred
partner in the above mentioned areas, and Vodafone has agreed to make us its
sole strategic partner in China for all areas of potential cooperation within
the scope of the strategic alliance. As part of the alliance, Sir Christopher
Gent, Chief Executive of Vodafone, joined our board of directors as an
independent non-executive director in February 2001. See "Item 6. Directors,
Senior Management and Employees". In addition, Vodafone paid us US$ 750 million
in July 2002 for the purchase of our ordinary shares through its wholly-owned
subsidiary, Vodafone Jersey, in connection with our acquisition of the eight
regional mobile telecommunications companies from our immediate parent company,
China Mobile Hong Kong (BVI) Limited. As a result, Vodafone's share holding in
us increased from 2.18% to approximately 3.27%. See "-- The History and
Development of Company -- Expansion of Business Coverage Through Acquisitions".

              We believe that the strategic alliance with Vodafone has enhanced
our strengths in the telecommunications market in Mainland China and will better
position us to pursue further expansion opportunities globally. In particular,
this alliance has enabled us to have frequent and broad exchanges of expertise
and market information. Moreover, this strategic alliance will enable Vodafone
and us to share information and establish benchmarks to better assess and
enhance each other's performance, thereby better positioning both parties in the
global telecommunications market. See " -- Research and Development".

         COMPETITION

              We compete with other telecommunications services providers. In
all of the provinces, municipalities and the autonomous region in which we
operate, we are one of the two licensed mobile services providers. The Chinese
government encourages orderly and fair competition in the telecommunications
industry in Mainland China. In particular, the Chinese government has extended
favorable regulatory policies to some of our competitors, such as China Unicom,
in order to help them become more viable competitors to us and China Mobile
Communications Corporation. For example, the Chinese government has permitted
China Unicom to apply mobile service tariffs as much as 10% below the
governmental standard rates. We believe this policy has helped China Unicom's
market share by capturing a significant number of price-sensitive mobile
telecommunications services subscribers.

              In accordance with the Chinese government policy of encouraging
competition in the telecommunications industry, the government has previously
authorized new entrants to offer IP-based long distance call services, data and
Internet services. In 2001, the State Council formally approved the
restructuring of the former China Telecommunications Corporation, China Netcom
Corporation Limited and Jitong Network Communications Company Limited, which
created two large telecommunications companies, China Telecom and China Netcom.
Increased competition from new entrants in China's telecommunications industry
could adversely affect our financial condition and results of operations. See
"Item 3. Key Information -- Risk Factors -- New entrants in the
telecommunications industry in China may further intensify competition and
adversely affect our results of operations".

              We compete on the basis of our network coverage and quality, the
pricing of our services, the range of services we offer and our service quality.
We believe that we have significant competitive advantages due to:

         -    our superior mobile telecommunications networks;

                                      -31-

<PAGE>

         -    our widely-recognized brand name and logo that are closely
              identified with us by consumers;

         -    our broad distribution networks and our focus on customer
              services;

         -    our extensive range of value added services;

         -    our experienced management team and high quality employees; and

         -    our financial resources.

              We believe these advantages have contributed to our superior
subscriber quality compared to that of our competitors, as measured by average
usage levels, average revenues per subscriber and doubtful accounts levels.

              The State Council and the Ministry of Information Industry may
approve additional mobile service providers in the future that may compete with
us. We may also be subject to competition from providers of new
telecommunications services based on new or existing technologies. Nonetheless,
given the relatively low mobile penetration rates in our markets and in Mainland
China in general, we believe there is substantial growth potential for our
mobile telecommunications business. We believe that the restructuring of the
telecommunications industry in Mainland China has helped to create a fair,
orderly, transparent and healthy telecommunications market.

              We also face indirect competition from other telecommunications
services, such as Xiaolingtong, a local area wireless telephone service with
limited mobility and limited coverage operated by China Telecom and China
Netcom. Xiaolingtong offers lower priced services. As a result Xiaolingtong's
services are targeted at lower usage customers who tend to spend smaller amounts
on mobile telecommunications. Xiaolingtong may become more competitive in the
low-end market as such services are becoming available in more large and
medium-sized cities, including Beijing, in Mainland China.

              In addition, China Unicom currently operates an 800 MHz Code
Division Multiple Access, or CDMA, network, and has recently announced that
certain of its subsidiaries will commence commercial trials of CDMA prepaid
services within their respective service regions. China Unicom's CDMA services
have generally increased the level of competition in the markets where we
operate.

         WORLD TRADE ORGANIZATION

              On December 11, 2001, China officially joined the WTO. Under the
Protocol on the Accession of the People's Republic of China, dated as of
November 11, 2001, China agreed to gradually open the various segments and
regions of its telecommunications market to foreign investment. Pursuant to this
accession protocol, both the percentage of ownership of Sino-foreign joint
ventures offering telecommunication services in China and the regions where
those joint ventures are permitted to offer telecommunications services will be
gradually expanded over a period of six years. Under the accession protocol, the
telecommunication market is divided into fixed line services, mobile voice and
data services, paging services and value added services. Value added services
include electronic mail, voice mail and online information and database
retrieval. By December 11, 2004, foreign investors will be permitted to own up
to 49% of joint ventures that offer mobile voice and data services in 17 cities
in China. By December 11, 2006, such joint ventures will be permitted to offer
mobile voice and data services in China without any geographic restrictions.

                                      -32-

<PAGE>

              The table below summarizes the foreign ownership restrictions for
telecommunications joint ventures in China as well as applicable geographic
restrictions:

            FOREIGN OWNERSHIP PERCENTAGE AND GEOGRAPHIC RESTRICTIONS
                FOR FOREIGN-FUNDED TELECOMMUNICATIONS ENTERPRISES

<TABLE>
<CAPTION>
                                                             AS OF DECEMBER 31,
-------------------------------------------------------------------------------------------------------------------------------
       SECTOR              2001            2002           2003             2004         2005         2006            2007
       ------              ----            ----           ----             ----         ----         ----            ----
<S>                    <C>            <C>              <C>            <C>               <C>      <C>              <C>

Mobile..............        25%           35%                              49%                        49%
                       (3 cities)(1)  (17 cities)(2)                  (17 cities)(2)             (nationwide)

Fixed-line..........        N/A           N/A               N/A            25%                       35%              49%
                                                                       (3 cities)(1)             (17 cities)(2)   (nationwide)

Value-added.........        30%           49%               50%
                       (3 cities)(1)  (17 Cities)(2)    (nationwide)

Paging..............        30%           49%               50%
                       (3 cities)(1)  (17 Cities)(2)    (nationwide)
</TABLE>

-----------------------
(1)  The initial three cities are Beijing, Shanghai and Guangzhou.

(2)  The 17 cities include Beijing, Chengdu, Chongqing, Dalian, Fuzhou,
     Guangzhou, Hangzhou, Nanjing, Ningbo, Qingdao, Shenyang, Shanghai,
     Shenzhen, Xiamen, Xi'an, Taiyuan and Wuhan.

         REGULATION

              The mobile telecommunications industry in Mainland China is
subject to a high degree of regulation by the Chinese government. Regulations
issued or implemented by the State Council, the Ministry of Information Industry
and other relevant government authorities including the State Development and
Reform Commission and the Ministry of Commerce, which consolidated the functions
of the former Ministry of Foreign Trade and Economic Cooperation, encompass all
key aspects of mobile telecommunications network operations, including entry
into the telecommunications industry, scope of permissible business,
interconnection and transmission line arrangements, technology and equipment
standards, tariff standards, capital investment priorities, foreign investment
policies and spectrum and number resources allocation.

              The Ministry of Information Industry, under the leadership of the
State Council, is responsible for, among other things:

         -    formulating and enforcing industry policy, standards and
              regulations;

         -    granting telecommunications licenses;

         -    formulating interconnection and settlement standards for
              implementation between telecommunications networks;

         -    together with other relevant regulatory authorities, formulating
              tariff and service charge standards for telecommunications
              services;

         -    supervising the operations of telecommunications services
              providers;

         -    promoting fair and orderly market competition among operators; and

         -    allocating and administering public telecommunications resources,
              such as radio frequencies, number resources, domain names and
              addresses of telecommunications networks.

                                      -33-

<PAGE>

              In order to provide a uniform regulatory framework to encourage
the orderly development of the telecommunications industry, the Ministry of
Information Industry, under the direction of the State Council, is currently
preparing a draft telecommunications law. We expect that, if and when the
telecommunications law is adopted by the National People's Congress, it will
become the basic telecommunications statute and the legal source of
telecommunications regulations in Mainland China. In addition, the State Council
promulgated a set of new telecommunications regulations on September 25, 2000.
These regulations are substantially consistent with the existing rules and
guidelines for the telecommunications industry, and are primarily intended to
streamline and clarify the existing rules and guidelines. They apply in the
interim period prior to the adoption of the telecommunications law. Although we
expect that the telecommunications law will have a positive effect on the
overall development of the telecommunications industry in Mainland China, we do
not know what the nature and scope of the telecommunications law will be.

              ENTRY INTO THE INDUSTRY. The new telecommunications regulations
adopt the existing regulatory distinction between basic and value added
telecommunications services and provide a classification of those services.
Operators of mobile telecommunications networks, providers of other basic
telecommunications services such as local and long distance fixed line telephone
services, and value added service providers whose telecommunications services
cover two or more provinces, municipalities or autonomous regions in China must
apply for specific permits from the Ministry of Information Industry in order to
provide such services. Granting of permits for providing basic
telecommunications services will be through a tendering process. Currently, in
addition to us and other entities controlled by China Mobile Communications
Corporation which operate in Mainland China outside of our markets, China Unicom
is also authorized to provide mobile services in all provinces, municipalities
and autonomous regions in China.

              On December 11, 2001, China officially joined the WTO. To
implement China's commitments under the WTO, the Administration of
Foreign-Funded Telecommunications Enterprises Provisions became effective on
January 1, 2002, permitting foreign investment in joint ventures that provide
telecommunications services in China. However, such investments will presumably
bear no direct relation to the issuance of licenses to providers of
telecommunications services in Mainland China, as the issuance of new licenses
by the relevant authority is governed by a separate set of rules and
regulations. Pursuant to the Administration of Foreign-Funded Telecommunications
Enterprises Provisions, foreign ownership in a telecommunications enterprise may
be gradually increased to 49% if such enterprise provides basic
telecommunication services and 50% if such enterprise provides value added
telecommunications services (including radio paging services).

              SPECTRUM USAGE. In coordination with the relevant provincial
authorities, the Ministry of Information Industry regulates the allocation of
radio frequency. The frequency assigned to an entity is not allowed to be leased
or, without approval of the Ministry of Information Industry, transferred by the
entity to any other third party. In accordance with a joint circular from the
State Development and Reform Commission and the Ministry of Finance, China
Mobile Communications Corporation entered into an agreement with us that
specifies the amount of fees to be paid to the Ministry of Information Industry
for spectrum usage by each mobile telecommunications network operator under the
Ministry of Information Industry's control based on the bandwidth of the
frequency used and the number of base transceiver stations within the relevant
operator's networks.

              On May 2, 2002, the relevant regulatory authorities in China
informed us that the standard spectrum usage fees for GSM networks will be
adjusted progressively over a period of three years, and that the adjustments
will be effective for a period of five years from July 1, 2002. For the first
year, spectrum usage fees for GSM networks will be charged at the annual rate of
RMB 7.5 million per MHz frequency. For the second year, the annual fee will be
RMB 11.25 million per MHz frequency and beginning in the third year and
thereafter, the annual fee will be RMB 15 million per MHz frequency. All
adjusted annual fees are charged on the basis that upward and downward
frequencies are separately charged. The allocation of spectrum usage fees
between China Mobile Communications Group and us remains the same under our
existing agreement. The adjustments will increase our expenses on an after-tax
basis by approximately RMB 224 million, RMB 343 million and RMB 462 million,
respectively, for the first, second, and third years after the effectiveness of
these new rates.

              NUMBER RESOURCES. The Ministry of Information Industry is
responsible for the administration of the telecommunications number resources
within Mainland China, including the mobile telecommunications network number
and subscriber numbers. The use of number resources by any telecommunications
operator is subject to the

                                      -34-

<PAGE>

approval by the Ministry of Information Industry. In January 2003, the Ministry
of Information Industry issued "Measures on Administration of Telecommunications
Network Number Resources". In accordance with these new measures, the
telecommunications network number resources are owned by the state, and the user
of number resources is required to pay a usage fee to the state starting March
1, 2003. However, the standard for the usage fee has not yet been determined. It
is also not clear when the standard for the usage fee will be determined and
when we will be required to pay such fee. The new measures also provide for
procedures for application for the use, upgrade and adjustment of number
resources by telecommunications operators.

              TARIFF SETTING. The levels and categories of our current tariffs
are subject to regulation by various government authorities, including the
Ministry of Information Industry, the State Development and Reform Commission
and, at the local level, the relevant provincial price regulatory authorities.
Under the new telecommunications regulations, telecommunications tariffs are
categorized into market based tariffs, government guidance tariffs and
government standard tariffs. In general, base usage charges, monthly fees,
domestic roaming usage charges and tariffs for all domestic long distance calls
(other than Internet Protocol phone calls) and international calls are fixed
jointly by the Ministry of Information Industry and the State Development and
Reform Commission. Our international roaming charges are set in accordance with
agreements between China Mobile Communications Corporation and the relevant
foreign mobile operators. Under the new telecommunications regulations, tariffs
for those telecommunications businesses that are considered fully competitive
may be set by the service providers as market based tariffs.

              INTERCONNECTION ARRANGEMENTS AND LEASE LINE ARRANGEMENTS. Under
the new telecommunications regulations, parties seeking interconnection must
enter into an interconnection agreement and file such interconnection agreement
with the Ministry of Information Industry. Major telecommunications services
providers that have control over essential telecommunications infrastructure and
possess significant market share must allow interconnection to their networks by
other operators. They must establish interconnection rules and procedures based
on the principles of non-discrimination and transparency and submit such rules
and procedures to the Ministry of Information Industry for approval. Such rules
and procedures will be binding upon those major telecommunications services
providers. The termination of any interconnection arrangements will require
prior approval by the Ministry of Information Industry.

              The applicable regulations provide that interconnection related
equipment must conform with the technical standards approved by the Ministry of
Information Industry. See "--Technical Standards" below. The Ministry of
Information Industry also determines the standard lease tariffs to be paid by
telecommunications operators with respect to the leasing of transmission lines
that facilitate interconnection between telecommunications networks. The
relevant provincial operating subsidiaries of China Telecom, China Netcom and
China Mobile Communications Corporation are responsible for the maintenance of
the transmission lines and related equipment in their respective localities.

              TECHNICAL STANDARDS. Certain regulatory authorities in Mainland
China, including the Ministry of Information Industry, set technical standards
and control the type and quality of mobile telecommunications equipment used in
or connected to public networks, all radio telecommunications equipment and all
interconnection related equipment.

              The establishment of base transceiver stations requires the
approval of the relevant provincial regulatory authorities. A number of these
approvals with respect to the base stations of our operating subsidiaries are
currently pending. We have not experienced and do not expect to experience
material difficulty in obtaining permission to establish additional sites.

              CAPITAL INVESTMENT. Some of our major investment projects,
including mobile telecommunications network development projects, may be
required to obtain approvals from relevant regulatory authorities in Mainland
China.

         EMPLOYEES

              The total number of our employees increased from 38,343 as of
December 31, 2000 to 59,633 as of December 31, 2002, mainly as a result of our
acquisitions of eight regional mobile telecommunications companies in

                                      -35-

<PAGE>

China in 2002. Substantially all of our employees are located in Mainland China.
The employees are classified in the following table. Approximately 56% of our
permanent employees have college or graduate degrees.

<TABLE>
<S>                                                       <C>
Management.........................................       11,480
Technical and engineering..........................       19,950
Sales and marketing................................       25,341
Financial and accounting...........................        2,862
                                                          ------
       Total.......................................       59,633
                                                          ======
</TABLE>

              We provide benefits to certain employees, including housing,
retirement benefits and hospital, maternity, disability and dependent medical
care benefits. Most of our employees are members of a labor association. We have
not experienced any strikes, slowdowns or labor disputes that have interfered
with our operations to date, and we believe that our relations with our
employees are good.

PROPERTY, PLANTS AND EQUIPMENT

              We own, lease or have usage rights in various properties which
consist of land and buildings for offices, administrative centers, staff
quarters, retail outlets and technical facilities. We have obtained land use
right certificates and property title certificates for all but five of these
properties. In 2001, we obtained real estate ownership certificates for four
properties located in Guangdong Province and we are currently in the process of
obtaining certificates for the remaining five properties, all of which are also
located in Guangdong Province. We believe that our use of these properties is
not affected by the fact that we have not yet obtained the relevant land use
right certificates and property title certificates. China Mobile (Hong Kong)
Group Limited, our indirect controlling shareholder, has agreed to indemnify us
against any loss or damage caused by or arising from any challenge of, or
interference with, our right to use any of the properties we had or used in our
business as of May 31, 1997, the date of asset revaluation in preparation for
our initial public offering. We believe that all of our owned and leased
properties are well maintained and are suitable and adequate for their present
use.

                                      -36-

<PAGE>

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

              You should read the following discussion and analysis in
conjunction with our consolidated financial statements, together with the
related notes, included elsewhere in this annual report. The consolidated
financial statements have been prepared in accordance with Hong Kong GAAP, which
differ in certain significant respects from U.S. GAAP. Note 33 to our
consolidated financial statements summarizes the significant differences between
Hong Kong GAAP and U.S. GAAP as they relate to us and provides a reconciliation
to U.S. GAAP of net profit and shareholders' equity. In addition, note 33 to our
consolidated financial statements includes our condensed consolidated financial
statements prepared and presented in accordance with U.S. GAAP for the relevant
periods. The consolidated financial statements present, and the discussion and
analysis in this section pertain to, our consolidated financial position and
results of operations as of and for the years ended December 31, 2000, 2001 and
2002. Our consolidated financial statements reflect the results of Beijing
Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong
Mobile and Guangxi Mobile from November 13, 2000 and Anhui Mobile, Jiangxi
Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi
Mobile and Shanxi Mobile from July 1, 2002, the respective dates of the
acquisitions.

OVERVIEW OF OUR OPERATIONS

              During 2000, 2001 and 2002, our network capacity, subscriber base
and usage and operations experienced significant growth. We believe that with
the market-oriented restructuring of the telecommunications industry, as well as
the development of the economy and increase in per capita income in Mainland
China, the telecommunications industry will continue to grow rapidly. Given the
relatively low penetration rates in our markets, we believe that there is
potential for future subscriber growth.

              Our results of operations, like those of other mobile
telecommunications network operators, are substantially dependent on a number of
factors, including:

         -    the number and quality of subscribers;

         -    the level of subscriber usage;

         -    the level and structure of tariffs; and

         -    interconnection, roaming and transmission line arrangements with
              other telecommunications operators.

              We operate in an extensively regulated environment and our
operations and financial performance are significantly affected by the Chinese
government's regulation of the telecommunications industry. These regulations
and policies may affect, among other things, our interconnection and
transmission line leasing arrangements, technology and equipment standards and
capital investment, as described in more detail under "Item 3. Key Information
-- Risk Factors -- Adverse changes in the economic policies of the Chinese
government could have a material adverse effect on the overall economic growth
of Mainland China, which could reduce the demand for our services and adversely
affect our business, financial condition and results of operations" and "Item 4.
Information on the Company -- Business Overview -- Regulation". Our financial
performance is also subject to the economic and social conditions in Mainland
China and foreign currency exchange rate fluctuations.

         OUR ACQUISITIONS OF REGIONAL MOBILE TELECOMMUNICATIONS COMPANIES IN THE
         PAST FIVE YEARS HAVE MATERIALLY IMPACTED OUR FINANCIAL RESULTS

              We acquired Jiangsu Mobile on June 4, 1998, Fujian Mobile, Henan
Mobile and Hainan Mobile on November 12, 1999, Beijing Mobile, Shanghai Mobile,
Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and Guangxi
Mobile on November 13, 2000 and Anhui Mobile, Jiangxi Mobile, Chongqing Mobile,
Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi Mobile on
July 1, 2002. We have adopted the purchase accounting method to account for
these acquisitions under Hong Kong GAAP. Accordingly, the consolidated financial
statements include the results of these companies from the respective dates of
the acquisitions. Under U.S. GAAP, our acquisitions of these companies are
considered a combination of entities under common

                                      -37-

<PAGE>

control which would be accounted for under the "as if pooling-of-interests"
method, whereby assets and liabilities are accounted for at historical cost and
the accounts of previously separate companies for periods prior to the
combination generally are restated on a combined basis.

              These acquisitions have had a material impact on our overall
results of operations. In particular, our financial results in 2002 were
significantly affected by the inclusion of the results of operations for the
eight regional mobile telecommunications companies we acquired in July 2002. By
comparison, our financial results in 2001 did not include the results of
operations of these companies. See "-- Results of Operations -- Year Ended
December 31, 2002 Compared to Year Ended December 31, 2001". These acquisitions
have, among other things, significantly expanded the size of the mobile
telecommunications markets we serve and increased the number of our subscribers
and usage of our services. As a result, our operating revenue and operating
expenses have also increased significantly.

         OPERATING ARRANGEMENTS WE ENTERED INTO OVER THE LAST SEVERAL YEARS HAVE
         MATERIALLY IMPACTED OUR FINANCIAL RESULTS

              Our current organizational structure was established pursuant to
the restructuring completed in September 1997 in preparation for our initial
public offering and our acquisitions of the 19 regional mobile
telecommunications companies in Mainland China in 1998, 1999, 2000 and 2002. In
connection with these transactions, we entered into various operating
arrangements to facilitate the transfer of the operations to us, to integrate
these operations within our operating structure and to improve our overall
operational efficiency. These arrangements included:

         -    interconnection revenue sharing and settlement arrangements with
              other operators, including China Mobile Communications
              Corporation;

         -    intra-provincial transmission line leasing agreements with other
              operators;

         -    service agreements with China Mobile Communications Corporation
              and certain other operators with respect to various
              telecommunications services and support;

         -    a change in the tax treatment of connection fees and certain
              surcharge revenue for our services;

         -    the revaluation of fixed assets of the companies we acquired as of
              the respective dates set forth in the financial statements
              included in this annual report; and

         -    an agreement with China Mobile Communications Corporation for
              inter-provincial interconnection and domestic and international
              roaming.

              The original terms of our agreements relating to interconnection,
leased lines and roaming have been revised as a result of tariff adjustments by
the government and/or commercial negotiation with the relevant parties. See
"Item 4. Information on the Company -- Business Overview -- Interconnection" and
"-- Roaming" as well as the notes to our consolidated financial statements for a
description of these arrangements as amended to date.

              Our financial results reflect the impact of the above arrangements
as of the dates they became effective. These arrangements and changes have had a
material impact on our overall results of operations. In each of 1999 and 2000,
depreciation expense increased as a result of the revaluation of fixed assets,
while our effective income tax rates increased as a result of connection fees
and certain surcharges becoming fully taxable after the acquired companies had
registered as wholly foreign owned enterprises following the acquisitions.

                                      -38-

<PAGE>

         OUR OPERATING ARRANGEMENTS WITH CHINA MOBILE COMMUNICATIONS CORPORATION
         HAVE AFFECTED AND MAY CONTINUE TO AFFECT OUR FINANCIAL RESULTS

              In May 2000, we entered into two agreements with China Mobile
Communications Corporation for:

         -    inter-provincial interconnection and domestic and international
              roaming services; and

         -    sharing of inter-provincial leased line fees.

              We entered into a supplemental agreement in September 2000,
extending the application of those agreements to the seven regional mobile
telecommunications companies we acquired in 2000 effective upon our acquisition.
We entered into a further supplemental agreement in April 2002, which extended
the application of these agreements to the eight regional mobile
telecommunications companies we acquired in 2002.

              Prior to these arrangements, we leased intra-provincial
transmission lines to link our network to the fixed line network, but did not
lease any inter-provincial transmission lines. Instead, we paid China Mobile
Communications Corporation an inter-provincial interconnection fee. Under the
inter-provincial transmission line leasing agreement with China Mobile
Communications Corporation, the leasing fee payable by us is determined based on
the standard leasing fee stipulated by the relevant regulatory authorities after
adjusting for the volume discount to which we are entitled, and on the basis
that the mobile network operators at both ends of the transmission lines will
share the leasing fees equally. As a result, these arrangements led to an
increase in our transmission line leasing expenses, but a reduction in our
inter-provincial interconnection and roaming settlement expenses, resulting in
net savings in our operating expenses in 2000. We have reflected the financial
impact of these arrangements in 1999 as a one-time gain in our accounts for
2000.

         TARIFF ADJUSTMENTS

              As part of the efforts to further rationalize the tariff structure
of telecommunications services, the government introduced a wide range of tariff
adjustments effective from early 2001. The tariff adjustments that affect our
mobile telecommunications services include the shortening of the billing unit
for long distance charges (other than for IP-based long distance call services),
from one minute to six seconds, the general reduction in domestic and
international long distance call rates, the elimination of various surcharges
and a general reduction in leased line tariffs. In particular, effective from
early 2001, domestic long distance call rates have been adjusted from the range
of RMB 0.50 to RMB 1.00 per minute to the uniform rate of RMB 0.07 per six
seconds. In addition, connection fees charged to new contract subscribers were
eliminated as of July 1, 2001.

         AMENDMENT TO REVENUE SHARING ARRANGEMENT FOR PREPAID SERVICES

              We offer prepaid services in each of our 21 service regions. Some
of our prepaid services allow subscribers to add value to their SIM cards in any
of our service regions or in the service regions of other subsidiaries of China
Mobile Communications Corporation. In May 2001, we entered into an agreement
with China Mobile Communications Corporation to amend the then-existing revenue
sharing arrangements with respect to prepaid services, with retroactive effect
from April 21, 2001, which was amended in April 2002 to extend those
arrangements to the eight regional mobile telecommunications companies we
acquired in 2002. The new agreement amended the prior arrangement by allowing
the network operator in the location that sells the top-off prepaid card to
charge 5% of the face value of the card as a handling charge, and remit the
other 95% (as compared to 85% prior to the amendment) to the subscriber's home
network operator.

         RENMINBI BOND OFFERING

              Following the approval by the relevant Chinese regulatory
authorities, on October 28, 2002 Guangdong Mobile, our wholly-owned subsidiary,
issued RMB 3 billion guaranteed bonds due 2007 and RMB 5 billion guaranteed
bonds due 2017. These bonds commenced trading on the Shanghai Stock Exchange on
January 22, 2003. The RMB 3 billion guaranteed bonds and RMB 5 billion
guaranteed bonds bear fixed interest of 3.5% and 4.5%, respectively, payable
annually.

                                      -39-

<PAGE>

              We have issued a joint and irrevocable guarantee for the
performance of these bonds, and China Mobile Communications Corporation has
issued a further guarantee in relation to the performance by us of our guarantee
obligation. These bonds have received a consolidated credit rating of "AAA" by
China Chengxin International Credit Rating Company Limited, an affiliate of
Fitch International Limited, and a consolidated credit rating of "AAA" by Dagong
Global Credit Rating Co. Ltd.

              The entire net proceeds from the offering were applied solely to
satisfy part of the US$ 2,800 million deferred consideration for the acquisition
by the Company of the entire interest in Anhui Mobile, Jiangxi Mobile, Chongqing
Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi
Mobile in 2002.

         ANALOG-TO-DIGITAL MIGRATION

              Due to the rapid development of mobile telecommunications
technologies and the potentially limited economic life cycle of our analog
network equipment, we migrated our analog subscribers to our GSM network. See
"Item 4. Information on the Company -- Business Overview -- Migration from
Analog to Digital Network". In 2000, we wrote down and wrote off the entire RMB
1,525 million in remaining net book value of our analog network equipment. We
discontinued our analog service on December 31, 2001.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

              The following discussion and analysis is based on our consolidated
financial statements, which have been prepared in accordance with Hong Kong
GAAP. The preparation of financial statements in conformity with Hong Kong GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and expenses
during the years reported. Actual results could differ from those estimates.
Estimates are used when accounting for certain items such as unbilled usage
fees, allowance for doubtful accounts, depreciation and amortization period, and
impairment of long lived assets including fixed assets and goodwill arising from
acquisitions (including that taken initially to reserves). Actual results may
differ from those estimates under different assumptions or conditions.

              We believe that the following critical accounting policies have a
more significant impact on our consolidated financial statements, either because
of the significance of the financial statement elements to which they relate, or
because they require judgment and estimation.

              ALLOWANCE FOR DOUBTFUL ACCOUNTS

              We maintain allowances for doubtful accounts based upon evaluation
of the recoverability of the accounts receivables and other receivables at each
balance sheet date. We base our estimates on the aging of our accounts
receivable balances and our historical write-off experience, net of recoveries.
If the financial condition of our customers were to deteriorate, additional
allowances may be required.

              IMPAIRMENT OF FIXED ASSETS

              Our fixed assets, consisting primarily of telecommunication
transceivers, switching centers and other network equipment, comprise a
significant portion of our total assets. Changes in technology or industry
conditions may cause the estimated period of use or the value of these assets to
change. We perform periodic reviews to confirm the appropriateness of estimated
economic useful lives for each class of fixed assets. For the three years ended
December 31, 2002, no changes of assets useful lives have occurred. In addition,
long-lived assets including fixed assets and goodwill arising on acquisition
(including that initially taken to reserve) are reviewed for impairment whenever
events or changes in circumstances have indicated that their carrying amounts
may not be recoverable. If any such indication exists, the asset's recoverable
amount is estimated. An impairment loss is recognized whenever the carrying
amount of an asset exceeds its recoverable amount. The recoverable amount of an
asset is the greater of its net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of
time value of money and the risks specific to the asset. Where an asset does not
generate cash inflows largely independent of those from other

                                      -40-

<PAGE>

assets, the recoverable amount is determined for the smallest group of assets
that generates cash inflows independently (i.e., a cash-generating unit).
Estimates and assumptions used in setting depreciable lives and testing for
recoverability require both judgment and estimation. Our policies regarding
accounting for these assets and assessing their recoverability are included in
note 2(f) and note 2(h) to our consolidated financial statements.

RESULTS OF OPERATIONS

              As a result of our acquisitions and the material changes made to
our operating arrangements, our results of operations are not directly
comparable with those in prior years.

              The following table sets forth selected income statement data,
expressed as percentages of operating revenue, for the periods indicated:

<TABLE>
<CAPTION>
                                                                               YEAR ENDED DECEMBER 31,
                                                                        ----------------------------------------
                                                                         2000             2001             2002
                                                                         ----             ----             ----
<S>                                                                     <C>              <C>              <C>
Operating revenue:                                                      100.0%           100.0%           100.0%
      Usage fees...............................................          71.2             73.2             72.6
      Monthly fees.............................................          14.8             14.1             13.1
      Connection fees..........................................           3.4              0.7              0.0
      Others...................................................          10.6             12.0             14.3
Operating expenses:
      Leased lines.............................................           8.5              5.0              4.1
      Interconnection..........................................          12.8             13.0             10.1
      Depreciation.............................................          15.0             17.6             20.9
      Personnel................................................           6.1              5.3              5.2
      Other operating expenses                                           16.3             18.2             21.7
                                                                        -----            -----            -----
              Total operating expenses.........................          58.7             59.1             62.0
Operating profit                                                         41.3             40.9             38.0
      Write-down and write-off of analog network equipment.....          (2.3)               -                -
      Amortization of goodwill.................................             -                -             (0.7)
      Other net income.........................................           1.4              1.6              1.3
      Finance costs............................................          (1.3)            (1.7)            (1.4)
      Interest income..........................................           1.5              0.8              0.5
      Non-operating net income.................................           0.0              0.0              0.4
                                                                        -----            -----            -----
      Profit before tax and minority interests.................          40.6             41.6             38.1
      Income tax...............................................         (12.9)           (13.7)           (12.6)
                                                                        -----            -----            -----
      Profit before minority interest..........................          27.7             27.9             25.5
      Minority interest........................................             -              0.0              0.0
                                                                        -----            -----            -----
Net Profit.....................................................          27.7%            27.9%            25.5%
                                                                        =====            =====            =====
</TABLE>

     YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

              Our results of operations in 2002 were materially affected by our
acquisition of eight regional mobile telecommunications companies in July 2002.
In particular, our operating revenue and operating expenses increased
significantly in 2002. This was primarily due to the inclusion of the results of
operations of these companies. By comparison, our results in 2001 did not
include the results of operations of these companies. See "-- Overview of Our
Operations -- Our Acquisitions of Regional Mobile Telecommunications Companies
in the Past Five Years Have Materially Impacted Our Financial Results". See
"Item 4. Information on the Company -- The History and Development of the
Company -- Expansion of Business Coverage Through Acquisitions".

              OPERATING REVENUE. We derive operating revenue principally from
usage fees and monthly fees. Usage fees include standard local usage fees for
airtime and applicable domestic and international long distance charges
receivable from subscribers for the use of our mobile telecommunications
networks and facilities, and fees in respect of roaming out calls made by our
subscribers outside their registered service areas. Other operating revenue
includes

                                      -41-

<PAGE>

charges for wireless data and value added services, interconnection revenue and
roaming in fees. As a result of the introduction and development of new
businesses, including wireless data services, we expect that revenue from new
businesses will constitute an increasing portion of our operating revenue in
2003.

              Operating revenue increased 28.1% from RMB 100,331 million in 2001
to RMB 128,561 million (US$ 15,532 million) in 2002. This increase was primarily
due to the expansion in subscriber base and the continued growth in usage
volume, as well as the inclusion of revenue of the eight regional mobile
telecommunications companies we acquired in July 2002. Our total number of
subscribers was approximately 117.7 million at December 31, 2002, compared to
approximately 69.6 million at December 31, 2001.

              Revenue from usage fees increased 27.0% from RMB 73,458 million in
2001 to RMB 93,272 million (US$ 11,269 million) in 2002. This increase was
principally a result of the increase in total subscriber numbers, both as a
result of organic subscriber growth and as a result of our acquisition of the
eight regional mobile telecommunications companies in July 2002, and the growth
in usage volume. As a percentage of operating revenue, usage fees decreased from
73.2% in 2001 to 72.6% in 2002.

              Revenue from monthly fees increased 20.0% from RMB 14,085 million
in 2001 to RMB 16,901 million (US$ 2,042 million) in 2002. This increase was
mainly due to the increase in total contract subscriber numbers, both as a
result of subscriber growth and as a result of our acquisition of the eight
regional mobile telecommunications companies in July 2002. As a percentage of
operating revenue, monthly fees decreased from 14.1% in 2001 to 13.1% in 2002.
This decrease was primarily due to the continued growth in our prepaid
subscriber base, which led to an increase in the proportion of prepaid
subscribers in our total subscriber base.

              There were no revenues from connection fees in 2002 due to the
elimination of connection fees charged to new contract subscribers since July
2001.

              Other operating revenue increased 52.3% from RMB 12,077 million in
2001 to RMB 18,388 million (US$ 2,221 million) in 2002. This increase resulted
principally from increased revenue from wireless data and value added services,
as well as the effect of our acquisition of the eight regional mobile
telecommunications companies in July 2002.

              OPERATING EXPENSES. Operating expenses include leased line
expenses, interconnection expenses, depreciation expenses relating to our mobile
telecommunications network and other fixed assets, personnel expenses and other
operating expenses. Other operating expenses primarily consist of selling and
promotion expenses, bad debts and administrative expenses.

              Operating expenses increased 34.5% from RMB 59,319 million in 2001
to RMB 79,765 million (US$ 9,637 million) in 2002. This increase was primarily
due to the expansion of our operations, the inclusion of expenses attributable
to the eight regional mobile telecommunications companies we acquired in July
2002 and increasing competition for customers.

              Total leased line payments increased 5.6% from RMB 5,005 million
in 2001 to RMB 5,287 million (US$ 639 million) in 2002. This increase was
largely a result of the inclusion of leased line payments for transmission lines
made by the eight regional mobile telecommunications companies we acquired in
July 2002 and our network expansion into new coverage areas. This increase was
partially offset by the reduction in leased line expenses due to the improvement
in the utilization of our network and the termination of certain transmission
line leases as a result of the increased construction of our own transmission
lines. As a percentage of operating expenses, total leased line payments
decreased from 8.4% in 2001 to 6.6% in 2002.

              Interconnection expenses decreased 0.6% from RMB 13,055 million in
2001 to RMB 12,975 million (US$ 1,568 million) in 2002. This decrease was mainly
due to the growing intra-network traffic as a result of our expansion of network
and subscribers base, as well as the optimization of our network structure and
traffic routing, partially offset by the inclusion of the interconnection
expenses of the eight regional mobile telecommunications companies we acquired
in July 2002. Interconnection expenses as a percentage of operating expenses
decreased from 22.0% in 2001 to 16.3% in 2002.

                                      -42-

<PAGE>

              Depreciation expense increased 51.9% from RMB 17,664 million in
2001 to RMB 26,827 million (US$ 3,241 million) in 2002. This increase was mainly
due to the expansion of our network capacity in high traffic areas and the
inclusion of depreciation expenses attributable to the eight regional mobile
telecommunications companies we acquired in July 2002, as well as the increased
investment in transmission facilities, new businesses and support systems. As a
percentage of operating expenses, depreciation expense increased from 29.8% in
2001 to 33.6% in 2002.

              Personnel expenses increased 26.9% from RMB 5,325 million in 2001
to RMB 6,757 million (US$ 816 million) in 2002. This increase was primarily due
to the inclusion of personnel expenses of the eight regional mobile
telecommunications companies we acquired in July 2002, as well as an increase in
performance-based incentive compensation as a result of our further improved
operating results. As a percentage of operating expenses, personnel expenses
decreased from 9.0% in 2001 to 8.5% in 2002.

              Other operating expenses increased 52.8% from RMB 18,270 million
in 2001 to RMB 27,919 million (US$ 3,373 million) in 2002. This increase was
primarily due to the increase in selling and promotion expenses. The increase in
selling and promotion expenses was due to the conduct of differentiated
promotional campaigns to maintain customer loyalty and the effect of our
acquisition of the eight regional mobile telecommunications companies in July
2002. As a percentage of operating expenses, other operating expenses increased
from 30.8% in 2001 to 35.0% in 2002.

              OPERATING PROFIT. As a result of the foregoing, operating profit
increased 19.0% from RMB 41,012 million in 2001 to RMB 48,796 million (US$ 5,895
million) in 2002, and operating margin (operating profit as a percentage of
operating revenue) decreased from 40.9% in 2001 to 38.0% in 2002.

              OTHER NET INCOME. Other net income represents primarily gross
profit from sales of SIM cards, handsets and accessories. Other net income
increased 5.8% from RMB 1,594 million in 2001 to RMB 1,686 million (US$ 204
million) in 2002. This increase was principally due to the effect of our
acquisition of the eight regional mobile telecommunications companies in July
2002. We expect the gross margin from sales of SIM cards decrease as a result of
the increasing market competition.

              FINANCE COSTS. Finance costs increased from RMB 1,740 million in
2001 to RMB 1,852 million (US$ 224 million) in 2002. This increase was primarily
due to the deferred consideration for the acquisition of eight regional mobile
telecommunications companies, and the inclusion of finance costs attributable to
those companies. In 2002, the average interest rate that we paid on our
outstanding borrowings was approximately 4%.

              INTEREST INCOME. Interest income decreased 16.8% from RMB 857
million in 2001 to RMB 713 million (US$ 86 million) in 2002. The lower interest
income in 2002 was primarily due to lower market interest rates prevailing
during this period.

              NON-OPERATING NET INCOME/(EXPENSES). Non-operating net expenses of
RMB 6 million in 2001 turned into non-operating net income of RMB 571 million
(US$ 69 million) in 2002. This was primarily due to a gain of RMB 255 million
recognized on a deemed disposal of our shareholding in Aspire.

              PROFIT BEFORE TAX AND MINORITY INTERESTS. As a result of the
foregoing, profit before tax and minority interests increased 17.4% from RMB
41,717 million in 2001 to RMB 48,978 million (US$ 5,917 million) in 2002.

              TAXATION. Our income tax expense increased 18.5% from RMB 13,703
million in 2001 to RMB 16,234 million (US$ 1,961 million) in 2002. This increase
was primarily due to an increase in our profit. Our effective tax rate was 32.8%
in 2001 to 33.1% in 2002, respectively.

              NET PROFIT. As a result of the foregoing and after taking into
account minority interests, net profit increased 16.9% from RMB 28,015 million
in 2001 to RMB 32,742 million (US$ 3,956 million) in 2002. Net profit margin
(net profit as a percentage of operating revenue) decreased from 27.9% in 2001
to 25.5% in 2002.

                                      -43-

<PAGE>

      YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

              OPERATING REVENUE. Operating revenue increased 54.4% from RMB
64,984 million in 2000 to RMB 100,331 million in 2001. This increase was
primarily due to an increase in usage fees as a result of subscriber growth as
well as the full year effect of including usage fees from subscribers of the
seven companies we acquired in November 2000. This increase was partially offset
by certain tariff adjustments implemented in early 2001. The tariff adjustments
included the cancellation of various surcharges and the adjustment of long
distance call tariffs during the first quarter of 2001. In addition, connection
fees were eliminated as of July 1, 2001. Our total number of subscribers was
approximately 69.6 million at December 31, 2001, compared to approximately 45.1
million at December 31, 2000. Excluding connection fees, operating revenue
increased from RMB 62,771 million in 2000 to RMB 99,620 million in 2001.

              Revenue from usage fees increased 58.7% from RMB 46,287 million in
2000 to RMB 73,458 million in 2001. This increase was primarily a result of the
increase in total subscriber numbers and the growth in usage volume, as well as
the full year effect of our acquisition of the seven regional mobile
telecommunications companies in November 2000. As a percentage of operating
revenue, usage fees increased from 71.2% in 2000 to 73.2% in 2001.

              Revenue from monthly fees increased 46.4% from RMB 9,623 million
in 2000 to RMB 14,085 million in 2001. This increase was mainly due to the
increase in total contract subscriber numbers, as well as the full year effect
of including monthly fees from subscribers of the seven companies we acquired in
November 2000. As a percentage of operating revenue, monthly fees decreased from
14.8% in 2000 to 14.1% in 2001.

              Revenue from connection fees decreased 67.9% from RMB 2,213
million in 2000 to RMB 711 million in 2001. This decrease was primarily due to
the gradual decrease and eventual elimination of connection fees charged to new
contract subscribers. As a percentage of operating revenue, connection fees
decreased from 3.4% in 2000 to 0.7% in 2001.

              Other operating revenue increased 76.0% from RMB 6,861 million in
2000 to RMB 12,077 million in 2001. This increase resulted principally from
increased revenue from wireless data and value added services, incoming roaming
revenue and interconnection revenue, as well as the full year effect of our
acquisition of the seven companies in November 2000.

              OPERATING EXPENSES. Operating expenses increased 55.5% from RMB
38,158 million in 2000 to RMB 59,319 million in 2001. This increase primarily
reflected the full year effect of including expenses attributable to the seven
companies we acquired in 2000, our overall expanded network coverage and service
scope and our larger subscriber base.

              Total leased line payments decreased 9.0% from RMB 5,501 million
in 2000 to RMB 5,005 million in 2001. This decrease was primarily due to a
reduction of leased line tariffs in 2001 and the construction of our own
transmission lines in high traffic areas as well as our termination of the Total
Access Communications System, or TACS, network. This decrease was partially
offset by the full year effect of including leased line payments for
transmission lines made by the seven companies we acquired in November 2000 and
our network expansion into new coverage areas. As a percentage of operating
expenses, total leased line payments decreased from 14.4% in 2000 to 8.4% in
2001.

              Interconnection expenses increased 56.7% from RMB 8,329 million in
2000 to RMB 13,055 million in 2001. This increase was mainly due to the full
year effect of including interconnection expenses attributable to the seven
companies we acquired in November 2000, as well as the increased traffic volume.
This increase was partially offset by the cost savings achieved by realizing the
economies of scale of increased traffic volume transmitted over our expanded
network. Interconnection expenses as a percentage of operating expenses
increased from 21.8% in 2000 to 22.0% in 2001.

              Depreciation expense increased 81.0% from RMB 9,759 million in
2000 to RMB 17,664 million in 2001. This increase was mainly due to the full
year impact of the inclusion of the depreciation expenses of the seven companies
we acquired in November 2000, as well as the increase in our network capacity,
the additional investment we made in our GSM networks and the additional
strategic investments

                                      -44-

<PAGE>

we made in certain transmission networks and stations. As a percentage of
operating expenses, depreciation expense increased from 25.6% in 2000 to 29.8%
in 2001.

              Personnel expenses increased 33.4% from RMB 3,991 million in 2000
to RMB 5,325 million in 2001. This increase was primarily due to the full year
effect of including personnel expenses of the seven companies we acquired in
November 2000, as well as an increase in performance-based incentive
compensation as a result of our further improved operating results. We believe
that implementation of our performance-based compensation system has helped us
to retain and attract talented staff and enhance employee productivity. As a
percentage of operating expenses, personnel expenses decreased from 10.5% in
2000 to 9.0% in 2001.

              Other operating expenses increased 72.7% from RMB 10,578 million
in 2000 to RMB 18,270 million in 2001. This increase was primarily due to the
increase in selling and promotion expenses and the one-off costs associated with
the migration of subscribers to our GSM networks from our analog service. The
increase in selling and promotion expenses primarily reflects our larger
subscriber base and the full year effect of our acquisition of the seven
regional mobile telecommunications companies we acquired in November 2000. As a
percentage of operating expenses, other operating expenses increased from 27.7%
in 2000 to 30.8% in 2001.

              OPERATING PROFIT. As a result of the foregoing, operating profit
increased 52.9% from RMB 26,826 million in 2000 to RMB 41,012 million in 2001,
and operating margin (operating profit as a percentage of operating revenue)
decreased slightly from 41.3% in 2000 to 40.9% in 2001.

              OTHER NET INCOME. Other net income represents primarily gross
profit from sales of SIM cards, handsets and accessories. Other net income
increased 74.2% from RMB 915 million in 2000 to RMB 1,594 million in 2001. This
increase was principally due to the full year effect of our acquisition of the
seven regional mobile telecommunications companies in November 2000, as well as
increased sales of SIM cards due to our subscriber growth.

              FINANCE COSTS. Finance costs increased from RMB 824 million in
2000 to RMB 1,740 million in 2001. This increase was primarily due to the full
year effect of including finance costs attributable to the seven companies we
acquired in November 2000. This increase was also partly due to the full year
impact of the interest on the US$ 690 million convertible notes issued in
November 2000. In 2001, the average interest rate that we paid on our
outstanding borrowings was approximately 5%.

              INTEREST INCOME. Interest income decreased 14.8% from RMB 1,006
million in 2000 to RMB 857 million in 2001. The higher interest income in 2000
was primarily due to our larger cash balances resulting from our capital raising
and financing activities in 2000.

              NON-OPERATING NET INCOME/(EXPENSES). Non-operating net expenses
increased 20.0% from RMB 5 million in 2000 to RMB 6 million in 2001. This
increase was primarily due to the full year effect of our acquisition of the
seven companies in November 2000.

              PROFIT BEFORE TAX AND MINORITY INTERESTS. As a result of the
foregoing, profit before tax and minority interests increased 58.1% from RMB
26,393 million in 2000 to RMB 41,717 million in 2001.

              TAXATION. Our income tax expense increased 63.8% from RMB 8,366
million in 2000 to RMB 13,703 million in 2001. This increase was primarily due
to an increase in our profit. Our effective tax rate increased from 31.7% in
2000 to 32.8% in 2001. The increase was largely a result of our acquisition of
the seven companies in November 2000. The connection fee revenue and certain
surcharge revenue from those seven companies were not subject to taxation in
2000 prior to their completion of the registration as wholly foreign-owned
enterprises. The full year effect of interest expenses on the US$ 690 million
convertible notes we issued in 2000 and the additional interest expenses on the
RMB 5 billion bonds we issued in 2001, both of which are not tax deductible,
also contributed to the higher effective tax rate.

              NET PROFIT. As a result of the foregoing and after taking into
account minority interests, net profit

                                      -45-

<PAGE>

increased 55.4% from RMB 18,027 million in 2000 to RMB 28,015 million in 2001.
Net profit margin (net profit as a percentage of operating revenue) increased
from 27.7% in 2000 to 27.9% in 2001.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY

              Our principal source of liquidity is cash generated from our
operations. As a result, our liquidity would be adversely affected to the extent
there is a significant decrease in demand for our services and products. As of
December 31, 2002, we had negative working capital (current assets minus current
liabilities) of RMB 896 million (US$ 108 million) compared to working capital of
RMB 9,458 million and RMB 5,847 as of December 31, 2001 and 2000, respectively.
The decrease in working capital in 2002 was principally due to the inclusion of
the outstanding debt of the eight regional mobile telecommunications companies
we acquired in July of that year. As of December 31, 2000, 2001 and 2002,
accounts receivable totaled RMB 7,252 million, RMB 5,728 million and RMB 6,066
million (US$ 733 million), respectively. The substantial decrease in accounts
receivable in 2001 and 2002 was principally due to the fact that approximately
93.5% and 68.7% of the net additional subscribers in 2001 and 2002,
respectively, were customers for prepaid services. Ongoing improvements in our
internal credit control and billing systems also contributed to the decrease in
our accounts receivable both in 2001 and 2002. Short-term bank and other loans
and the current portion of obligations under capital leases totaled RMB 12,095
million, RMB 5,439 million and RMB 8,200 million (US$ 990 million) as at
December 31, 2000, 2001 and 2002, respectively.

              The following table summarizes certain cash flow information for
the periods indicated.

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                               ---------------------------------
                                                               2000          2001          2002
                                                               ----          ----          ----
                                                                    (in millions of RMB)
<S>                                                           <C>           <C>          <C>
Net cash from operating activities.......................      35,449        50,971       69,422
Net cash used in investing activities....................     (91,869)      (45,248)     (64,117)
Net cash from/(used in) financing activities.............      64,773       (11,604)       5,449
                                                              -------       -------      -------
Net Increase/(decrease) in cash and cash equivalents.....       8,353        (5,881)      10,754
                                                              =======       =======      =======
</TABLE>

              Net cash from operating activities increased from 2000 to 2001,
reflecting the growth in operating revenue due to the full effect of the
inclusion of the results of operations of the seven regional mobile
telecommunications companies we acquired in November 2000 and the increase in
our subscriber base through internal growth. Net cash from operating activities
increased from 2001 to 2002, generally reflecting the growth in operating
revenue due to the increase in our subscriber base through internal growth and
the acquisition of the eight regional mobile telecommunications companies in
July 2002.

              Net cash used in investing activities decreased from 2000 to 2001.
This decrease was primarily due to the fact that we did not conduct any
significant acquisitions during 2001. Net cash used in investing activities
increased significantly from 2001 to 2002. This increase was principally a
result of the payment of the consideration for our acquisition of the eight
regional mobile telecommunications companies in July 2002.

              Net cash from financing activities decreased significantly from
2000 to 2001. This decrease was principally due to the fact that we
significantly reduced our capital raising and financing activities during 2001,
except for the RMB 5 billion floating rate bonds issued by Guangdong Mobile in
June 2001. The proceeds from these bonds were applied solely to repay part of
the RMB 12.5 billion syndicated loans. Net cash from financing activities
increased significantly from 2001 to 2002. This increase was principally due to
the issuance of new shares by the Company in June 2002 and the issuance of RMB 3
billion five-year guaranteed bonds and RMB 5 billion fifteen-year guaranteed
bonds by Guangdong Mobile in October 2002. The proceeds from these shares and
bonds were applied solely to pay part of the consideration for the acquisition
of the eight regional mobile telecommunications companies in July 2002. See "--
Contractual Obligations and Commitments -- Indebtedness" below for more
information regarding the offerings.

                                      -46-

<PAGE>

         CAPITAL EXPENDITURES

              Capital expenditures incurred during 2000, 2001 and 2002 were RMB
20,729 million, RMB 42,417 million and RMB 40,083 million (US$ 4,843 million),
respectively. We incurred capital expenditures principally for the construction
of our GSM networks, support systems, transmission facilities, infrastructure
buildings and the development of new technologies and new businesses.

              We estimate that we will spend approximately US$ 5.6 billion in
2003, US$ 4.9 billion in 2004 and US$ 4.5 billion in 2005 in capital
expenditures. We expect to incur these expenditures primarily for the purpose
of:

         -    further expanding our GSM network capacity and coverage;

         -    increasing our efforts in improving our support systems;

         -    building our own transmission facilities where economically
              advantageous;

         -    constructing infrastructure buildings where economically
              advantageous; and

         -    developing and providing new technologies and new businesses.

Minimal capital expenditure is currently budgeted annually for third generation
mobile networks monitoring and experimentation.

              Following our initial public offering, we have funded our capital
requirements primarily with cash generated from operations, proceeds from equity
and debt offerings and, to the extent necessary, short- term and long-term
borrowings. We believe our available cash and cash generated from future
operations will be sufficient to fund most of the capital expenditures and
working capital necessary for the planned network expansion and continued growth
of our mobile telecommunications operations through the end of 2004.

              We may seek to obtain additional sources of financing to fund our
network expansion and possible future acquisitions, to the extent necessary.

         CONTRACTUAL OBLIGATIONS AND COMMITMENTS

         INDEBTEDNESS

              As of December 31, 2000, 2001 and 2002, our aggregate long-term
bank and other loans and obligation under capital leases (excluding current
portions) totaled RMB 13,708 million, RMB 6,739 million and RMB 12,676 million
(US$ 1,531 million), respectively, and our short-term bank and other loans
(including the current portion of long-term loans) and current portion of
obligation under capital leases totaled RMB 12,095 million, RMB 5,439 million
and RMB 8,200 million (US$ 990 million), respectively. Our short term loans and
long term loans decreased in 2001 due to the repayment of a portion of the RMB
12.5 billion syndicated loans we entered into in October 2000. Our short term
loans and long term loans increased in 2002 mainly due to the inclusion of the
outstanding debt of the eight regional mobile telecommunications companies in
2002. Capital lease obligations totaled RMB 68 million (US$ 8 million) at
December 31, 2002, all of which will be repayable in 2003. We currently plan to
repay loan amounts due using cash in hand and cash from our operating
activities.

              On November 2, 1999, we issued unsecured fixed rate notes with a
principal amount of US$ 600 million due on November 2, 2004. The notes bear
interest at the rate of 7.875% per annum and such interest is payable
semi-annually on May 2 and November 2 of each year, commencing May 2, 2000.

              On November 3, 2000, we issued unsecured convertible notes with a
principal amount of US$ 690 million due on November 3, 2005. The notes bear
interest at the rate of 2.25% per annum and such interest is payable
semi-annually on May 3 and November 3 of each year, commencing May 3, 2001.

                                      -47-

<PAGE>

              Pursuant to agreements entered into on October 7, 2000 between our
wholly-owned subsidiary, China Mobile (Shenzhen) Limited, and a syndicate of
international and domestic Chinese commercial banks, we borrowed an aggregate of
RMB 12.5 billion in bank loans, including (1) an RMB 5.0 billion loan for a
six-month term with a fixed interest rate of 5.022% per annum and (2) an RMB 7.5
billion loan for a three-year term with an interest rate of 5.346% per annum for
the first year, to be adjusted annually on each anniversary of the first
drawdown date of the loan to equal the rate that is 10% below the three-year
base lending rate for financial institutions prevailing on such anniversary date
as announced by the People's Bank of China. The loans are guaranteed jointly and
severally by six of our operating subsidiaries. We repaid in full the RMB 5.0
billion loan and RMB 5.0 billion of the RMB 7.5 billion loan with proceeds from
the Renminbi bond offering described above under " -- Overview of Our Operations
-- Renminbi Bond Offering". As of December 31, 2002, RMB 2.5 billion of the
loans had been drawn down and remained outstanding. During 2002, the average
interest rate of these loans was approximately 5%.

              On June 18, 2001, Guangdong Mobile, one of our wholly-owned
subsidiaries, issued bonds with a principal amount RMB 5 billion at a floating
rate due June 18, 2011. Guangdong Mobile's payment obligations under the bonds
are guaranteed in full by us, and our guarantee is further guaranteed by China
Mobile Communications Corporation.

              The deferred consideration of US$ 2,800 million for our
acquisition of the eight regional mobile telecommunications companies in 2002 is
subordinated to other senior debt owed by us from time to time, including but
not limited to, the US$ 600 million fixed rate notes and US$ 690 million
convertible notes issued in 1999 and 2000, respectively. In addition, this
deferred consideration is payable by the fifteenth anniversary of the date of
the completion of acquisition, and we may make an early payment of all or part
of the deferred consideration at any time without penalty. We are required to
pay interest semi-annually on the actual amount of deferred consideration unpaid
from the date of completion of the acquisition. Interest is calculated at the
two-year US dollar London Inter-Bank Offered Rate ("LIBOR") swap rate at 11:00
a.m. (New York City time) on the second business day next preceding the date of
the acquisition agreement for the first two years after completion of the
acquisition. Thereafter, the interest rate will be adjusted every two years to
equal the two-year US dollar LIBOR swap rate prevailing at 11:00 a.m. (New York
City time) on the relevant interest determination date. The payment of the
deferred consideration and the interest payments can be made in Hong Kong
dollars, RMB or US dollars (or other agreed currencies). Any payment made in
currencies other than US dollars will be accounted for based on the exchange
rates between US dollars and such currencies prevailing at 12:00 noon (New York
City time) on the day which is two business days next preceding the date of the
acquisition agreement. We used the entire proceeds from the RMB 3 billion
guaranteed bonds due 2007 and RMB 5 billion guaranteed bonds due 2017, both
issued on October 28, 2002 by Guangdong Mobile, our wholly-owned subsidiary, to
pay a portion of the US$ 2,800 million deferred consideration.

              On October 28, 2002, Guangdong Mobile, one of our wholly-owned
subsidiaries, issued RMB 3 billion five-year guaranteed bonds and RMB 5 billion
fifteen-year guaranteed bonds. Guangdong Mobile's payment obligations under
these two bonds are guaranteed in full by us, and our guarantee obligation is
further guaranteed by China Mobile Communications Corporation.

              We currently enjoy a rating of Baa2 from Moody's and BBB from
Standard & Poor's, which is equivalent to China's sovereign rating. Any
downgrade in our credit rating will not trigger any events on our outstanding
bonds or loans or our existing credit facilities. In addition, Moody's recently
upgraded our international credit rating outlook from "stable" to "positive",
and our management currently believes that a downgrade below Baa2 or BBB is not
likely. However, under the terms of our US$ 690 million convertible notes and
our US$ 600 million fixed rate notes, we are obligated to ensure that the
aggregate debt of our subsidiaries does not exceed 120% of our consolidated
adjusted earnings before interest, tax, depreciation and amortization and
write-down and write-off of fixed assets, or EBITDA, for the most recently
completed twelve-month period. We have complied with this covenant in the most
recently completed twelve-month period. In addition, we currently do not foresee
any event that would cause us to violate any of these covenants.

              For a discussion of our interest rate risk, please see "Item 11.
Quantitative and Qualitative Disclosures about Market Risk".

                                      -48-

<PAGE>

         OTHER CONTRACTUAL OBLIGATIONS AND COMMITMENTS

              As of December 31, 2002, we had various contractual obligations
and commitments which are more fully disclosed in the notes to our consolidated
financial statements. The principal components of these obligations and
commitments include:

         -    our short-term and long-term debts (in addition to the bonds and
              notes described under " -- Indebtedness" above), which includes
              capital leases;

         -    operating leases; and

         -    capital commitments.

              In the ordinary course of our business, we routinely enter into
commercial commitments for various aspects of our operations, such as repair and
maintenance. However, we believe that those commitments will not have a material
effect on our financial condition, results of operations or cash flows.

              For further disclosure regarding leases and other commitments,
please see note 21 to our consolidated financial statements included elsewhere
in this annual report.

              The following table sets forth certain information regarding our
contractual obligations to make future payments as of December 31, 2002:

<TABLE>
<CAPTION>
                                                                         PAYMENTS DUE BY PERIOD
                                                    --------------------------------------------------------------
                                                                                 OVER         OVER
                                                                              1 YEAR BUT   3 YEARS BUT
                                                                 LESS THAN     LESS THAN    LESS THAN       AFTER
           CONTRACTUAL OBLIGATIONS                   TOTAL        1 YEAR        3 YEARS      5 YEARS       5 YEARS
           -----------------------                   -----        ------        -------      -------       -------
                                                                         (in millions of RMB)
<S>                                                 <C>          <C>          <C>          <C>             <C>
SHORT-TERM DEBT...............................       3,689         3,689             -            -             -
BILLS PAYABLE.................................       1,256         1,256             -            -             -
DEFERRED PAYABLE..............................      15,176             -             -            -        15,176
LONG-TERM DEBT (1)............................      40,791         4,443        23,238        3,080        10,030
CAPITAL LEASE OBLIGATIONS.....................          68            68             -            -             -
TRADE PAYABLE.................................      19,251        19,251             -            -             -
                                                    ------        ------        ------        -----        ------
TOTAL CONTRACTUAL CASH OBLIGATIONS............      80,231        28,707        23,238        3,080        25,206
                                                    ======        ======        ======        =====        ======
</TABLE>

-----------------------
(1)  Including the current portion of long-term debt.

              The following table sets forth certain information regarding our
other commercial commitments as of December 31, 2002:

                                      -49-

<PAGE>

<TABLE>
<CAPTION>
                                                                           AMOUNT OF COMMITMENT
                                                                           EXPIRATION PER PERIOD
                                                   -------------------------------------------------------------------
                                                     TOTAL                    OVER 1 YEAR    OVER 3 YEARS
                                                    AMOUNTS     LESS THAN    BUT LESS THAN   BUT LESS THAN      OVER
      OTHER COMMERCIAL COMMITMENTS                 COMMITTED     1 YEAR        3 YEARS         5 YEARS        5 YEARS
      ----------------------------                 ---------     ------        -------         -------        --------
                                                                           (in millions of RMB)
<S>                                                <C>          <C>          <C>             <C>              <C>
OPERATING LEASES COMMITMENTS..................      14,718        6,088         4,678            1,950          2,002
CAPITAL COMMITMENTS...........................       6,437        6,437             -                -              -
                                                    ------       ------         -----            -----          -----
TOTAL COMMERCIAL COMMITMENTS..................      21,155       12,525         4,678            1,950          2,002
                                                    ======       ======         =====            =====          =====
</TABLE>

              As of December 31, 2002, we did not have any off-balance sheet
arrangements or any written options on non-financial assets.

         FOREIGN EXCHANGE

              We maintain our accounts in Renminbi and substantially all of our
revenue and expenses are denominated in Renminbi. Our capital expenditures
totaled the equivalent of RMB 20,729 million, RMB 42,417 million and RMB 40,083
million (US$ 4,843 million) for 2000, 2001 and 2002, respectively. For 2000, a
substantial portion of our capital expenditures was denominated in U.S. dollars
and incurred in connection with our purchase of imported equipment. In addition,
we also incur interest expense on foreign currency (mainly U.S. dollar)
denominated borrowings. U.S. dollar denominated debt totaled the equivalent of
RMB 11,855 million and RMB 26,353 million (US$ 3,184 million) at December 31,
2001 and 2002, respectively, constituting 40.5% and 43.2% of our total debt as
of those dates, respectively.

              All of our current operating subsidiaries are incorporated in
Mainland China. Under the current foreign exchange system in Mainland China, our
subsidiaries may not be able to hedge effectively against currency risk,
including any possible future Renminbi devaluation. See "Item 3. Key Information
-- Risk Factors -- Fluctuations in exchange rates could adversely affect our
financial results" and "Item 10. Additional Information -- Exchange Controls".

              Each of our operating subsidiaries is able to purchase foreign
exchange for settlement of current account transactions, as defined in
applicable regulations, in order to satisfy its foreign exchange requirements.

U.S. GAAP RECONCILIATION

              Our consolidated financial statements are prepared in accordance
with Hong Kong GAAP, which differ in certain significant respects from U.S.
GAAP. The following table sets forth a comparison of our net profit and
shareholders' equity in accordance with Hong Kong GAAP and U.S. GAAP.

<TABLE>
<CAPTION>
                                                               AS OF OR FOR THE YEAR ENDED DECEMBER 31
                                                    --------------------------------------------------------------
                                                       2000             2001             2002             2002
                                                       ----             ----             ----             ----
                                                                            (in millions)
<S>                                                 <C>              <C>              <C>              <C>
Net profit in accordance with:
    Hong Kong GAAP...........................       RMB 18,027       RMB 28,015       RMB 32,742        US$ 3,956
    U.S. GAAP................................       RMB 24,137       RMB 34,236       RMB 37,202        US$ 4,495
Shareholders' equity in accordance with:
    Hong Kong GAAP...........................       RMB 83,760       RMB 111,779      RMB 172,202      US$ 20,804
    U.S. GAAP................................       RMB 95,650       RMB 140,300      RMB 134,575      US$ 16,259
</TABLE>

              Under Hong Kong GAAP, we adopted the purchase accounting method to
account for our acquisitions of the seven regional mobile telecommunications
companies in November 2000 and the eight regional mobile telecommunications
companies in July 2002. Under the purchase accounting method, the acquired
results of these companies were included in the results of operations from the
respective dates of acquisition. Goodwill is the excess of the cost over the
fair value of our share of the identifiable assets and liabilities acquired.
Goodwill arising on the

                                      -50-

<PAGE>

acquisition date of our acquisition of seven regional mobile telecommunications
companies in November 2000 was eliminated against reserves immediately on
acquisition. Due to the adoption of SSAP 30, which took effect in 2001, goodwill
arising on the acquisition date of our acquisition of eight regional mobile
telecommunications companies in July 2002 is amortized to the consolidated
statements of income on a straight line of twenty years. See "Special Note on
our Financial Information and Certain Statistical Information in this Annual
Report".

              For U.S. GAAP, because we and the acquired companies were deemed
to be under common control prior to the acquisitions, the acquisitions were
considered a "combination of entities under common control". Under U.S. GAAP,
combinations of entities under common control are accounted for under the "as if
pooling-of-interests" method, whereby assets and liabilities are accounted for
at historical cost and the financial statements of previously separate companies
for periods prior to the combination are restated on a combined basis. The
consideration we paid or payable in each acquisition was treated as an equity
transaction in the respective years of each acquisition, and goodwill
amortization recognized under Hong Kong GAAP in 2002 was reversed for U.S. GAAP
purposes.

              In addition, there are other differences between Hong Kong GAAP
and U.S. GAAP for the periods presented, which relate primarily to:

         -    the computation of capitalized interest;

         -    the revaluation of fixed assets of the acquired companies under
              Hong Kong GAAP;

         -    the recognition of deferred income taxes;

         -    the non-recognition under Hong Kong GAAP of certain of our
              employee housing scheme costs;

         -    the treatment of share options we grant to directors and
              employees;

         -    the recognition as revenue of connection fees and telephone number
              selection fees; and

         -    the net savings arising from interconnection, roaming and leased
              line agreements.

              Historically, connection fee revenue was recognized as received
for both Hong Kong GAAP and U.S. GAAP for all periods presented to June 30,
1999. Beginning July 1, 1999, we adopted a new accounting policy under U.S. GAAP
to defer connection fees received in excess of direct costs and recognize such
deferred amount over the estimated customer usage period for the related
service. Effective January 1, 2000, under U.S. GAAP, we have adopted the
provisions of Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements". Under this Staff Accounting Bulletin, connection fees and
telephone number selection fees received and incremental direct costs up to but
not exceeding such fees are deferred and amortized over the estimated customer
usage period for the related service. These changes in accounting policy for
U.S. GAAP have significantly impacted the timing of connection fee revenue
recognized. Connection fees were, however, eliminated as of July 1, 2001.

              Disclosure relating to these differences can be found in note 33
to our consolidated financial statements. In addition, our condensed
consolidated balance sheets as of December 31, 2001 and 2002 and our condensed
consolidated statements of income, total shareholders' equity and cash flows for
the years ended December 31, 2000, 2001 and 2002 prepared and presented under
U.S. GAAP have been included in notes 33 and 34 to our consolidated financial
statements to reflect the impact of the significant differences between Hong
Kong GAAP and U.S. GAAP.

                                      -51-

<PAGE>

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

DIRECTORS AND SENIOR MANAGEMENT

              The following table sets forth certain information concerning our
directors and senior management as of May 31, 2003.

NAME                      AGE    POSITION
----                      ---    --------
Mr. WANG Xiaochu........  45     Chairman; Chief Executive Officer

Mr. LI Yue..............  44     Executive Director; Vice President

Mr. LU Xiangdong........  43     Executive Director; Vice President

Mr. XUE Taohai..........  47     Executive Director; Vice President
                                 and Chief Financial Officer

Mr. HE Ning.............  41     Executive Director; Vice President

Mr. LI Gang.............  46     Executive Director

Mr. XU Long.............  46     Executive Director

Sir Christopher GENT....  54     Independent Non-Executive Director

Dr. LO Ka Shui..........  56     Independent Non-Executive Director

Mr. Frank K. S. WONG....  54     Independent Non-Executive Director

Mr. Moses M. C. CHENG...  52     Independent Non-Executive Director

Mr. ZHANG Ligui.........  60     Non-Executive Director

              Mr. Wang Xiaochu has served as our Chairman and Chief Executive
Officer since March 1999. Mr. Wang is in charge of our overall management. He is
also Vice President of China Mobile Communications Corporation, the ultimate
controlling shareholder of the Company. Prior to joining us, Mr. Wang served as
the Director General of the Tianjin Posts and Telecommunications Administration.
He also served as Director and Deputy Director of the Hangzhou
Telecommunications Bureau in Zhejiang Province. He was responsible for the
development of China Telecom's telephone network management systems and various
other information technology projects, and, as a result, received the Class
Three National Science and Technology Advancement Award and the former Ministry
of Posts and Telecommunications Class One Science and Technology Advancement
Award. Mr. Wang graduated from Beijing University of Posts and
Telecommunications in 1980 and has over 22 years of management experience in the
telecommunications industry.

              Mr. Li Yue has served as our Executive Director and Vice President
since March 2003. Mr. Li assists the Chief Executive Officer in relation to the
network and planning activities of the Company. He has been serving as Vice
President of China Mobile Communications Corporation since April 2000. Mr. Li
previously served as the Deputy Director General of the Tianjin Posts and
Telecommunications Administration and the President of Tianjin Mobile
Communications Company. Mr. Li graduated from Tianjin University with a Master's
Degree and has over 27 years of management experience in the telecommunications
industry.

              Mr. Lu Xiangdong has served as our Executive Director and Vice
President since March 2003. Mr. Lu assists the Chief Executive Officer mainly in
marketing, wireless data services, billing and settlement and corporate
co-operation of the Company. He has been serving as Vice President of China
Mobile Communications Corporation since April 2000. He previously served as the
Director General of Fujian Wireless Telecommunications Bureau and the Deputy
Director General of the Mobile Telecommunications Bureau of the Ministry of
Posts and Telecommunications. Mr. Lu graduated from the Academy of Posts and
Telecommunications of the Ministry of Posts and Telecommunications with a
Master's Degree and has nearly 21 years of management experience in the
telecommunications industry.

              Mr. Xue Taohai has served as our Executive Director, Vice
President and Chief Financial Officer since July 2002. Mr. Xue assists the Chief
Executive Officer in relation to the corporate financial management of the
Company. Mr. Xue is also the Vice President of China Mobile Communications
Corporation. Mr. Xue previously served as the Deputy Director General of the
Finance Department of the former Ministry of Posts and Telecommunications,
Deputy Director General of the Department of Financial Adjustment and Clearance
of the

                                      -52-

<PAGE>

Ministry of Information Industry and Deputy Director General of the former
Directorate General of Telecommunications. He graduated from Henan University
and has over 23 years of experience in the telecommunications industry and
financial management.

              Mr. He Ning has served as our Executive Director since August
1998. Mr. He is also a Vice President of the Company, assisting the Chief
Executive Officer in the general administration and investor and media relations
of the Company. He previously served as the Deputy Director General of the
Zhenjiang Posts and Telecommunications Bureau, the Director and Deputy Director
of the Jiangsu Mobile Communications Bureau, Deputy Director General of the
Posts and Telecommunications Administration in Jiangsu Province and the Chairman
and President of Jiangsu Mobile. He graduated from Nanjing University of Posts
and Telecommunications and received a Master's Degree from Maastricht School of
Management of the Netherlands. He has 19 years of management experience in the
telecommunications industry.

              Mr. Li Gang has served as our Executive Director since August
1999. He is the Chairman and President of Guangdong Mobile, responsible for the
mobile telecommunications operations in Guangdong Province. He previously served
as Director of the Network Maintenance Division and a Deputy Director of the
Telecommunications Division of the Posts and Telecommunications Administration
in Guangdong Province and the Vice Chairman and President of Guangdong Mobile.
He graduated from Beijing University of Posts and Telecommunications in 1985,
and has 29 years of experience in the telecommunications industry.

              Mr. Xu Long has served as our Executive Director since August
1999. He is the Chairman and President of Zhejiang Mobile, responsible for the
mobile telecommunications operations in Zhejiang Province. He previously served
as Deputy Director of Shaoxing Posts and Telecommunications Bureau, the
President of Zhejiang Nantian Posts and Telecommunications Group Company and
Director of the General Office and Deputy Director General of Posts and
Telecommunications Administration in Zhejiang Province. He graduated from
Zhejiang Radio and Television University in 1985, and has 25 years of experience
in the telecommunications industry.

              Sir Christopher Gent has served as our independent Non-Executive
Director since February 2001. Sir Christopher is the Chief Executive of Vodafone
Group Plc., one of the world's largest mobile telecommunications companies. Sir
Christopher joined the Vodafone Group as Managing Director of Vodafone Limited
in 1985 when Vodafone launched its first mobile phone service in the UK, and
held the position until December 1996, when he became Group Chief Executive. He
also represents Vodafone on the board of directors of the largest mobile
telecommunications company in the United States, Verizon Wireless. Sir
Christopher has many years of management experience in the telecommunications
industry worldwide.

              Dr. Lo Ka Shui has served as our independent Non-Executive
Director since April 2001. Dr. Lo is the Deputy Chairman and Managing Director
of Great Eagle Holdings Limited. He is also a non-executive Director of The Hong
Kong and Shanghai Banking Corporation Limited, Shanghai Industrial Holdings
Limited and Phoenix Satellite Television Holdings Limited. He is also a director
of Hong Kong Exchanges and Clearing Limited, a Vice Chairman of the Real Estate
Developers Association of Hong Kong, a Trustee of the Hong Kong Centre for
Economic Research, and a member of the Council of Advisors on Innovation and
Technology. Dr. Lo graduated with a bachelor of science degree from McGill
University in Canada and a doctorate degree in medicine from Cornell University
in the United States. He is certified in cardiology. Dr. Lo has more than 23
years of experience in property and hotel development and investment both in
Hong Kong and overseas.

              Mr. Frank K. S. Wong has served as our independent Non-Executive
Director since August 2002. Mr. Wong is Vice Chairman of DBS Bank and Chairman
of Dao Heng Bank. He previously served as the Designated Chief Executive for
National Westminster Bank's Hong Kong branch and Chairman of the Hong Kong
Futures Exchange. He also held various senior positions in JP Morgan's Hong Kong
and London operations, and in Citibank-North Asia region. Mr. Wong has many
years of finance and commercial management experience.

              Mr. Moses M. C. Cheng has served as our independent Non-Executive
Director since March 2003. Mr. Cheng is a practicing solicitor and a senior
partner of Messrs. P. C. Woo & Co. He is also Chairman of the Hong Kong
Institute of Directors, Chairman of the Committee on the Promotion of Civic
Education of Hong Kong and the Deputy Chairman of the Listing Committee of both
the Main Board and Growth Enterprise Market of The Stock Exchange of Hong Kong
Limited. He previously served as an appointed member of the Legislative Council
of Hong Kong from

                                      -53-

<PAGE>

1991 to 1995.

              Mr. Zhang Ligui has served as our Non-Executive Director since
March 2003. Mr. Zhang has been serving as the President of China Mobile
Communications Corporation since April 2000 and is in charge of the overall
management of China Mobile Communications Corporation. Mr. Zhang previously
served as the Director General of the Gansu Posts and Telecommunications
Administration. He had also served as the Director General of the Directorate
General of Telecommunications of the Ministry of Posts and Telecommunications,
the Director General of the Beijing Telecommunications Bureau, and the Director
General of the Directorate General of Posts and Telecommunications. Mr. Zhang
graduated from Beijing University of Posts and Telecommunications and has over
37 years of management experience in the telecommunications industry.

              On July 3, 2002, Mr. Ding Donghua retired and resigned as our
Director and Chief Financial Officer. On August 1, 2002, Professor Arthur Li
Kwok Cheung resigned as our independent non-executive director. On March 18,
2003, Mr. Li Zhenqun resigned as our Vice Chairman and Chief Operating Officer.
On the same date, each of Mr. Liu Ping, Mr. Yuan Jianguo and Mr. Wei Yiping
resigned as our Director.

COMPENSATION

              The aggregate amount of compensation that we paid to our directors
and executive officers during 2002 for services performed as directors, officers
or employees was approximately RMB 15 million (US$ 1.8 million).

              We adopted a share option scheme on October 8, 1997, or the Old
Scheme, pursuant to which our directors may, at their discretion, invite our
employees, including executive directors, or employees of our subsidiaries, to
take up options to subscribe for ordinary shares up to a maximum aggregate
number of ordinary shares equal to 10% of our total issued share capital.

              Pursuant to a resolution passed at the annual general meeting held
on June 24, 2002, the Old Scheme was terminated and a new share option scheme,
or the New Scheme, was adopted. The purpose of the New Scheme is to provide the
Company with a flexible and effective means of remunerating and providing
benefits to the employees, the executive directors and the non-executive
directors of the Company, any of its holdings companies and their respective
subsidiaries and any entity in which the Company or any of its subsidiaries
holds any equity interest, thereby providing incentives to these participants.
Under the New Scheme, the directors of the Company may, at their discretion,
invite the plan participants to take up options to subscribe for the ordinary
shares of the Company.

              The maximum aggregate number of ordinary shares which can be
subscribed pursuant to options that are or may be granted under the above
schemes equals to 10% of the total issued share capital of the Company as at the
date of adoption of the New Scheme. Options lapsed or cancelled in accordance
with the terms of the Old Scheme or the New Scheme will not be counted for the
purpose of calculating this 10% limit.

              As the Old Scheme was terminated with effect on June 24, 2002, no
further options was granted under the Old Scheme thereafter. As at December 31,
2002, the total number of ordinary shares which may be issued on the exercise of
the outstanding options granted under the Old Scheme is 112,761,500. As at the
same date, the total number of ordinary shares which may be issued on the
exercise of the outstanding options granted or to be granted under the New
Scheme is 1,773,844,445.

              The consideration payable for the grant of each option under each
of the Old Scheme and the New Scheme is HK$ 1.00. For options granted before
September 1, 2001 under the Old Scheme, the exercise price of the options was
determined by the directors of the Company at their discretion provided that
such price may not be set below a minimum price which is the higher of:

        (i)   the nominal value of a share; and

        (ii)  80% of the average of the closing price of the ordinary share on
              The Stock Exchange of Hong Kong Limited, or the Hong Kong Stock
              Exchange, on the five trading days immediately preceding the date
              on which the option was granted.

                                      -54-

<PAGE>

              With effect from September 1, 2001, the Hong Kong Stock Exchange
requires that the exercise price of options to be at least the higher of the
nominal value of an ordinary share, the closing price of the ordinary shares on
the Hong Kong Stock Exchange on the date on which the option was granted and the
average closing price of the ordinary shares on the Hong Kong Stock Exchange for
the five trading days immediately preceding the date on which the option was
granted. During the year ended December 31, 2002, no option was granted under
the Old Scheme.

              For options granted under the New Scheme, the exercise price of
the options shall be determined by the directors of the Company at their
discretion provided that such price may not be set below a minimum price which
is the highest of:

        (i)   the nominal value of an ordinary share;

        (ii)  the closing price of the ordinary shares on the Hong Kong Stock
              Exchange on the date on which the option was granted; and

        (iii) the average closing price of the ordinary shares on the Hong Kong
              Stock Exchange for the five trading days immediately preceding the
              date on which the option was granted.

Share options involving 150,476,500 ordinary shares were granted under the New
Scheme during the year ended December 31, 2002.

              Under both the Old Scheme and the New Scheme, the term of the
option is determined by the directors at their discretion, provided that all
options shall be exercised within 10 years after the adoption of the scheme (in
the case of the Old Scheme) and within 10 years after the date on which the
option is granted (in the case of the New Scheme).

              As at December 31, 2002, the directors and employees of the
Company had options to subscribe for the ordinary shares of the Company granted
under both the Old Scheme and, from June 24, 2002 onwards, the New Scheme. See
"-- Share Ownership" below for details on options granted to our directors.

BOARD PRACTICES

              To enhance our corporate governance, we established two board
committees, the audit committee and the remuneration committee, in 1998 and
2000, respectively. These committees are comprised solely of independent
non-executive directors. In 2001, having considered the relevant rules on
corporate governance and the Code of Best Practice of the Listing Rules of the
London Stock Exchange, we established the nomination committee. The nomination
committee is comprised primarily of independent non-executive directors.

         AUDIT COMMITTEE

              The members of our audit committee are Dr. Lo Ka Shui, as chairman
of the committee, Mr. Frank K.S. Wong and Mr. Moses M. C. Cheng. The audit
committee's major responsibilities include:

         -    to review the financial reports, the related auditors' review
              report and management's responses to the review reports;

         -    to discuss audit procedures with the auditors as well as any
              issues arising out of such procedures;

         -    to review the auditors' appointment, the auditors' fees and any
              matters relating to the termination or resignation of the auditor;
              and

         -    to examine the effectiveness of our internal controls, to review
              our internal audit plan and to submit relevant reports and
              recommendations to our Board on a regular basis.

              The audit committee usually meets four times each year.

                                      -55-

<PAGE>

         REMUNERATION COMMITTEE

              The members of our remuneration committee are Dr. Lo Ka Shui, as
chairman of the committee, Mr. Frank K. S. Wong and Mr. Moses M. C. Cheng. The
remuneration committee's major responsibilities include:

         -    to advise the Board in relation to the remuneration structure and
              payments of our executive directors and executives; and

         -    to represent the Board in confirming the individual remuneration
              packages and employment terms of executive directors and approving
              their related employment contracts.

              Meetings of the remuneration committee are held when necessary.

         NOMINATION COMMITTEE

              The members of our nomination committee are Mr. Wang Xiaochu, as
chairman of the committee, Dr. Lo Ka Shui, Mr. Frank K. S. Wong and Mr. Moses M.
C. Cheng. The primary responsibilities of the nomination committee include
reviewing, advising and making recommendations to the board on the matters in
relation to the appointment and re-appointment of board members, and ensuring
the proper and transparent procedures for the appointment and re-appointment of
directors. Meetings of the nomination committee are held when necessary.

EMPLOYEES

              See "Item 4. Information on the Company -- Business Overview --
Employees".

SHARE OWNERSHIP

              As of December 31, 2002, the following directors and those members
of our senior management named in the section entitled "Directors and Senior
Management" had interests in our share capital:

<TABLE>
<CAPTION>
          DIRECTOR                     NUMBER OF ADSS          PERCENTAGE OF CLASS
          --------                     --------------          -------------------
<S>                                    <C>                     <C>
Wang Xiaochu......................           500                       *
Li Zhenqun (resigned).............           100                       *
</TABLE>

---------------
* Less than 1%.

              Under our Memorandum and Articles of Association, our directors
and senior management do not have different voting rights when compared to other
holders of shares in the same class.

              As of December 31, 2002, options exercisable for an aggregate of
14,479,000 shares had been granted to the following directors and those members
of our senior management named in the section "Directors and Senior Management"
under our share option scheme and were outstanding.

              The following options are exercisable at a price of HK$ 33.91 per
share through October 7, 2007.

<TABLE>
<CAPTION>
             DIRECTOR                      NUMBER OF SHARES COVERED BY OPTIONS
             --------                      -----------------------------------
<S>                                        <C>
Wang Xiaochu.......................                     3,900,000
He Ning............................                     1,000,000
Li Gang............................                     1,000,000
</TABLE>

              The following options are exercisable at a price of HK$ 45.04 per
share through October 7, 2007.

                                      -56-

<PAGE>

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                      100,000
He Ning.............................                       83,000
Li Gang.............................                       90,000
Xu Long.............................                      585,000
Liu Ping (resigned).................                      581,000
Yuan Jiangguo (resigned)............                      580,000
Wei Yiping (resigned)...............                      578,000
</TABLE>

              The following options are exercisable at a price of HK$ 45.04 per
share from April 25, 2005 through October 7, 2007.

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                      100,000
He Ning.............................                       83,000
Li Gang.............................                       90,000
Xu Long.............................                      585,000
Liu Ping (resigned).................                      581,000
Yuan Jiangguo (resigned)............                      580,000
Wei Yiping (resigned)...............                      578,000
</TABLE>

              The following options are exercisable at a price of HK$ 32.10 per
share from June 22, 2003 through October 7, 2007.

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                       60,000
Li Zhenqun (resigned)...............                      560,000
He Ning.............................                       45,000
Li Gang.............................                       50,000
Xu Long.............................                       47,500
Liu Ping (resigned).................                       40,000
Yuan Jianguo (resigned).............                       45,000
Wei Yiping (resigned)...............                       40,000
</TABLE>

                                      -57-

<PAGE>

              The following options are exercisable at a price of HK$ 32.10 per
share from June 22, 2006 through October 7, 2007.

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                       60,000
Li Zhenqun (resigned)...............                      560,000
He Ning.............................                       45,000
Li Gang.............................                       50,000
Xu Long.............................                       47,500
Liu Ping (resigned).................                       40,000
Yuan Jianguo (resigned).............                       45,000
Wei Yiping (resigned)...............                       40,000
</TABLE>

              The following options are exercisable at a price of HK$ 22.85 per
share from July 3, 2004 through July 2, 2012.

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                      150,000
Xue Taohai..........................                      100,000
Li Zhenqun (resigned)...............                      100,000
He Ning.............................                       90,000
Li Gang.............................                       95,000
Xu Long.............................                       90,000
Liu Ping (resigned).................                       50,000
Yuan Jianguo (resigned).............                       80,000
Wei Yiping (resigned)...............                       50,000
</TABLE>

              The following options are exercisable at a price of HK$ 22.85 per
share from July 3, 2007 through July 2, 2012.

<TABLE>
<CAPTION>
              DIRECTOR                     NUMBER OF SHARES COVERED BY OPTIONS
              --------                     -----------------------------------
<S>                                        <C>
Wang Xiaochu........................                      150,000
Xue Taohai..........................                      100,000
Li Zhenqun (resigned)...............                      100,000
He Ning.............................                       90,000
Li Gang.............................                       95,000
Xu Long.............................                       90,000
Liu Ping (resigned).................                       50,000
Yuan Jianguo (resigned).............                       80,000
Wei Yiping (resigned)...............                       50,000
</TABLE>

                                      -58-

<PAGE>

ITEM 7.  SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

MAJOR SHAREHOLDERS

              As of May 31, 2003, approximately 75.7% of our outstanding shares
were held by China Mobile Hong Kong (BVI) Limited, a wholly-owned subsidiary of
China Mobile (Hong Kong) Group Limited. China Mobile Communications Corporation,
a state-owned company, holds all of the voting shares and economic interest in
China Mobile (Hong Kong) Group Limited. No other persons own 5% or more of our
ordinary shares. Between our initial public offering and May 31, 2003, our
majority shareholders held, directly or indirectly, between approximately 75%
and 76.5% of equity interest in us, except for brief periods following our
equity offerings in 1999 and 2000 but before the issuance of consideration
shares to our direct shareholder, China Mobile Hong Kong (BVI) Limited, for the
related acquisitions, during which periods the shareholding was temporarily
lower. See "Item 4. Information on the Company -- Industry Restructuring and
Changes in Our Shareholding Structure" for changes during the past three years
with respect to our majority shareholders. Under our Memorandum and Articles of
Association, our major shareholders do not have different voting rights when
compared to other holders of shares in the same class.

              We are not aware of any arrangement which may at a subsequent date
result in a change of control over us.

RELATED PARTY TRANSACTIONS

              As of May 31, 2003, China Mobile Communications Corporation
indirectly owns an aggregate of approximately 75.7% of our issued and
outstanding share capital.

              We and each of our subsidiaries have entered into various related
party transactions. The principal terms of the agreements for these related
party transactions are described below.

              Certain charges for the services under these agreements are based
on tariffs set by the Chinese regulatory authorities. Those transactions where
the charges are not set by Chinese regulatory authorities are based on
commercial negotiation between the parties, in each case on an arm's length
basis. In this regard, we have the benefit of the undertaking from China Mobile
Communications Corporation that to the extent within its control, we will be
treated equally with any other mobile telecommunications entities in respect of
all approvals, transactions and arrangements between us on the one hand and
China Mobile Communications Corporation and other mobile telecommunications
operators controlled by China Mobile Communications Corporation on the other
hand, as described below under "Undertaking from China Mobile Communications
Corporation".

         ROAMING ARRANGEMENTS

              We offer domestic and international roaming services to our
subscribers. In September 1997, in connection with our initial public offering,
we entered into domestic roaming arrangements with the mobile communications
networks previously controlled by the former Ministry of Posts and
Telecommunications. Those arrangements were replaced by our interconnection and
roaming agreement with China Mobile Communications Corporation entered in May
2000, which sets forth the current terms of our domestic and international
roaming arrangements. Under this agreement, with regard to inter-provincial
roaming, 80% of the base roaming calling charges payable by a roaming subscriber
is credited to the visited network and the remaining 20% is retained by the
roaming subscriber's home network. This agreement is valid for two years from
April 1, 1999, and will be automatically renewed on an annual basis unless
either party notifies the other of its intention to terminate at least three
months prior to the expiration of the term.

              With regard to international roaming, roaming calling charges
incurred by an international mobile telecommunications services subscriber
making or receiving a call while roaming in our service regions in Mainland
China are collected for us and credited to us by China Mobile Communications
Corporation, and we will make the necessary settlement with the relevant
telecommunications operators in Mainland China. China Mobile Communications
Corporation also collects a 15% handling charge on the roaming calling charges
from the international mobile telecommunications operators and shares such
handling charge equally with us with respect to

                                      -59-

<PAGE>

roaming in calls to our service regions. When our subscribers roam
internationally, we will collect the roaming calling charges together with a 15%
handling charge from our subscribers and will pay the roaming calling charges
together with half of the handling charge collected to China Mobile
Communications Corporation, which will make the necessary settlement with the
international mobile telecommunications operators concerned.

         LICENSING OF TRADEMARK

              China Mobile Communications Corporation is the owner of the "CHINA
MOBILE" name and logo, a registered trademark in Mainland China, Cambodia and
New Zealand. In addition, it has filed applications in Bangladesh, Canada, Hong
Kong, India, Indonesia, Macau, Malaysia, Philippines, South Korea, Taiwan,
Thailand and the Untied States to register the "CHINA MOBILE" name and logo as a
trademark for certain goods and services. In July 2002, we entered into a new
licensing agreement with China Mobile Communications Corporation for, among
other things, the use of the "CHINA MOBILE" name and logo by us and our
operating subsidiaries. The new licensing agreement replaces the previous
licensing agreements entered into with China Mobile Communications Corporation
in October 1999 and the supplemental licensing agreement entered into in
September 2000. Under this agreement, no license fee is payable by us for the
first five years from the effective date of the trademark registration in China
and any fees payable after that will be no less favorable than fees paid by
other affiliates of China Mobile Communications Corporation. China Mobile
Communications Corporation may terminate the license agreement if it no longer
has any interests in us.

         SPECTRUM FEES

              The Ministry of Information Industry and the Ministry of Finance
jointly determine the standardized spectrum fees payable to the Ministry of
Information Industry by all mobile telecommunications operators in Mainland
China, including us. In accordance with a joint circular from the State
Development and Reform Commission and the Ministry of Finance, China Mobile
Communications Corporation entered into an agreement with us that specifies the
amount of fees to be paid to the Ministry of Information Industry for spectrum
usage by each mobile telecommunications network operator under the Ministry of
Information Industry's control based on the bandwidth of the frequency used and
the number of base transceiver stations within the relevant operator's networks.
In October 1999, we entered into an agreement with China Mobile Communications
Corporation (as supplemented by two supplemental agreements entered into in
September 2000 and April 2002), under which we have been granted the exclusive
right to use the frequency spectrum and telephone numbers allocated to us in our
service regions. For the usage of the 800/900 MHz and the 1800 MHz frequency
bands, the charges will be shared between our operating subsidiaries and China
Mobile Communications Corporation's operating subsidiaries. Sixty percent of the
charges will be shared on the basis of the number of base stations at the end of
the previous year and 40% of the charges will be shared on the basis of the
bandwidth of the spectrum used. The agreement is valid for one year and will be
automatically renewed on an annual basis unless either party notifies the other
of its intention to terminate at least three months prior to the expiration of
the term.

              On May 2, 2002, the relevant regulatory authorities in China
informed us that the standard spectrum usage fees for GSM networks will be
adjusted progressively over a period of three years, and the adjustments will be
effective from July 1, 2002 for a period of five years. For the first year,
spectrum usage fees for GSM networks will be charged at the annual rate of RMB
7.5 million per MHz frequency. For the second year, the annual fee will be RMB
11.25 million per MHz frequency and from the third year onward, the annual fee
will be RMB 15 million per MHz frequency. All adjusted annual fees are charged
on the basis that upward and downward frequencies are separately charged. The
allocation of spectrum usage fees between China Mobile Communications Group and
us remains the same under our existing agreement. The adjustments will increase
our expenses on an after-tax basis by approximately RMB 224 million, RMB 343
million and RMB 462 million, respectively for the first, second, and third year
after the effectiveness of these new rates.

                                      -60-

<PAGE>

         SHARING OF INTER-PROVINCIAL TRANSMISSION LINE LEASING FEES

              In May 2000, we entered into an inter-provincial leased line
agreement with China Mobile Communications Corporation, which was supplemented
in September 2000, extending the application of this agreement to the seven
regional mobile telecommunications companies we acquired in 2000 effective upon
our acquisition. We entered into a further supplemental agreement in April 2002,
which extended the application of this agreement to the eight regional mobile
telecommunications companies we acquired in 2002. More details about the
arrangements are described under "Item 5. Operating and Financial Review and
Prospects -- Overview of Our Operations -- Our Operating Arrangements with China
Mobile Communications Corporation Have Affected and May Continue to Affect Our
Financial Results".

         INTERCONNECTION ARRANGEMENTS

              Our networks interconnect with the mobile telecommunications
networks of China Mobile Communications Corporation in other regions. In May
2000, we entered into an interconnection and roaming agreement with China Mobile
Communications Corporation (as amended by two supplemental agreements entered in
September 2000 and April 2002). Under these agreements, with regard to
inter-provincial roaming, when the roaming subscriber places a call from a
roaming location, the operator of the visited network receives all long distance
calling charges, if any, and when the roaming subscriber receives a call at a
roaming location, the network operator with whom the subscriber is registered
retains all long distance calling charges, if any.

              International long distance calling charges incurred by an
international mobile telecommunications services subscriber making an
international long distance call while roaming in the areas in Mainland China
where we operate are collected by China Mobile Communications Corporation and
are credited to us. We will make the necessary settlement with the relevant
telecommunications operators in Mainland China. China Mobile Communications
Corporation also collects a 15% handling charge on such international long
distance calling charges from the international mobile telecommunications
operators and shares such handling charges equally with us. When our subscribers
roam internationally, we will collect the international long distance calling
charges, if any, together with a 15% handling charge from our subscribers and
will pay the international long distance calling charges together with half of
the handling charges to China Mobile Communications Corporation, which will make
the necessary settlement with the international mobile telecommunications
operators concerned. Where long distance charges cannot be distinguished from
base roaming charges, such long distance charges are grouped under roaming
charges.

         PREPAID SERVICES

              Prepaid services allow subscribers to add value to their SIM cards
by purchasing top-off cards from any of our network operators or China Mobile
Communications Corporation's other network operators. We have entered into an
agreement with China Mobile Communications Corporation regarding the sharing and
settlement of revenue when prepaid subscribers purchase top-off cards from
network operators other than their home network operators. This agreement is for
a term of one year from July 1, 2000 (the sharing of revenue from prepaid
subscribers purchasing top-off cards from network operators other than their
home network operators commenced from February 1, 2000) and will be
automatically renewed on an annual basis unless either party notifies the other
of its intention to terminate at least three months prior to the expiration of
the term. The agreement was amended on May 11, 2001 with retroactive effect from
April 21, 2001, and was further amended on April 29, 2002 to extend the
application of the arrangement to the eight regional mobile telecommunications
companies we acquired in 2002. Under the amended agreement, the mobile network
operator in the location that issues the top-off card remits 95% of the face
value of the top-off card to the subscriber's home network operator, and keeps
the remainder as a handling charge. Prior to the amendment, the remittance
amount to home network operator was 85% of the face value of the top-off card.

         PLATFORM DEVELOPMENT

              Aspire is 66.4% owned by us, and it is a joint venture with
Vodafone and Hewlett-Packard Company. It entered into a platform development
master agreement with each of us and China Mobile Communications Corporation on
January 10, 2001. Under the two platform development master agreements, Aspire
(or its subsidiaries) will provide the same scope of technology platform
development and maintenance services to us and our subsidiaries and to China
Mobile Communications Corporation and their respective mobile telecommunications

                                      -61-

<PAGE>

subsidiaries in various regions in Mainland China. These services include system
and gateway integration services, hardware, software and system development
(including development of applications), technical support and major overhaul
services for a standardized, nation-wide platform for wireless data.

              Under the platform development master agreements, we and China
Mobile Communications Corporation will each pay Aspire equipment charges,
systems integration fees, software licensing fees, technical support fees and/or
major overhaul charges, which will be determined according to standards laid
down by the relevant governmental departments and/or by reference to market
rates.

         PROPERTY LEASING AND MANAGEMENT SERVICES

              We lease from other subsidiaries of China Mobile Communications
Corporation various properties that are used as office space and for locating
our cell sites and switching equipment. In relation to leased properties, the
rental payments are determined with reference to market rates. In relation to
properties sub-leased by such subsidiaries to the companies that we acquired in
November 2000 (which were in turn leased to such subsidiaries by third parties),
the rental is equal to the rental payable to such third parties, and such
subsidiaries do not make any gains as the intermediate lessors. Some of such
subsidiaries of China Mobile Communications Corporation also provide property
management services in relation to the properties leased or subleased (other
than for Tianjin Mobile and Guangxi Mobile). Property management fees are
determined with reference to market rates.

              The initial terms of such leases and sub-leases range from six
months to ten years. The initial terms of such leases and sub-leases to Guangxi
Mobile are renewable on an annual basis if Guangxi Mobile gives six months'
notice of its intention to renew. Guangxi Mobile is entitled to terminate such
leases and sub-leases by giving three months' notice at any time. The initial
terms of such leases and sub-leases to Tianjin Mobile are automatically
renewable on an annual basis unless terminated by Tianjin Mobile by three
months' notice given at any time or by the relevant lessor by giving notice of
its intention to terminate three months prior to expiration of the relevant
term. The initial terms of such leases and sub-leases to Shanghai Mobile are
automatically renewed on an annual basis unless terminated by Shanghai Mobile by
three months' notice given at any time or in relation to sub-leases terminated
by the relevant lessor by giving three months' notice prior to the expiration of
the relevant term. In relation to our other subsidiaries, the relevant lease
terms and (subject to the relevant head lease being valid or renewable for the
extended term) sub-lease terms will be automatically renewed on an annual basis
unless terminated by the relevant companies with three months' notice given at
any time and, in relation to sub-leased properties, the relevant lessor may also
terminate by giving three months' notice prior to the expiration of the relevant
term. Beijing Mobile also leases certain properties and provides property
management services to a subsidiary of China Mobile Communications Corporation
for an initial term of one year and on terms substantially similar to those set
out above in this paragraph.

         CONSTRUCTION AND RELATED SERVICES

              Beijing Mobile, Shanghai Mobile, Liaoning Mobile and Shandong
Mobile entered into agreements with certain subsidiaries of China Mobile
Communications Corporation under which such subsidiaries provide services such
as construction, design, equipment installation, testing and/or maintenance
services and/or act as general contractors in relation to construction and other
projects of our subsidiaries. Such agreements are for terms of between 6 months
and 16 months, which will be automatically renewed on an annual basis unless
either party (in the case of Shandong Mobile, Shanghai Mobile and Beijing
Mobile) or Liaoning Mobile (in the case of Liaoning Mobile) notifies the other
in writing at least three months prior to the expiration of the term of its
intention to terminate the arrangement. Beijing Mobile had also previously
entered into other agreements for the provision of certain construction and
related services which have continued to be performed according to their terms
after Beijing Mobile was acquired by us in November 2000. The charges payable
for services rendered under such agreements are determined according to
standards laid down by relevant governmental departments and/or by reference to
market rates.

         EQUIPMENT MAINTENANCE AND RELATED SERVICES

              Beijing Mobile, Shanghai Mobile and Liaoning Mobile entered into
agreements with certain subsidiaries of China Mobile Communications Corporation
under which such subsidiaries provide equipment maintenance and related services
to such companies. Such agreements are for terms of between 6 months and 15
months, which will be

                                      -62-

<PAGE>

automatically renewed on an annual basis unless either party (in the case of
Beijing Mobile) or Shanghai Mobile or Liaoning Mobile (in the case of Shanghai
Mobile and Liaoning Mobile, respectively) notifies the other of its intention to
terminate in writing at least three months prior to the expiration of the term.
Beijing Mobile had also previously entered into another agreement for the
provision of certain equipment maintenance services which continued to be
performed according to its terms after Beijing Mobile was acquired by us in
November 2000. The charges payable for services rendered under such agreements
are determined according to standards laid down by relevant governmental
departments and/or by reference to market rates.

         TRANSMISSION TOWER PRODUCTION, SALES AND OTHER SERVICES AND ANTENNA
         MAINTENANCE SERVICES

              Hebei Mobile entered into an agreement with a subsidiary of China
Mobile Communications Corporation under which such subsidiary provides
transmission tower design, production, installation and maintenance services and
antenna maintenance services to Hebei Mobile, and sells transmission towers and
spare parts to Hebei Mobile. The initial term of this agreement is for one year
from August 1, 2000 to July 30, 2001. This agreement will be automatically
renewed on an annual basis unless either party notifies the other of its
intention to terminate in writing at least three months prior to the expiration
of the term. The price of such transmission towers and spare parts and the
charges payable for services rendered under this agreement are determined
according to standards laid down by relevant governmental departments and/or by
reference to market rates.

         COLLECTION SERVICES AND SALES ARRANGEMENTS

              Henan Mobile entered into an agreement with a subsidiary of China
Mobile Communications Corporation in August 1999 in respect of the provision by
the China Mobile Communications Corporation subsidiary of certain payment
collection services to Henan Mobile. The collection service charges payable by
Henan Mobile amount to 1% of the collections.

              In addition, Henan Mobile also entered into a sales service
agreement with a subsidiary of China Mobile Communications Corporation in August
1999 pursuant to which such subsidiary has agreed to market through its outlets
Henan Mobile's mobile telecommunications services. The maximum sales service
charges of RMB 250 per subscriber are based on commercial negotiation on an
arm's length basis by reference to the prevailing market rates.

         TELECOMMUNICATION SERVICES

              In April 2002, each of Anhui Mobile, Jiangxi Mobile, Chongqing
Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi
Mobile has, respectively, entered into an agreement with the respective
subsidiary of China Mobile Communications Corporation for the provision of
certain telecommunications services. These services include:

        (i)   telecommunications projects planning, design and constructions
              services and telecommunications lines and pipelines construction
              services (as the case may be);

        (ii)  telecommunications lines maintenance services provided to Anhui
              Mobile, Jiangxi Mobile, Shaanxi Mobile and Shanxi Mobile; and

        (iii) property leasing and property management services.

              For the services described in (i) and (ii) above, the charges
payable are generally determined with reference to and cannot exceed relevant
standards set by and revised from time to time by relevant governmental
authorities in Mainland China. Where there are no such standards, the charges
are determined with reference to market rates.

         TRANSMISSION TOWER SALES, INSTALLATION AND MAINTENANCE

              On May 8, 2002, we entered into an agreement with Hubei
Communication Services Company, a wholly-owned subsidiary of China Mobile
Communications Corporation, under which Hubei Communication

                                      -63-

<PAGE>

Services Company provided transmission towers and spare parts and related
installation and maintenance services to our operating subsidiaries. The price
of such transmission towers and spare parts and the charges payable for the
services rendered under the agreement are determined either according to
standards set by relevant governmental authorities in Mainland China or by
reference to market rates.

         MISCELLANEOUS

              These transactions entered into by us (including our subsidiaries)
have been entered into in the ordinary course of business and on normal
commercial terms. Under the Listing Rules of the Hong Kong Stock Exchange, these
transactions are considered to be "connected transactions" and (other than the
licensing of trademarks) would normally require full disclosure and prior
independent shareholders' approval on each occasion they arise. As the
transactions are expected to be continued in the normal course of business, our
directors consider that such disclosure and approval would be impractical.
Accordingly, our directors have requested the Hong Kong Stock Exchange to grant,
and the Hong Kong Stock Exchange has granted, waivers from compliance with the
normal approval and disclosure requirements related to connected transactions
under the Listing Rules (except for the licensing of trademarks), which will be
effective until December 31, 2004, except that the waivers for transactions
relating to prepaid services and platform development will be effective until
December 31, 2006, upon the following conditions as applicable:

        (1)   the transactions as well as the respective agreements governing
              such transactions will be (a) entered into in the ordinary and
              usual course of business on terms that are fair and reasonable so
              far as our independent shareholders are concerned, and (b) on
              normal commercial terms and in accordance with the terms of the
              agreements governing such transactions;

        (2)   details of the transactions, as required by rule 14.25(1)(A) to
              (D) of the Listing Rules, shall be disclosed in our Hong Kong
              annual report;

        (3)   our independent non-executive directors shall review annually the
              transactions and confirm in our Hong Kong annual report and
              accounts for the relevant year that the transactions have been
              conducted in the manner stated in paragraph (1) above and within
              the upper limits stated below;

        (4)   our auditors shall review annually the transactions and provide
              our directors with a letter, details of which will be set out in
              our Hong Kong annual accounts, stating that the transactions:

              -    received the approval of our board of directors;

              -    are in accordance with the pricing policies as stated in our
                   annual report;

              -    have been conducted in the manner as stated in (1)(b) above;
                   and

              -    have not exceeded the upper limits as set forth in paragraph
                   (7) below;

        (5)   details of the transactions are disclosed to our independent
              shareholders who shall have voted in favor of an ordinary
              resolution to approve the connected transactions and the upper
              limits set out below at our extraordinary general meeting;

        (6)   China Mobile Communications Corporation has undertaken to us that
              our auditors will be granted access to such of its and its
              associates' accounting records for the purposes of reviewing the
              transactions mentioned above; and

        (7)   with respect to the following types of transactions entered into
              and to be entered into by us, the waiver was applied for and
              granted under the additional condition that they shall not exceed
              the relevant upper limits set out below in each of our fiscal
              years:

                                      -64-

<PAGE>

              -    payments payable by us (other than the eight regional mobile
                   telecommunications companies we acquired in 2002), to
                   subsidiaries of China Mobile Communications Corporation for
                   collection service charges in any fiscal year shall not
                   exceed 0.1% of our consolidated operating revenue in such
                   year, and payment payable by us (other than the eight
                   regional mobile telecommunications companies we acquired in
                   2002) to subsidiaries of China Mobile Communications
                   Corporation for sales service charges in any fiscal year
                   shall not exceed 0.3% of our consolidated operating revenue
                   in such year;

              -    payments payable by us (other than the eight regional mobile
                   telecommunications companies we acquired in 2002), to
                   subsidiaries of China Mobile Communications Corporation for
                   rental and property management fees in any fiscal year shall
                   not exceed 0.56% of our consolidated operating revenue in
                   such year;

              -    payments payable by us (other than the eight regional mobile
                   telecommunications companies we acquired in 2002), to
                   subsidiaries of China Mobile Communications Corporation for
                   construction and related services in any fiscal year shall
                   not exceed 0.25% of our consolidated operating revenue in
                   such year;

              -    payments payable by us (other than the eight regional mobile
                   telecommunications companies we acquired in 2002), to
                   subsidiaries of China Mobile Communications Corporation for
                   equipment maintenance and related services in any fiscal year
                   shall not exceed 0.05% of our consolidated operating revenue
                   in such year;

              -    payments payable by Hebei Mobile to the relevant subsidiaries
                   of China Mobile Communications Corporation for purchase of
                   transmission towers, transmission tower-related services and
                   antenna maintenance services in any fiscal year shall not
                   exceed 0.06% of our consolidated operating revenue in such
                   year;

              -    handling charges received by us (other than the eight
                   regional mobile telecommunications companies we acquired in
                   2002), from subsidiaries of China Mobile Communications
                   Corporation in respect of prepaid services in 2003 shall not
                   exceed 2% of our consolidated operating revenue in 2003 and
                   in any fiscal years thereafter shall not exceed 1% of our
                   consolidated operating revenue for such year, and handling
                   charges paid by us to subsidiaries of China Mobile
                   Communications Corporation in respect of prepaid services in
                   2003 shall not exceed 2% of our consolidated operating
                   revenue in 2003 and in any fiscal years thereafter shall not
                   exceed 1% of our consolidated operating revenue for such
                   year;

              -    payments payable by each of us (other than the eight regional
                   mobile telecommunications companies we acquired in 2002), and
                   China Mobile Communications Corporation to Aspire in respect
                   of platform development charges in any fiscal year shall not
                   exceed 3% of our consolidated net tangible assets as of the
                   end of such year;

              -    handling charges received by the eight regional mobile
                   telecommunications companies we acquired in 2002 from the
                   subsidiaries of China Mobile Communications Corporation in
                   respect of prepaid services in any fiscal year shall not
                   exceed 1% of our consolidated operating revenue in such year,
                   and handling charges paid by the eight regional mobile
                   telecommunications companies we acquired in 2002 to
                   subsidiaries of China Mobile Communications Corporation in
                   respect of prepaid services in any fiscal year shall not
                   exceed 1% of our consolidated operating revenue in such year;

              -    payments in respect of telecommunications projects planning,
                   design and construction services and telecommunications lines
                   and pipelines construction services payable by the eight
                   regional mobile telecommunications companies we acquired in
                   2002 to the subsidiaries of China Mobile Communications
                   Corporation in any fiscal year shall not exceed 0.25% of our
                   consolidated operating revenue in such year;

                                      -65-

<PAGE>

              -    telecommunications lines maintenance services payments
                   payable by the eight regional mobile telecommunications
                   companies we acquired in 2002 to the subsidiaries of China
                   Mobile Communications Corporation in any fiscal year shall
                   not exceed 0.04% of our consolidated operating revenue in
                   such year;

              -    property leasing and property management services payments
                   payable by the eight regional mobile telecommunications
                   companies we acquired in 2002 to the subsidiaries of China
                   Mobile Communications Corporation in any fiscal year shall
                   not exceed 0.25% of our consolidated operating revenue in
                   such year; and

              -    payments to Hubei Communication Services Company, a
                   subsidiary of China Mobile Communications Corporation, by us
                   in respect of the purchase of transmission towers and related
                   services in any fiscal year shall not exceed 0.5% of our
                   consolidated operating revenue in such year.

              Our independent shareholders approved the connected transactions
and the related upper limits at our extraordinary general meeting held on June
12, 2001, June 24, 2002 and May 15, 2003, respectively.

         UNDERTAKING FROM CHINA MOBILE COMMUNICATIONS CORPORATION

              China Mobile Communications Corporation has undertaken that:

         -    it will extend its full support to our present operations and
              future development;

         -    we will be the only mobile telecommunications services company
              operating in Mainland China under China Mobile Communications
              Corporation's control that will be listed on any securities
              exchange in Hong Kong or outside China;

         -    to the extent within China Mobile Communications Corporation's
              control, we will be treated equally with any other mobile
              telecommunications operators in respect of all approvals,
              transactions and arrangements between us and China Mobile
              Communications Corporation and other mobile telecommunications
              entities controlled by China Mobile Communications Corporation;

         -    China Mobile Communications Corporation and the provincial
              entities under its control will not, directly or indirectly,
              participate in the operation of any mobile telecommunications
              services in any province in which we currently operate or may
              operate in the future; and

         -    in the provinces in which we operate, we will have the option to
              operate additional telecommunications services that fall within
              China Mobile Communications Corporation's scope of business
              (including the testing and commercial operation of services using
              new technologies), and we will have the right to acquire China
              Mobile Communications Corporation's interest in such services.

ITEM 8.  FINANCIAL INFORMATION.

CONSOLIDATED FINANCIAL STATEMENTS

              Our audited consolidated financial statements are set forth
beginning on page F-1.

LEGAL PROCEEDINGS

              We are not involved in any material litigation, arbitration or
administrative proceedings, and, so far as we are aware, we do not have any
pending or threatened litigation, arbitration or administrative proceeding that
is expected to have a material effect on our financial conditions and results of
operation.

                                      -66-

<PAGE>

POLICY ON DIVIDEND DISTRIBUTIONS

              We hold in the highest regard the interests of our shareholders
and the returns achieved for our shareholders, especially minority shareholders.
Taking into account such factors as our business growth, financial position and
cash flow, our board of directors is of the view that we have sufficient cash
flow and financial strength to support our long-term development targets and to
make a cash payout to shareholders. Having also considered the need to maintain
sufficient financial resources and the capability to complete future
acquisitions and investments in quality assets, as well as a possible share
buyback under appropriate circumstances, with a view to generating the best
possible return for shareholders, our board of directors recommended the first
ever payment of a final dividend of HK$0.32 per share for the financial year
ended December 31, 2002, representing a dividend payout ratio of 20%. We will
endeavor to achieve a sustainable, steadily increasing dividend, with a view to
generating the best possible return for shareholders.

ITEM 9.  THE OFFER AND LISTING.

              In connection with our initial public offering, our American
depositary shares, or ADSs, each representing twenty ordinary shares, were
listed and commenced trading on the New York Stock Exchange on October 22, 1997
under the symbol "CHL". Effective from July 5, 2000, our ADS-to-share ratio has
been changed to one-to-five. Our shares were listed and commenced trading on the
Hong Kong Stock Exchange on October 23, 1997. Prior to these listings, there was
no public market for our equity securities. The New York Stock Exchange and the
Hong Kong Stock Exchange are the principal trading markets for our ADSs and
ordinary shares, which are not listed on any other exchanges in or outside the
United States.

              As of December 31, 2002 and May 31, 2003, there were
19,671,653,899 and 19,671,653,899, respectively, ordinary shares issued and
outstanding. As of December 31, 2002 and May 31, 2003, there were, respectively,
110 and 111 registered holders of American depositary receipts evidencing
37,049,168 and 41,474,619 ADSs. Since certain of the ADSs are held by nominees,
the above number may not be representative of the actual number of U.S.
beneficial holders of ADSs or the number of ADSs beneficially held by U.S.
persons. The depositary for the ADSs is The Bank of New York.

              The high and low closing sale prices of the shares on the Hong
Kong Stock Exchange and of the ADSs on the NYSE for the periods indicated are as
follows. The information for periods prior to July 2000 has been restated to
reflect the change in our ADS-to-share ratio from one-to-twenty to one-to-five,
which became effective on July 5, 2000.

<TABLE>
<CAPTION>
                                                   PRICE PER SHARE (HK$)                 PRICE PER ADS (US$)
                                                 ------------------------             -------------------------
                                                 HIGH                LOW               HIGH               LOW
                                                 ----                ---               ----               ----
<S>                                              <C>                <C>               <C>                <C>
1998....................................         16.25               8.90             10.66               5.73
1999....................................         48.60              12.60             32.16               8.09
2000....................................         79.00              40.30             50.73              25.94
2001
      First Quarter.....................         50.50              33.30             33.00              21.45
      Second Quarter....................         42.70              29.70             27.45              19.50
      Third Quarter.....................         42.30              19.40             26.99              13.19
      Fourth Quarter....................         29.95              21.30             19.03              13.76

2002
      First Quarter.....................         28.40              21.50             17.87              13.60
      Second Quarter....................         27.30              22.35             17.61              14.25
      Third Quarter.....................         23.55              17.80             15.25              11.30
</TABLE>

                                      -67-

<PAGE>

<TABLE>
<CAPTION>
                                                   PRICE PER SHARE (HK$)                 PRICE PER ADS (US$)
                                                 ------------------------             -------------------------
                                                 HIGH                LOW               HIGH               LOW
                                                 ----                ---               ----               ----
<S>                                              <C>                <C>               <C>                <C>
      Fourth Quarter....................         21.75              18.20             13.81              11.65

2002
      November..........................         21.15              18.95             13.65              12.15
      December..........................         21.75              18.50             13.81              11.80
2003
      January...........................         20.10              18.40             12.88              11.56
      February..........................         18.30              16.80             11.90              10.94
      March.............................         17.35              15.45             11.28               9.85
      April.............................         16.35              14.85             10.34               9.30
      May...............................         17.95              15.85             11.71               9.90
</TABLE>

ITEM 10. ADDITIONAL INFORMATION.

MEMORANDUM AND ARTICLES OF ASSOCIATION

              Under Section 3 of our Memorandum of Association, we have the
capacity and the rights, powers and privileges of a natural person and, in
addition and without limit, we may do anything which it is permitted or required
to do by any enactment or rule of law.

         DIRECTORS

              MATERIAL INTERESTS. A director who is in any way directly or
indirectly interested in a contract or proposed contract with us shall declare
the nature of his interest in accordance with the provisions of the Companies
Ordinance (Chapter 32) of Hong Kong and the Articles of Association. A director
shall not vote, or be counted in the quorum, on any resolution of the board in
respect of any contract or arrangement or proposal in which he is, to his
knowledge, materially interested, and if he shall do so his vote shall not be
counted or counted in the quorum for that resolution. The above prohibition
shall not apply to any contract, arrangement or proposal:

         -    for the giving by us of any security or indemnity to the director
              in respect of money lent or obligations incurred or undertaken by
              him at the request of, or for, our or any of our subsidiaries'
              benefit;

         -    for the giving by us of any security to a third party in respect
              of our or any of our subsidiaries' debt or obligation for which
              the director has himself assumed responsibility or guaranteed or
              secured in whole or in part whether alone or jointly;

         -    concerning an offer of the shares or debentures or other
              securities of or by us or any other company which we may promote
              or be interested in for subscription or purchase where the
              director is, or is to be, interested as a participant in the
              underwriting or sub-underwriting of the offer;

         -    in which the director is interested in the same manner as other
              holders of our shares or debentures or other securities by virtue
              only of his interest in our shares or debentures or other
              securities;

         -    concerning any other company in which the director is interested,
              directly or indirectly, as an officer or a shareholder or in which
              the director is beneficially interested in shares of that company
              other than a company in which the director, together with any of
              his associates, is beneficially interested in five percent or more
              of the issued share of any class of the equity share capital of
              such company (or of any third company through which his interest
              is derived) or of the voting rights;

                                      -68-

<PAGE>

         -    for the benefit of our or any of our subsidiaries' employees,
              including the adoption, modification or operation of a pension
              fund or retirement, death or disability benefit scheme which
              relates to both our, or any of our subsidiaries', directors and
              employees and does not give the director any privilege not
              generally accorded to the class of persons to whom such scheme or
              fund relates; and

         -    concerning the adoption, modification or operation of any
              employees' share scheme involving the issue or grant of options
              over shares or other securities by us to, or for the benefit of,
              our or any of our subsidiaries' employees under which the director
              may benefit.

              COMPENSATION AND PENSION. The directors are entitled to receive by
way of remuneration for their services such sum as we may determine from time to
time in general meeting. The directors are also entitled to be repaid their
reasonable traveling, hotel and other expenses incurred by them in or about the
performance of their duties as directors. The directors may award special
remuneration out of our funds, by way of salary, commission or otherwise as the
directors may determine, to any director who performs services which, in the
opinion of the directors, are outside the scope of the ordinary duties of a
director.

              The board may establish and maintain any contributory or
non-contributory pension or superannuation funds for the benefit of, or give
donations, gratuities, pensions, allowances or emoluments to any persons (1) who
are or were at any time in employment or service of our company (or any of our
subsidiaries) or are allied or associated with us or any of our subsidiaries, or
(2) who are or were at any time our (or any of our subsidiaries') directors or
officers, and who are holding or have held any salaried employment or office in
our company or any of our subsidiaries, and the wives, widows, families and
dependants of any of these persons. Any director holding any such employment or
office is entitled to participate in, and retain for his own benefit, any such
donation, gratuity, pension, allowance or emolument.

              BORROWING POWERS. The directors may exercise all the powers of our
company to borrow money and to mortgage or charge all or any part of our
undertaking, property and assets (present and future) and uncalled capital and
to issue debentures, debenture stocks, bonds and other securities, whether
outright or as collateral security for the debt, liability or obligation of our
company or any third party.

              QUALIFICATION; RETIREMENT. A director need not hold any of our
shares to qualify as a director. There is no age limit requirement for a
director's retirement or non-retirement.

              At each annual general meeting, one-third of the directors for the
time being, or, if their number is not three or a multiple of three, then the
number nearest one-third, shall retire from office by rotation except for any
director holding office as chairman or chief executive officer. The directors to
retire in every year shall be those who have been longest in office since their
last election, but as between persons who became directors on the same day shall
be determined by lot unless they otherwise agree between themselves. The
retiring directors shall be eligible for re-election.

         RIGHTS ATTACHING TO ORDINARY SHARES

              The section entitled "Description of Share Capital" in our
Registration Statement on Form F-3 (File No. 333-47256), as filed with the
Securities and Exchange Commission on October 30, 2000, is incorporated by
reference into this annual report.

              Pursuant to ordinary resolutions passed at our extraordinary
general meeting held on November 10, 2000, our authorized share capital was
increased, by the creation of an additional 14,000,000,000 ordinary shares of
HK$ 0.10 each, which rank pari passu with the existing ordinary shares, to a
total of HK$ 3,000,000,000 divided into 30,000,000,000 ordinary shares.

         ANNUAL GENERAL MEETINGS AND EXTRAORDINARY GENERAL MEETINGS

              We must hold, in each year, a general meeting as our annual
general meeting in addition to any other meetings in that year. The annual
general meeting must be held at such time (which shall be within a period of not

                                      -69-

<PAGE>

more than 15 months, or such longer period as the Registrar of Companies may
authorize in writing, after the holding of the last preceding annual general
meeting) and place as may be determined by the directors. All other general
meetings are extraordinary meetings. The directors may proceed to convene an
extraordinary general meeting whenever they think fit, in accordance with the
Companies Ordinance.

              In general, an annual general meeting and a meeting called for the
passing of a special resolution shall be called by not less than 21 days' notice
in writing, and any other general meeting shall be called by not less than 14
days' notice in writing. The notice must specify the place, date and time of the
meeting and, in the case of special business, the general nature of that
business.

         MISCELLANEOUS

              We keep our share register with our share registrar, which is Hong
Kong Registrars Limited, Rooms 1901-5, 19th Floor, Hopewell Centre, 183 Queen's
Road East, Wanchai, Hong Kong. In addition, we also file certain documents with
the Registrar of Companies, Hong Kong, China, in accordance with the
requirements of the Companies Ordinance. Our company number is 622909.

MATERIAL CONTRACTS

              See "Item 7. Major Shareholders and Related Party Transactions --
Related Party Transactions" for certain arrangements we have entered into with
China Mobile Communications Corporation.

         INTERCONNECTION ARRANGEMENTS

              Each of our operating subsidiaries has entered into an
interconnection agreement with fixed line operators in its network area. A large
portion of calls on our networks involve interconnection with the fixed line
networks. The economic terms of the interconnection arrangements are described
under "Item 4. Information on the Company -- Business Overview --
Interconnection".

         ASPIRE BUSINESS ALLIANCE WITH VODAFONE

              In addition, on January 9, 2002, Vodafone Americas Asia Inc., a
subsidiary of Vodafone, and Aspire entered into a business alliance agreement
under which Aspire will engage Vodafone Global Platform and Internet Services, a
unit of Vodafone Americas Asia Inc., as a preferred provider of wireless data
applications software in relation to the Aspire Mobile Information Service
Center Platform, provided that software supplied to Aspire has at least
equivalent technical specifications on the same or better commercial terms.
Aspire and Vodafone Global Platform and Internet Services also agreed to use
their reasonable efforts to coordinate the development of their respective
wireless data platforms with the intention of providing a seamless delivery of
wireless data services for their respective customers and enabling content and
application providers to use a single application programming interface.

EXCHANGE CONTROLS

              The Renminbi currently is not a freely convertible currency. The
State Administration of Foreign Exchange, under the authority of the People's
Bank of China, controls the conversion of Renminbi into foreign currency. Prior
to January 1, 1994, Renminbi could be converted to foreign currency through the
Bank of China or other authorized institutions at official rates fixed daily by
the State Administration of Foreign Exchange. Renminbi could also be converted
at swap centers open to Chinese enterprises and foreign invested enterprises,
subject to State Administration of Foreign Exchange approval of each foreign
currency trade, at exchange rates negotiated by the parties for each
transaction. In the year ended December 31, 1993, as much as 80% by value of all
foreign exchange transactions in China took place through the swap centers. The
exchange rate quoted by the Bank of China differed substantially from that
available in the swap centers. Effective January 1, 1994, a unitary exchange
rate system was introduced in China, replacing the dual-rate system previously
in effect. In connection with the creation of a unitary exchange system, the
China Foreign Exchange Trading System inter-bank foreign exchange market was
established. Under the unitary foreign exchange system, People's Bank of China
sets daily exchange rates for conversion of

                                      -70-

<PAGE>

Renminbi into U.S. dollars and other currencies based on the China Foreign
Exchange Trading System interbank market rates, and the Bank of China and other
authorized banks may engage in foreign exchange transactions at rates that vary
within a prescribed range above or below rates set by the People's Bank of
China.

              In the event of shortages of foreign currencies, we may be unable
to convert sufficient Renminbi into foreign currency to meet its foreign
currency obligations or to pay dividends in foreign currency.

              The value of the Renminbi is subject to changes in Chinese
government policies and to international economic and political developments.
During the few years prior to 1994, the Renminbi experienced a devaluation
against most major currencies, and a devaluation of approximately 50% of the
Renminbi against the U.S. dollar occurred on January 3, 1994 in connection with
the adoption of the new unitary exchange rate system. Since 1994, the official
exchange rate for the conversion of Renminbi to U.S. dollars has been stable,
and the Renminbi has appreciated slightly against U.S. dollars. Any future
devaluation of the Renminbi would increase our effective cost of foreign
manufactured equipment or components, and of satisfying any other foreign
currency denominated liabilities. In addition, any such devaluation would reduce
the U.S. dollar value of any dividends declared in Renminbi. During 2001 and
2002, the Renminbi has remained stable against the U.S. dollar.

              There are no limitations on the right of non-resident or foreign
owners to remit dividends or to hold or vote the ordinary shares or the ADSs
imposed by Hong Kong law or by our memorandum and articles of association or
other constituent documents.

TAXATION -- HONG KONG

              The taxation of income and capital gains of holders of ordinary
shares or ADSs is subject to the laws and practices of Hong Kong and of
jurisdictions in which holders of ordinary shares or ADSs are resident or
otherwise subject to tax. The following summary of certain relevant taxation
provisions under Hong Kong law is based on current law and practice, is subject
to changes therein and does not constitute legal or tax advice. The discussion
does not deal with all possible tax consequences relating to an investment in
the ordinary shares or ADSs. Accordingly, each prospective investor
(particularly those subject to special tax rules, such as banks, dealers,
insurance companies, tax-exempt entities and holders of 10% or more of our
voting capital stock) should consult its own tax advisor regarding the tax
consequences of an investment in the ordinary shares and ADSs. The discussion is
based upon laws and relevant interpretations thereof in effect as of the date of
this annual report, all of which are subject to change. There is no reciprocal
tax treaty in effect between Hong Kong and the United States.

         TAX ON DIVIDENDS

              Under the current practices of the Hong Kong Inland Revenue
Department, no tax is payable in Hong Kong in respect of dividends paid by us
unless such dividends are attributable to a trade, profession or business
carried on in Hong Kong.

         PROFITS TAX

              No tax is imposed in Hong Kong in respect of capital gains from
the sale of property (such as the ordinary shares and ADSs). Trading gains from
the sale of property by persons carrying on a trade, profession or business in
Hong Kong where such gains are derived from or arise in Hong Kong from such
trade, profession or business will be chargeable to Hong Kong profits tax, which
is currently imposed at the rate of 16% on corporations and at a maximum rate of
15% on individuals. Gains from sales of the ordinary shares effected on the Hong
Kong Stock Exchange may be considered to be derived from or arise in Hong Kong.
Liability for Hong Kong profits tax may thus arise in respect of trading gains
from sales of ordinary shares or ADSs realized by persons carrying on a business
or trading or dealing in securities in Hong Kong.

         STAMP DUTY

              Hong Kong stamp duty, currently charged at the rate of HK$ 1 per
HK$ 1,000 or part thereof on the higher of the consideration for or the value of
the ordinary shares, will be payable by the purchaser on every purchase

                                      -71-

<PAGE>

and by the seller on every sale of ordinary shares (i.e., a total of HK$ 2 per
HK$ 1,000 or part thereof is currently payable on a typical sale and purchase
transaction involving ordinary shares). In addition, a fixed duty of HK$ 5 is
currently payable on any instrument of transfer of ordinary shares. The
withdrawal of ordinary shares upon the surrender of ADSs, and the issuance of
ADSs upon the deposit of ordinary shares, will also attract stamp duty at the
rate described above for sale and purchase transactions unless the withdrawal or
deposit does not result in a change in the beneficial ownership of the ordinary
shares under Hong Kong law, in which case only a fixed duty of HK$ 5 is payable
on the transfer. The issuance of the ADSs upon the deposit of ordinary shares
issued directly to the depositary or for the account of the depositary does not
attract stamp duty. No Hong Kong stamp duty is payable upon the transfer of ADSs
outside Hong Kong.

         ESTATE DUTY

              The ordinary shares are Hong Kong property under Hong Kong law,
and accordingly such ordinary shares may be subject to estate duty on the death
of the beneficial owner of the ordinary shares (regardless of the place of the
owner's residence, citizenship or domicile). Hong Kong estate duty is currently
imposed on a progressive scale from 5% to 15%. The rate of and the threshold for
estate duty has, in the past, been adjusted on a fairly regular basis. No estate
duty is payable when the aggregate value of the dutiable estate does not exceed
HK$ 7.5 million, and the maximum rate of duty of 15% applies when the aggregate
value of the dutiable estate exceeds HK$ 10.5 million.

TAXATION -- UNITED STATES FEDERAL INCOME TAXATION

              This section describes the material United States Federal income
tax consequences of the ownership and disposition of our shares or ADSs. This
section applies to you only if you hold your shares or ADSs as capital assets
for United States Federal income tax purposes. This section does not discuss
special rules that may apply to you if you are a member of a special class of
holders subject to special rules, including:

         -    a dealer in securities;

         -    a trader in securities that elects to use a mark-to-market method
              of accounting for your securities holdings;

         -    a tax-exempt organization;

         -    a life insurance company;

         -    a person liable for alternative minimum tax;

         -    a person that actually or constructively owns 10% or more of our
              voting stock;

         -    a person that holds shares or ADSs as part of a straddle or a
              hedging or conversion transaction; or

         -    a person whose functional currency is not the U.S. dollar.

              This section is based on the Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed regulations, published
rulings and court decisions, all as currently in effect. These laws are subject
to change, possibly on a retroactive basis. In addition, this section is based
in part upon the representations of the Depositary and the assumption that each
obligation in the Deposit Agreement and any related agreement will be performed
in accordance with its terms.

              You are a U.S. holder if you are a beneficial owner of shares or
ADSs and you are:

         -    a citizen or resident of the United States;

         -    a domestic corporation;

                                      -72-

<PAGE>

         -    an estate whose income is subject to United States Federal income
              tax regardless of its source; or

         -    a trust if a United States court can exercise primary supervision
              over the trust's administration and one or more United States
              persons are authorized to control all substantial decisions of the
              trust.

              You should consult your own tax advisor regarding the United
States Federal, state and local and other tax consequences of owning and
disposing of shares or ADSs in your particular circumstances.

              In general, and taking into account the earlier assumptions, for
United States Federal income tax purposes, if you hold ADRs evidencing ADSs, you
will be treated as the owner of the shares represented by those ADRs. Exchanges
of shares for ADRs, and ADRs for shares, generally will not be subject to the
United States Federal income tax.

         TAXATION OF DIVIDENDS

              Under the United States Federal income tax laws, and subject to
the passive foreign investment company, or PFIC, rules discussed below, if you
are a U.S. holder, the gross amount of any dividend we pay out of our current or
accumulated earnings and profits (as determined for United States Federal income
tax purposes) is subject to United States Federal taxation. If you are a
noncorporate U.S. holder, dividends paid to you after December 31, 2002 and
before January 1, 2009 that constitute qualified dividend income will be taxable
to you at a maximum tax rate of 15% provided that you hold the shares or ADSs
for more than 60 days during the 120-day period beginning 60 days before the
ex-dividend date and meet other holding period requirements, dividends we pay
with respect to the shares or ADSs will be qualified dividend income provided
that, in the year that you receive the dividend, the shares or ADSs are readily
tradable on an established securities market in the United States.

              The dividend is taxable to you when you, in the case of shares, or
the Depositary, in the case of ADSs, receive the dividend, actually or
constructively. The dividend will not be eligible for the dividends-received
deduction generally allowed to United States corporations in respect of
dividends received from other United States corporations. The amount of the
dividend distribution that you must include in your income will be the U.S.
dollar value of the Hong Kong dollar payments made, determined at the spot Hong
Kong dollar/U.S. dollar rate on the date the dividend distribution is includible
in your income, regardless of whether the payment is in fact converted into U.S.
dollars. Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date you include the dividend payment in
income to the date you convert the payment into U.S. dollars will be treated as
ordinary income or loss and will not be eligible for the special tax rate
applicable to qualified dividend income. This gain or loss generally will be
from sources within the United States for foreign tax credit limitation
purposes. Distributions in excess of current and accumulated earnings and
profits (as determined for United States Federal income tax purposes) will be
treated as a non-taxable return of capital to the extent of your basis in the
shares or ADSs and thereafter as capital gain. Dividends will be income from
sources outside the United States, but generally will be "passive income" or
"financial services income", which is treated separately from other types of
income for purposes of computing the foreign tax credit allowable to you.

         TAXATION OF CAPITAL GAINS

              Subject to the PFIC rules discussed below, if you are a U.S.
holder and you sell or otherwise dispose of your shares or ADSs, you will
recognize capital gain or loss for United States Federal income tax purposes
equal to the difference between the U.S. dollar value of the amount that you
realize and your tax basis, determined in U.S. dollars, in your shares or ADSs.
Capital gain of a noncorporate U.S. holder that is recognized on or after May 6,
2003 and before January 1, 2009 is generally taxed at a maximum rate of 15%
where the property is held more than one year. The deductibility of capital
losses is subject to limitations. The gain or loss will generally be from
sources within the United States for foreign tax credit limitation purposes.

         PFIC RULES

              We believe that shares or ADSs should not be treated as stock of a
PFIC for United States Federal income tax purposes, but this conclusion is a
factual determination that is made annually and thus may be subject to

                                      -73-

<PAGE>

change. In general, if you are a U.S. holder, we will be a PFIC with respect to
you if for any taxable year in which you held our shares or ADSs:

         -    at least 75% of our gross income for the taxable year is passive
              income; or

         -    at least 50% of the value, determined on the basis of a quarterly
              average, of our assets is attributable to assets that produce or
              are held for the production of passive income.

              Passive income generally includes dividends, interest, royalties,
rents (other than certain rents and royalties derived in the active conduct of a
trade or business), annuities and gains from assets that produce passive income.
If a foreign corporation owns at least 25% by value of the stock of another
corporation, the foreign corporation is treated for purposes of the PFIC tests
as owning its proportionate share of the assets of the other corporation, and as
receiving directly its proportionate share of the other corporation's income.

              If we are treated as a PFIC, and you are a U.S. holder that did
not make a mark-to-market election, as described below, you will be subject to
special rules with respect to:

         -    any gain you realize on the sale or other disposition of your
              shares or ADSs; and

         -    any excess distribution that we make to you (generally, any
              distributions to you during a single taxable year that are greater
              than 125% of the average annual distributions received by you in
              respect of the shares or ADSs during the three preceding taxable
              years or, if shorter, your holding period for the shares or ADSs).

              Under these rules:

         -    the gain or excess distribution will be allocated ratably over
              your holding period for the shares or ADSs;

         -    the amount allocated to the taxable year in which you realized the
              gain or excess distribution will be taxed as ordinary income;

         -    the amount allocated to each prior year, with certain exceptions,
              will be taxed at the highest tax rate in effect for that year; and

         -    the interest charge generally applicable to underpayments of tax
              will be imposed in respect of the tax attributable to each such
              year.

              If you own shares or ADSs in a PFIC that are treated as marketable
stock, you may make a mark-to-market election. If you make this election, you
will not be subject to the PFIC rules described above. Instead, in general, you
will include as ordinary income each year the excess, if any, of the fair market
value of your shares or ADSs at the end of the taxable year over your adjusted
basis in your shares or ADSs. These amounts of ordinary income will not be
eligible for the favorable tax rates applicable to qualified dividend income on
long-term capital gains. You will also be allowed to take an ordinary loss in
respect of the excess, if any, of the adjusted basis of your shares or ADSs over
their fair market value at the end of the taxable year (but only to the extent
of the net amount of previously included income as a result of the
mark-to-market election). Your basis in the shares or ADSs will be adjusted to
reflect any such income or loss amounts.

              In addition, notwithstanding any election you make with regard to
the shares or ADSs, dividends that you receive from us will not constitute
qualified dividend income to you if we are a PFIC either in the taxable year of
the distribution or the preceding are not eligible for taxation at the 15%
maximum rate applicable to qualified dividend income, Instead, you must include
the gross amount of any such dividend paid by us out of our accumulated earnings
and profits (as determined for Untied States federal income tax purposes) in
your gross income, and it will be subject to tax at rates applicable to ordinary
income.

              If you own shares or ADSs during any year that we are a PFIC, you
must file Internal Revenue Service

                                      -74-

<PAGE>

Form 8621.

DOCUMENTS ON DISPLAY

              You may read and copy documents referred to in this annual report
on Form 20-F that have been filed with the U.S. Securities and Exchange
Commission at the SEC's public reference room located at 450 Fifth Street, NW,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms and their copy charges. The SEC also
maintains a web site at http://www.sec.gov that contains reports, proxy
statements and other information regarding registrants that file electronically
with the SEC.

              The SEC allows us to "incorporate by reference" the information we
file with the SEC. This means that we can disclose important information to you
by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this annual
report on Form 20-F.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

              We are subject to market rate risks due to fluctuations in
interest rates. The majority of our debt is in the form of long-term, fixed- and
variable-rate bank and other loans with original maturities ranging from one to
fifteen years. Accordingly, fluctuations in interest rates can lead to
significant fluctuations in the fair value of these debt instruments. From time
to time, we may enter into interest rate swap agreements designed to mitigate
our exposure to interest rate risks, although we did not consider it necessary
to do so in 2002.

              We are also exposed to foreign currency risk as a result of our
telecommunications equipment being sourced substantially from overseas
suppliers. Specifically, our foreign currency exposure relates primarily to our
foreign currency-denominated short-term and long-term debt, our firm purchase
commitments and, to a limited extent, cash and cash equivalents denominated in
foreign currencies. We may, from time to time, enter into currency swap
agreements and foreign exchange forward contracts designed to mitigate our
exposure to foreign currency risks, although we did not consider this to be
necessary in 2002. Our foreign currency hedging activity generally is expected
to be limited to hedging of specific future commitments and long-term debt
denominated in foreign currencies.

                                      -75-

<PAGE>

              The following table provides information regarding our interest
rate-sensitive financial instruments, which consist of fixed and variable rate
short-term and long-term debt obligations, as of December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                                       AS OF DECEMBER 31,  AS OF DECEMBER 31,
                                                  EXPECTED MATURITY DATE                     2002                 2001
                                ------------------------------------------------------ ------------------  -----------------
                                                                                         TOTAL              TOTAL
                                                                                        RECORDED    FAIR   RECORDED  FAIR
                                 2003       2004     2005     2006   2007   THEREAFTER   AMOUNT     VALUE   AMOUNT   VALUE
                                 ----       ----     ----     ----   ----   ----------   ------     -----   ------   -----
                                                     (RMB EQUIVALENT IN MILLIONS, EXCEPT INTEREST RATES)
<S>                             <C>       <C>       <C>       <C>    <C>    <C>         <C>        <C>     <C>       <C>
Debt:
 Obligations under
   capital leases...........       68          -        -        -       -         -         68        68    1,720    1,733
   Average interest rate....     4.96%         -        -        -       -         -       4.96%        -     5.22%       -
 Fixed rate bank and
   other loans..............    4,562        145       62        -       -         -      4,769     4,762    5,472    5,553
   Average interest rate....     4.80%      6.56%    5.29%       -       -         -       4.86%        -     6.01%       -
 Variable rate bank and
   other loans..............    3,570     11,479      880       40      40        30     16,039    16,039    4,986    4,986
   Average interest rate....     5.05%      3.84%    5.36%    5.76%   5.76%     5.76%      5.05%        -     5.67%       -
 Fixed rate notes...........        -      4,961        -        -       -         -      4,961     5,418    4,956    5,375
   Average interest rate....        -       7.88%       -        -       -         -       7.88%        -     7.88%       -
 Convertible notes..........        -          -    5,711        -       -         -      5,711     5,576    5,708    5,400
   Average interest rate....        -          -     2.25%       -       -         -       2.25%        -     2.25%       -
 Bonds......................        -          -        -        -   3,000    10,000     13,000    13,309    5,000    5,045
   Average interest rate....        -          -        -        -    3.50%     4.18%      4.03%        -     4.00%       -
 Deferred payable...........        -          -        -        -       -    15,176     15,176    15,176        -        -
   Average interest rate....        -          -        -        -       -      3.80%      3.80%        -        -        -
</TABLE>

-----------------------
* The interest rates for variable rate bank and other loans are calculated based
on the year-end indices.

              The following table provides information regarding our foreign
currency-sensitive financial instruments and transactions, which consist of
deposits with banks, cash and cash equivalents, short and long-term debt
obligations and capital commitments as of December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                                       AS OF DECEMBER 31,  AS OF DECEMBER 31,
                                                  EXPECTED MATURITY DATE                     2002                 2001
                                ------------------------------------------------------ ------------------  ------------------
                                                                                         TOTAL              TOTAL
                                                                                        RECORDED    FAIR   RECORDED  FAIR
                                 2003       2004     2005     2006   2007   THEREAFTER   AMOUNT     VALUE   AMOUNT   VALUE
                                 ----       ----     ----     ----   ----   ----------   ------     -----   ------   -----
                                                  (RMB EQUIVALENT IN MILLIONS, EXCEPT INTEREST RATES)
<S>                             <C>         <C>      <C>      <C>    <C>    <C>         <C>         <C>    <C>       <C>
On-balance sheet financial
  instruments:
Deposits with banks:
  in U.S. dollars.............    539          -        -      -      -         -            539      539     2,604   2,604
  in Hong Kong dollars........    132          -        -      -      -         -            132      132       130     130
Cash and cash equivalents:
  in U.S. dollars.............  2,574          -        -      -      -         -          2,574    2,574     2,505   2,505
  in Hong Kong dollars........    767          -        -      -      -         -            767      767     1,068   1,068
Debts:
  Fixed rate bank and other
  loans (U.S. dollar).........    230        144       62      -      -         -            436      446       413     436
     Average interest rate...    6.88%      6.56%    5.29%     -      -         -           6.55%       -      7.50%      -
  Variable rate bank and other
  loans (U.S.dollar)(1).......     69          -        -      -      -         -             69       69        79      79
    Average interest rate.....   3.68%         -        -      -      -         -           3.68%       -      7.58%      -
</TABLE>

                                      -76-

<PAGE>

<TABLE>
<CAPTION>
                                                                                       AS OF DECEMBER 31,  AS OF DECEMBER 31,
                                                  EXPECTED MATURITY DATE                     2002                 2001
                                ------------------------------------------------------ ------------------  -----------------
                                                                                         TOTAL              TOTAL
                                                                                        RECORDED    FAIR   RECORDED  FAIR
                                 2003       2004     2005     2006   2007   THEREAFTER   AMOUNT     VALUE   AMOUNT   VALUE
                                 ----       ----     ----     ----   ----   ----------   ------     -----   ------   -----
                                                     (RMB EQUIVALENT IN MILLIONS, EXCEPT INTEREST RATES)
<S>                             <C>        <C>      <C>       <C>    <C>    <C>         <C>        <C>     <C>       <C>
Fixed rate notes (U.S.
  dollar).....................     -       4,961        -      -      -             -      4,961    5,418     4,956   5,375
    Average interest rate.....     -        7.88%       -      -      -             -       7.88%       -      7.88%      -
Convertible notes (U.S.
  dollar).....................     -           -    5,711      -      -             -      5,711    5,576     5,708   5,400
    Average interest rate.....     -           -     2.25%     -      -             -       2.25%       -      2.25%      -
Deferred payable(2)...........     -           -        -      -      -        15,176     15,176   15,176         -       -
    Average interest rate.....     -           -        -      -      -          3.80%      3.80%       -         -       -

Off-balance sheet commitments
  Capital commitments
  authorized and contracted
  for in U.S. dollar..........    48           -        -      -      -             -         48       48       469     469
</TABLE>

-----------------------
(1)  The interest rates for variable rate bank and other loans are calculated
     based on the year-end indices.

(2)  Pursuant to our agreement with China Mobile Communications Corporation and
     China Mobile Hong Kong (BVI) Limited for our acquisition of the eight
     regional mobile telecommunications companies in July 2002, we have the
     option to pay the deferred payable in either U.S. dollars, Hong Kong
     dollars or Renminbi.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

              Not Applicable.

                                    PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

              Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHT OF SECURITY HOLDERS AND USE OF
         PROCEEDS.

              None.

ITEM 15. CONTROLS AND PROCEDURES.

              Our Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934, as
amended) within 90 days of the date of this Form 20-F, have concluded that, as
of such date, the Company's disclosure controls and procedures were effective to
ensure that material information relating to the Company was made known to them
by others within the Company particularly during the period in which this Form
20-F was being prepared.

              There were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date our Chief Executive Officer and Chief Financial Officer
completed their evaluation, nor were there any significant deficiencies or
material weaknesses in the Company's internal controls requiring corrective
actions.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

          Not applicable.

                                      -77-

<PAGE>

ITEM 16B. CODE OF ETHICS.

          Not applicable.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

ITEM 16.  Not applicable.

ITEM 17.  FINANCIAL STATEMENTS.

              The Company has elected to provide the financial statements and
related information specified in Item 18 in lieu of Item 17.

ITEM 18.  FINANCIAL STATEMENTS.

              The following financial statements are filed as part of this
annual report.

<TABLE>
<S>                                                                                                 <C>
CHINA MOBILE (HONG KONG) LIMITED:

Index to consolidated financial statements....................................................       F-1

Independent auditors' report..................................................................       F-2

Consolidated statements of income for each of the three years ended December 31,
     2000, 2001 and 2002......................................................................       F-3

Consolidated balance sheets for each of the three years ended December 31, 2000,
     2001 and 2002............................................................................       F-5

Consolidated statements of cash flows for each of the three years ended
     December 31, 2000, 2001 and 2002.........................................................       F-7

Consolidated statements of shareholders' equity for each of the three years ended
     December 31, 2000, 2001 and 2002.........................................................      F-11

Notes to the accounts.........................................................................      F-12
</TABLE>

ITEM 19.  EXHIBITS.

        (a)   See Item 18 for a list of the financial statements filed as part
              of this annual report.

        (b)   Exhibits to this annual report:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
  1.1            Memorandum and Articles of Association (as amended).(6)

  2.1            We agree to provide the Securities and Exchange Commission, upon request, copies of instruments
                 defining the rights of holders of our long-term debt.

  2.2            Guarantee from China Mobile Communications Corporation for the RMB 5 billion guaranteed bonds due
                 2011 issued by Guangdong Mobile.(6)

  2.3            Letter of Guarantee from China Mobile Communications Corporation for the RMB 3 billion guaranteed
                 bonds due 2007 and RMB 5 billion guaranteed bonds due 2017, both issued by Guangdong Mobile in
                 2002 (with English translation).

  4.1            Trademark License Agreement, dated July 18, 2002, between China Mobile Communications Corporation
                 and China Mobile (Hong Kong) Limited (with English translation).
</TABLE>

                                      -78-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
  4.2            Tax Indemnity dated July 1, 2002 between China Mobile Hong Kong (BVI) Limited, China Mobile (Hong
                 Kong) Limited and China Mobile Communications Corporation.

  4.3            Amendment Letter dated June 18, 2002 between China Mobile (Hong Kong) Limited, Vodafone Group Plc
                 and Vodafone Holdings.

  4.4            Supplemental Agreement relating to Frequency Spectrum/Numbering Resources Usage Agreement, Sharing
                 Agreement of Inter-provincial Long Distance Transmission Line Leasing Fee, Inter-provincial
                 Interconnection and Domestic and International Roaming Settlement Agreement, Agreement on
                 "Shenzhouxing" Roaming Settlement and Sharing of Revenue From Sales of Top-Off Cards From Network
                 Operators Other Than Their Home Network Operators, and Supplemental Agreement to Agreement on
                 "Shenzhouxing" Roaming Settlement and Sharing of Revenue from Sales And Value-Adding of Top-Off
                 Cards from Network Operators Other Than Their Home Network Operators dated April 29, 2002 between
                 China Mobile Communications Corporation, China Mobile (Hong Kong) Limited and the eight regional
                 mobile communications companies (Anhui Mobile Communication Company Limited, Jiangxi Mobile
                 Communication Company Limited, Chongqing Mobile Communication Company Limited, Sichuan Mobile
                 Communication Company Limited, Hubei Mobile Communication Company Limited, Hunan Mobile
                 Communication Company Limited, Shaanxi Mobile Communication Company Limited, and Shanxi Mobile
                 Communication Company Limited) (with English translation).

  4.5            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Anhui
                 Mobile Communication Company Limited and Anhui Communication Service Company (with English
                 translation).

  4.6            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Jiangxi Mobile Communication Company Limited and Jiangxi Communication Service Company (with
                 English translation).

  4.7            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Chongqing Mobile Communication Company Limited and Chongqing Communication Service Company (with
                 English translation).

  4.8            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Sichuan Mobile Communication Company Limited and Sichuan Communication Service Company (with
                 English translation).

  4.9            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Hubei
                 Mobile Communication Company Limited and Hubei Communication Service Company (with English
                 translation).

 4.10            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Hunan
                 Mobile Communication Company Limited and Hunan Communication Service Company (with English
                 translation).

 4.11            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Shaanxi Mobile Communication Company Limited and Shaanxi Communication Service Company (with
                 English translation).

 4.12            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Shanxi
                 Mobile Communication Company Limited and Shanxi Communication Service Company (with English
                 translation).

 4.13            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Anhui Mobile
                 Communication Company Limited and Anhui Communication Service Company (with English translation).
</TABLE>

                                      -79-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.14            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Jiangxi Mobile
                 Communication Company Limited and Jiangxi Communication Service Company (with English
                 translation).

 4.15            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Chongqing
                 Mobile Communication Company Limited and Chongqing Communication Service Company (with English
                 translation).

 4.16            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Sichuan Mobile
                 Communication Company Limited and Sichuan Communication Service Company (with English
                 translation).

 4.17            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Hubei Mobile
                 Communication Company Limited and Hubei Communication Service Company (with English translation).

 4.18            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Hunan Mobile
                 Communication Company Limited and Hunan Communication Service Company (with English translation).

 4.19            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Shaanxi Mobile
                 Communication Company Limited and Shaanxi Communication Service Company (with English
                 translation).

 4.20            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Shanxi Mobile
                 Communication Company Limited and Shanxi Communication Service Company (with English translation).

 4.21            Telecommunications Services Agreement dated April 10, 2002 between Anhui Mobile Communication
                 Company Limited and Anhui Communication Service Company (with English translation).

 4.22            Telecommunications Services Agreement dated April 10, 2002 between Jiangxi Mobile Communication
                 Company Limited and Jiangxi Communication Service Company (with English translation).

 4.23            Telecommunications Services Agreement dated April 10, 2002 between Chongqing Mobile Communication
                 Company Limited and Chongqing Communication Service Company (with English translation).

 4.24            Telecommunications Services Agreement dated April 27, 2002 between Sichuan Mobile Communication
                 Company Limited and Sichuan Communication Service Company (with English translation).

 4.25            Telecommunications Services Agreement dated April 10, 2002 between Hubei Mobile Communication
                 Company Limited and Hubei Communication Service Company (with English translation).

 4.26            Telecommunications Services Agreement dated April 10, 2002 between Hunan Mobile Communication
                 Company Limited and Hunan Communication Service Company (with English translation).

 4.27            Telecommunications Services Agreement dated April 10, 2002 between Shaanxi Mobile Communication
                 Company Limited and Shaanxi Communication Service Company (with English translation).

 4.28            Telecommunications Services Agreement dated April 10, 2002 between Shanxi Mobile Communication
                 Company Limited and Shanxi Communication Service Company (with English translation).
</TABLE>

                                      -80-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.29            Service Agreement for Supply Installation and Maintenance of Steel Towers dated May 8, 2002
                 between China Mobile (Hong Kong) Limited and Hubei Communication Services Company (with English
                 translation).

 4.30            Co-operation Framework Agreement in respect of Indirect Loan dated May 10, 2002 between China
                 Mobile Communications Corporation and China Mobile (Hong Kong) Limited (with English translation).

 4.31            Trademark License Agreement, dated April 24, 2002, between China Mobile Communications Corporation
                 and China Mobile (Hong Kong) Limited. (7)

 4.32            Conditional Sale and Purchase Agreement, dated May 16, 2002, among China Mobile Hong Kong (BVI)
                 Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(7)

 4.33            Subscription Agreement, dated May 16, 2002, among Vodafone Group Plc, Vodafone Holdings (Jersey)
                 Limited and China Mobile (Hong Kong) Limited. (7)

 4.34            Prepaid services agreement dated May 11, 2001, between China Mobile (Hong Kong) Limited and China
                 Mobile Communications Corporation.(6)

 4.35            Inter-Provincial Long-Distance Transmission Leased Line Fee Sharing Agreement, dated May 5, 2000,
                 between China Mobile Communications Corporation and China Telecom (Hong Kong) Limited. (4)

 4.36            Inter-Provincial Network Interconnection, Domestic and International Roaming and Settlement
                 Agreement, dated May 5, 2000, between China Mobile Communications Corporation and China Telecom
                 (Hong Kong) Limited. (4)

 4.37            Tenancy Agreement, dated June 7, 2000, between Fu Hao Properties Limited and China Telecom (Hong
                 Kong) Limited.(4)

 4.38            Agreement Regarding the Roaming Settlement of "Shenzhouxing" Prepaid Services "Shenzhouxing" and
                 Revenues Sharing for Sales of Stored Value for Stored Value Cards, dated October 4, 2000, between
                 China Mobile Communications Corporation and China Mobile (Hong Kong) Limited.(1)

 4.39            Contract on Termination of the Trademark Licensing, dated September 15, 2000, between China
                 Telecommunications Corporation and China Mobile (Hong Kong) Limited.(1)

 4.40            Building Leasing and Property Management Agreement, dated September 18, 2000, between Beijing
                 Mobile and Beijing Communications Service Company ("Beijing Service").(1)

 4.41            Building Leasing and Property Management Agreement, dated September 18, 2000, between Beijing
                 Mobile and Beijing Service.(1)

 4.42            Agreement on Mobile Communications Equipment Maintenance and Modulation, dated September 18, 2000,
                 between Beijing Mobile and Beijing Huarui Wireless Communications Equipment Installation Company
                 ("Beijing Huarui").(1)

 4.43            Agreement on Communications Projects Design and Construction, dated September 18, 2000, between
                 Beijing Mobile and Beijing Huarui.(1)

 4.44            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Beijing Mobile and Beijing Service.(1)

 4.45            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Beijing Mobile and Beijing Service.(1)

 4.46            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Beijing Mobile and Beijing Service.(1)
</TABLE>

                                      -81-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.47            Agreement on Mobile Communications Equipment Maintenance, dated September 20, 2000, between
                 Shanghai Mobile and Shanghai Long-distance Telecommunications Engineering Company ("Shanghai
                 Engineering").(1)

 4.48            Agreement on Contracting Mobile Communications Projects, dated September 20, 2000, between
                 Shanghai Mobile and Shanghai Engineering.(1)

 4.49            Building Leasing and Property Management Agreement, dated September 20, 2000, between Shanghai
                 Mobile and Shanghai Communications Service Company ("Shanghai Service").(1)

 4.50            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Shanghai Mobile and Shanghai Service.(1)

 4.51            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shanghai Mobile and Shanghai Service.(1)

 4.52            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Shanghai Mobile and Shanghai Service.(1)

 4.53            Building Leasing Agreement, dated August 1, 2000, between Tianjin Mobile and Tianjin
                 Communications Service Company ("Tianjin Service").(1)

 4.54            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Tianjin Mobile and Tianjin Service.(1)

 4.55            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Tianjin Mobile and Tianjin Service.(1)

 4.56            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Tianjin Mobile and Tianjin Service.(1)

 4.57            Building Leasing and Property Management Agreement, dated August 1, 2000, between Hebei Mobile and
                 Hebei Communications Service Company ("Hebei Service").(1)

 4.58            Agreement on the Sales and Maintenance of Masts and Maintenance of Antennas and Feeder Lines,
                 dated August 1, 2000, between Hebei Mobile and Hebei Provincial Posts and Telecommunications
                 Equipment and Machinery Plant.(1)

 4.59            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Hebei Mobile and Hebei Service.(1)

 4.60            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Hebei Mobile and Hebei Service.(1)

 4.61            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Hebei Mobile and Hebei Service.(1)

 4.62            Building Leasing and Property Management Agreement, dated August 10, 2000, between Liaoning Mobile
                 and Liaoning Communications Service Company ("Liaoning Service").(1)

 4.63            Agreement on Communications Equipment Maintenance, dated September 8, 2000, between Liaoning
                 Mobile and Liaoning Provincial Posts and Telecommunications Engineering Bureau ("Liaoning
                 Engineering").(1)

 4.64            Agreement on Mobile Communications Projects Construction, dated September 8, 2000, between
                 Liaoning Mobile and Liaoning Engineering.(1)

 4.65            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Liaoning Mobile and Liaoning Service.(1)
</TABLE>

                                      -82-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.66            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Liaoning Mobile and Liaoning Service.(1)

 4.67            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Liaoning Mobile and Liaoning Service.(1)

 4.68            Building Leasing and Property Management Agreement, dated September 1, 2000, between Shandong
                 Mobile and Shandong Communications Service Company ("Shandong Service").(1)

 4.69            Agreement on Contracting Mobile Communications Projects, dated September 1, 2000, between Shandong
                 Mobile and Shandong Mobile Communications Engineering Bureau.(1)

 4.70            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Shandong Mobile and Shandong Service. (1)

 4.71            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shandong Mobile and Shandong Service. (1)

 4.72            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Shandong Mobile and Shandong Service.(1)

 4.73            Building Lease Agreement, dated August 26, 2000, between Guangxi Mobile and Guangxi Communications
                 Service Company ("Guangxi Service").(1)

 4.74            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Guangxi Mobile and Guangxi Service.(1)

 4.75            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Guangxi Mobile and Guangxi Service.(1)

 4.76            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Guangxi Mobile and Guangxi Service.(1)

 4.77            Strategic Investor Placing Agreement among China Mobile (Hong Kong) Limited, Vodafone Group Plc,
                 China International Capital Corporation, Goldman Sachs (Asia) L.L.C. and Merrill Lynch Far East
                 Limited.(1)

 4.78            Syndicated loan agreement for RMB 7,500,000,000 among China Mobile (Shenzhen) Limited,
                 Construction Bank of China, Bank of China, State Development Bank, Agriculture Bank of China,
                 Industrial and Commercial Bank of China, Bank of Communications, Hong Kong and Shanghai Banking
                 Corporation Ltd., China Merchants Bank and Construction Bank of China, Shenzhen Branch, dated
                 October 7, 2000.(1)

 4.79            Syndicated loan agreement for RMB 5,000,000,000 among China Mobile (Shenzhen) Limited,
                 Construction Bank of China, Bank of China, State Development Bank, Agriculture Bank of China,
                 Industrial and Commercial Bank of China, Bank of Communications, Hong Kong & Shanghai Banking
                 Corporation Ltd., China Merchants Bank and Construction Bank of China, Shenzhen Branch, dated
                 October 7, 2000.(1)

 4.80            Conditional Sale and Purchase Agreement, dated October 4, 2000, among China Mobile Communications
                 Corporation, China Mobile Hong Kong (BVI) Limited and China Mobile (Hong Kong) Limited.(1)

 4.81            Conditional Sale and Purchase Agreement, dated October 4, 1999, among China Telecom Hong Kong
                 (BVI) Limited, China Telecom (Hong Kong) Group Limited and China Telecom (Hong Kong) Limited.(2)
</TABLE>

                                      -83-

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.82            Agreement Regarding Provincial Network Interconnection, Roaming and Settlement of Account, dated
                 October 8, 1999, between China Telecom (Hong Kong) Limited and China Mobile (Hong Kong) Limited.(2)

 4.83            Agreement Regarding the Use of Frequency/Number Resources, dated October 8, 1999, between China
                 Telecom (Hong Kong) Limited and China Mobile (Hong Kong) Limited.(2)

 4.84            Agreement Regarding Network Interconnection and Settlement of Account, dated October 8, 1999,
                 between Guangdong Mobile and Guangdong Posts and Telecommunications Administration ("PTA").(2)

 4.85            Agreement Regarding Network Interconnection and Settlement of Account, dated October 5, 1999,
                 between Zhejiang Mobile and Zhejiang PTA.(2)

 4.86            Agreement Regarding Network Interconnection and Settlement of Account, dated October 8, 1999,
                 between Jiangsu Mobile and Jiangsu PTA.(2)

 4.87            Agreement Regarding Network Interconnection and Settlement of Account, dated August 30, 1999,
                 between Fujian Mobile Communication Bureau and Fujian PTA.(2)

 4.88            Synchronous Clock Port Leasing Agreement, dated August 30, 1999, between Fujian Mobile
                 Communication Bureau and Fujian PTA.(2)

 4.89            Building and Facilities Leasing Agreement, dated August 30, 1999, between Fujian Mobile and Fujian
                 PTA.(2)

 4.90            Building and Facilities Leasing Agreement (leasing to PTA), dated August 30, 1999, between Fujian
                 Mobile Communication Bureau and Fujian PTA.(2)

 4.91            Building and Facility Leasing Agreement, dated September 25, 1999, between Fujian Mobile and
                 Fujian Xunjie Communications Technical Services Company ("Xunjie").(2)

 4.92            Agreement Regarding Network Interconnection and Settlement of Account, dated August 20, 1999,
                 between Henan Mobile and Henan PTA.(2)

 4.93            Synchronous Clock Port Leasing Agreement, dated August 19, 1999, between Henan Mobile and Henan
                 PTA.(2)

 4.94            Building and Facilities Leasing Agreement, dated August 19, 1999, between Henan Mobile and Henan
                 PTA.(2)

 4.95            Agreement Regarding Network Interconnection and Settlement of Account, dated August 20, 1999,
                 between Hainan Mobile and Hainan PTA.(2)

 4.96            Building and Facilities Leasing Agreement, dated August 20, 1999, between Hainan Mobile and Hainan
                 PTA.(2)

 4.97            Real Estates Leasing Agreement, dated September 24, 1999, between Hainan Mobile and Hainan
                 Communication Service Company ("Hainan Service").(2)

 8.1             List of major subsidiaries.
</TABLE>

---------------
(1) Incorporated by reference to our Registration Statement on Form F-3 (File
    No. 333-47256), filed with the Securities and Exchange Commission on October
    30, 2000.

(2) Incorporated by reference to our Registration Statement on Form F-3 (File
    No. 333-10956), filed with the Securities and Exchange Commission on October
    30, 1999.

(3) Incorporated by reference to our Registration Statement on Form F-1 (File
    No. 333-7634), filed with the Securities and Exchange Commission on
    September 29, 1997.

(4) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 1999 (File No. 1-14696), filed with the Securities
    and Exchange Commission on June 20, 2000.

                                      -84-

<PAGE>

(5) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 1998 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 25, 1999.

(6) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 2000 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 26, 2001.

(7) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 2001 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 13, 2002.

                                      -85-

<PAGE>

                                   SIGNATURES

              The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

                           CHINA MOBILE (HONG KONG) LIMITED

                           By:  /s/ WANG Xiaochu
                                --------------------------------------------
                                Name: Wang Xiaochu
                                Title: Chairman and Chief Executive Officer

Date: June 17, 2003

                                      -86-

<PAGE>

                                 CERTIFICATIONS

              I, WANG Xiaochu, certify that:

              1. I have reviewed this annual report on Form 20-F of China Mobile
(Hong Kong) Limited;

              2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

              3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

              4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:

                 a.     designed such disclosure controls and procedures to
                        ensure that material information relating to the
                        registrant, including its consolidated subsidiaries, is
                        made known to us by others within those entities,
                        particularly during the period in which this annual
                        report is being prepared;

                 b.     evaluated the effectiveness of the registrant's
                        disclosure controls and procedures as of a date within
                        90 days prior to the filing date of this annual report
                        (the "Evaluation Date"); and

                 c.     presented in this annual report our conclusions about
                        the effectiveness of the disclosure controls and
                        procedures based on our evaluation as of the Evaluation
                        Date;

              5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

                 a.     all significant deficiencies in the design or operation
                        of internal controls which could adversely affect the
                        registrant's ability to record, process, summarize and
                        report financial data and have identified for the
                        registrant's auditors any material weaknesses in
                        internal controls; and

                 b.     any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the registrant's internal controls; and

              6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

                                 /s/ WANG Xiaochu
                                 -----------------------------------------------
                                 Name:  WANG Xiaochu
                                 Title: Chairman and Chief Executive Officer

Date: June 17, 2003

                                      -84-

<PAGE>

              I, XUE Taohai, certify that:

              1.  I have reviewed this annual report on Form 20-F of China
Mobile (Hong Kong) Limited;

              2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

              3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this annual report;

              4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:

                 a.     designed such disclosure controls and procedures to
                        ensure that material information relating to the
                        registrant, including its consolidated subsidiaries, is
                        made known to us by others within those entities,
                        particularly during the period in which this annual
                        report is being prepared;

                 b.     evaluated the effectiveness of the registrant's
                        disclosure controls and procedures as of a date within
                        90 days prior to the filing date of this annual report
                        (the "Evaluation Date"); and

                 c.     presented in this annual report our conclusions about
                        the effectiveness of the disclosure controls and
                        procedures based on our evaluation as of the Evaluation
                        Date;

              5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):

                 a.     all significant deficiencies in the design or operation
                        of internal controls which could adversely affect the
                        registrant's ability to record, process, summarize and
                        report financial data and have identified for the
                        registrant's auditors any material weaknesses in
                        internal controls; and

                 b.     any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the registrant's internal controls; and

              6. The registrant's other certifying officers and I have indicated
in this annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

                            /s/ XUE Taohai
                            ----------------------------------------------------
                            Name:  XUE Taohai
                            Title: Vice President and Chief Financial Officer

Date: June 17, 2003

                                      -88-
<PAGE>

[KPMG LOGO]

                        China Mobile (Hong Kong) Limited

                      For the year ended December 31, 2002

                        Consolidated Financial Statements

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements

Index to Consolidated Financial Statements

<TABLE>
<CAPTION>
                                                                                                  PAGE NO.
<S>                                                                                             <C>
Independent auditors' report                                                                             F-2

Consolidated statements of income for each of the three years ended
  December 31, 2000, 2001 and 2002                                                                 F-3 - F-4

Consolidated balance sheets as of December 31, 2001 and 2002                                       F-5 - F-6

Consolidated statements of cash flows for each of the three years ended
  December 31, 2000, 2001 and 2002                                                                F-7 - F-10

Consolidated statements of shareholders' equity for each of the three
  years ended December 31, 2000, 2001 and 2002                                                          F-11

Notes to consolidated financial statements                                                      F-12 - F-110
</TABLE>

                                       F-1

<PAGE>

[KPMG LOGO]

Independent Auditors' Report

The Board of Directors and Shareholders of
China Mobile (Hong Kong) Limited:

We have audited the accompanying consolidated balance sheets of China Mobile
(Hong Kong) Limited and subsidiaries (the "Group") as of December 31, 2001 and
2002 and the related consolidated statements of income, shareholders' equity and
cash flows for each of the years in the three-year period ended December 31,
2002, all expressed in Renminbi. These consolidated financial statements are the
responsibility of the Group's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the United States of America and Hong Kong. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of China Mobile (Hong
Kong) Limited and subsidiaries as of December 31, 2001 and 2002 and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2002 in conformity with accounting principles
generally accepted in Hong Kong.

Accounting principles generally accepted in Hong Kong vary in certain material
respects from accounting principles generally accepted in the United States of
America. Application of accounting principles generally accepted in the United
States of America would have affected results of operations for each of the
years in the three-year period ended December 31, 2002 and shareholders' equity
as of December 31, 2001 and 2002 to the extent summarized in Note 33 to the
consolidated financial statements.

The accompanying consolidated financial statements as of and for the year ended
December 31, 2002 have been translated into United States dollars solely for the
convenience of the reader. We have audited the translation, and in our opinion,
the consolidated financial statements expressed in Renminbi have been translated
into United States dollars on the basis set forth in Note 1 to the consolidated
financial statements.

KPMG
Hong Kong

March 18, 2003

                                       F-2

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Statements of Income
(Amounts in millions, except share data)

<TABLE>
<CAPTION>
                                                                                     Year ended December 31,
                                                                ---------------------------------------------------------------
                                                Note             2000               2001               2002               2002
                                                                  RMB               RMB                RMB                 US$
<S>                                             <C>             <C>               <C>                <C>                 <C>
OPERATING REVENUE

Usage fees                                                      46,287             73,458             93,272             11,269
Monthly fees                                                     9,623             14,085             16,901              2,042
Connection fees                                                  2,213                711                  -                  -
Other operating revenue                                          6,861             12,077             18,388              2,221
                                                                ------            -------            -------             ------

TOTAL OPERATING REVENUE                           3             64,984            100,331            128,561             15,532
                                                                ------            -------            -------             ------

OPERATING EXPENSES

Leased lines                                                     5,501              5,005              5,287                639
Interconnection                                                  8,329             13,055             12,975              1,568
Depreciation                                                     9,759             17,664             26,827              3,241
Personnel                                                        3,991              5,325              6,757                816
Other operating expenses                                        10,578             18,270             27,919              3,373
                                                                ------            -------            -------             ------

TOTAL OPERATING EXPENSES                          4             38,158             59,319             79,765              9,637
                                                                ======            =======            =======             ======

OPERATING PROFIT                                                26,826             41,012             48,796              5,895

AMORTIZATION OF GOODWILL                         14                  -                  -               (936)              (113)

WRITE-DOWN AND WRITE-OFF OF ANALOG
  NETWORK EQUIPMENT                               5             (1,525)                 -                  -                  -

OTHER NET INCOME                                  6                915              1,594              1,686                204

NON-OPERATING NET (EXPENSES) / INCOME             7                 (5)                (6)               571                 69

INTEREST INCOME                                                  1,006                857                713                 86

FINANCE COSTS                                    20               (824)            (1,740)            (1,852)              (224)
                                                                ------            -------            -------             ------

PROFIT BEFORE TAX                                               26,393             41,717             48,978              5,917

INCOME TAX                                        8             (8,366)           (13,703)           (16,234)            (1,961)
                                                                ------            -------            -------             ------

PROFIT AFTER TAX                                                18,027             28,014             32,744              3,956

MINORITY INTERESTS                                                   -                  1                 (2)                 -
                                                                ------            -------            -------             ------

PROFIT ATTRIBUTABLE TO SHAREHOLDERS                             18,027             28,015             32,742              3,956
                                                                ======            =======            =======             ======

DIVIDENDS ATTRIBUTABLE TO THE YEAR:
Final dividend proposed after the balance
  sheet date                                      9                  -                  -              6,678                807
                                                                ======            =======            =======             ======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Statements of Income (Continued)
(Amounts in millions, except share data)

<TABLE>
<CAPTION>
                                                                          Year ended December 31,
                                                   -------------------------------------------------------------------
                                        Note           2000                2001               2002              2002
                                                        RMB                 RMB                RMB               US$
<S>                                     <C>        <C>                 <C>                <C>                 <C>
BASIC NET PROFIT PER SHARE              2(u)       RMB      1.25       RMB      1.51      RMB      1.71       US$ 0.21
                                                   =============       =============      =============       ========

WEIGHTED AVERAGE
  NUMBER OF SHARES USED
  IN CALCULATING BASIC NET
  PROFIT PER SHARE
  (THOUSANDS)                                         14,394,313          18,605,371         19,151,322
                                                   =============       =============      =============

DILUTED NET PROFIT PER
  SHARE                                 2(u)       RMB      1.25       RMB      1.51      RMB      1.71       US$ 0.21
                                                   =============       =============      =============       ========

WEIGHTED AVERAGE
  NUMBER OF SHARES USED
  IN CALCULATING DILUTED
  NET PROFIT PER SHARE
  (THOUSANDS)                                         14,409,503          18,698,023         19,243,050
                                                   =============       =============      =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-4

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Balance Sheets
(Amounts in millions)

<TABLE>
<CAPTION>
                                                                       December 31,
                                                           ------------------------------------
                                                 Note        2001           2002          2002
                                                             RMB            RMB            US$
<S>                                              <C>       <C>            <C>            <C>
ASSETS

Current assets
  Cash and cash equivalents                                 21,821         32,575         3,935
  Deposits with banks                                       14,970         11,069         1,337
  Accounts receivable                             10         5,728          6,066           733
  Other receivables                               11         1,189          1,465           177
  Inventories                                                1,029          1,586           192
  Deferred tax - current portion                  17         1,362          3,116           377
  Prepayments and other current assets                       1,571          2,059           249
  Amount due from ultimate holding
     company                                      12           503          1,282           155
                                                           -------        -------        ------

  Total current assets                                      48,173         59,218         7,155

Fixed assets                                      13       105,208        165,409        19,984
Construction in progress                                    19,981         23,013         2,780
Goodwill                                          14             -         36,522         4,412
Interest in associates                            15            16             16             2
Investment securities                             16            77             77             9
Deferred tax - long term portion                  17           114            455            54
Deferred expenses                                 18           180            190            23
                                                           -------        -------        ------

TOTAL ASSETS                                               173,749        284,900        34,419
                                                           =======        =======        ======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-5

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Balance Sheets (Continued)
(Amounts in millions)

<TABLE>
<CAPTION>
                                                                              December 31,
                                                                  ----------------------------------
                                                      Note          2001         2002          2002
                                                                    RMB           RMB           US$
<S>                                                   <C>         <C>           <C>           <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable                                     19          11,317        19,251        2,326
  Bills payable                                                     1,458         1,256          152
  Deferred revenue - current portion                   23           3,417         6,760          816
  Bank loans and other interest-bearing
    borrowings                                         20           4,531         8,132          982
  Taxes payable                                                     6,003         6,568          794
  Obligations under capital lease
    - current portion                                  21             908            68            8
 Amount due to immediate holding
   company                                             12               -           402           49
 Amount due to ultimate holding company                12             241         1,217          147
 Accrued expenses and other payables                   22          10,840        16,460        1,989
                                                                  -------       -------       ------

 Total current liabilities                                         38,715        60,114        7,263

Bank loans and other interest-bearing
  borrowings                                           20          21,591        36,348        4,391
Obligations under capital lease
  - long term portion                                  21             812             -            -
Amount due to immediate holding
  company                                              12               -        15,176        1,833
Deferred revenue - long term portion                   23             820           869          105
                                                                  -------       -------       ------

TOTAL LIABILITIES                                                  61,938       112,507       13,592

Minority interests                                                     32           191           23

SHAREHOLDERS' EQUITY                                              111,779       172,202       20,804
                                                                  -------       -------       ------

TOTAL LIABILITIES AND  SHAREHOLDERS' EQUITY                       173,749       284,900       34,419
                                                                  =======       =======       ======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-6

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Statements of Cash Flows
(Amounts in millions)

<TABLE>
<CAPTION>
                                                                                 Year ended December 31,
                                                                   ----------------------------------------------------
                                                                    2000           2001            2002          2002
                                                                     RMB           RMB             RMB            US$
<S>                                                                <C>           <C>             <C>            <C>
OPERATING ACTIVITIES
Profit before taxation                                             26,393         41,717          48,978         5,917
Adjustment for:
- Depreciation of fixed assets                                      9,759         17,664          26,827         3,241
- Write-down and write-off of analog network
  equipment                                                         1,525              -               -             -
- Amortization of goodwill                                              -              -             936           113
- Provision for interest in associates                                  -             30               -             -
- Profit on deemed disposal of a subsidiary                             -            (54)           (255)          (31)
- Loss on sale of fixed assets                                        126            275             205            25
- Write off of fixed assets                                             -              -              96            12
- Provision for doubtful accounts                                   1,346          1,737           1,749           211
- Amortization of deferred expenses                                    15             39              43             5
- Interest income                                                  (1,006)          (857)           (713)          (86)
- Interest expense and capital lease charges                          824          1,740           1,852           224
- Dividend income                                                     (26)           (43)            (25)           (3)
- Unrealized exchange loss, net                                        (2)             4               8             1
                                                                   ------        -------         -------        ------

OPERATING PROFIT BEFORE CHANGES IN WORKING
  CAPITAL                                                          38,954         62,252          79,701         9,629

Increase in inventories                                              (408)          (124)           (234)          (28)
Decrease in amount due from ultimate holding
  company                                                             409             54             765            92
Increase in accounts receivable                                      (985)          (213)           (733)          (89)
Decrease/(increase) in other receivables                               54          1,111            (234)          (28)
(Increase)/decrease in prepayments and other current
  assets                                                             (262)          (282)             91            11
Decrease in amounts due from related parties                        1,700              -               -             -
Increase/(decrease) in amount due to ultimate holding
  company                                                              14           (437)            450            54
Increase in amount due to immediate holding
  company                                                               -              -             402            49
Increase/(decrease) in accounts payable                             1,179         (1,724)          4,915           594
Decrease in amount due to related parties                          (1,696)             -               -             -
Increase in accrued expenses and other payables                     1,319          2,616             469            57
Increase in deferred revenue                                        1,123            583           2,370           286
                                                                   ------        -------         -------        ------

CASH GENERATED FROM OPERATIONS                                     41,401         63,836          87,962        10,627

Tax paid
- PRC income tax paid                                              (5,952)       (12,865)        (18,540)       (2,240)
                                                                   ------        -------         -------        ------

NET CASH FROM OPERATING ACTIVITIES CARRIED FORWARD                 35,449         50,971          69,422         8,387
                                                                   ------        -------         -------        ------
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-7

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Statements of Cash Flows (Continued)
(Amounts in millions)

<TABLE>
<CAPTION>
                                                                                       Year ended December 31,
                                                                            ----------------------------------------------
                                                                   Note      2000          2001        2002          2002
                                                                              RMB          RMB          RMB           US$
<S>                                                                <C>      <C>          <C>          <C>           <C>
NET CASH FROM OPERATING ACTIVITIES BROUGHT FORWARD                           35,449       50,971       69,422        8,387
                                                                            -------      -------      -------       ------
INVESTING ACTIVITIES
Payment of amount due to immediate holding company
  in respect of acquisition of subsidiaries                                       -       (4,136)           -            -
Payment for acquisition of subsidiaries (net of cash and
  cash equivalents acquired)                                       (b)      (67,299)           -      (28,733)      (3,471)
Capital expenditure                                                         (21,964)     (39,500)     (41,000)      (4,954)
Proceeds from sale of fixed assets                                              264          204          411           50
Proceeds from issuance of shares to minority interest
  by subsidiary, net of expenses                                                 17           69          412           50
(Increase)/decrease in deposits with banks                                   (3,881)      (2,766)       3,901          471
Interest received                                                               994          867          867          105
Dividends received from associate                                                 -           14           25            3
                                                                            -------      -------      -------       ------

NET CASH USED IN INVESTING ACTIVITIES                                       (91,869)     (45,248)     (64,117)      (7,746)
                                                                            -------      -------      -------       ------

FINANCING ACTIVITIES

Proceeds from issue of shares, net of expenses                               55,812            4        5,970          721
Proceeds from bank and other loans                                           12,736        5,407        6,955          840
Repayments of bank and other loans                                           (8,130)     (17,897)     (12,232)      (1,478)
Repayment of obligations under capital lease                                   (362)      (2,055)      (1,652)        (200)
Proceeds from issue of bonds                                                      -        5,000        8,000          967
Expenses on issue of bonds                                                        -          (55)         (53)          (6)
Proceeds from issue of convertible notes                                      5,708            -            -            -
Expenses on issue of convertible notes                                         (128)           -            -            -
Interest paid                                                                  (863)      (2,008)      (1,539)        (186)
                                                                            -------      -------      -------       ------

NET CASH FROM / (USED IN) FINANCING ACTIVITIES                               64,773      (11,604)       5,449          658
                                                                            =======      =======      =======       ======

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                          8,353       (5,881)      10,754        1,299

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                               19,349       27,702       21,821        2,636
                                                                            -------      -------      -------       ------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                     27,702       21,821       32,575        3,935
                                                                            =======      =======      =======       ======

ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS
Deposits with banks maturing within three months
  when placed                                                                 6,457        3,818        5,004          604
Cash and bank balances                                                       21,245       18,003       27,571        3,331
                                                                            -------      -------      -------       ------

                                                                             27,702       21,821       32,575        3,935
                                                                            =======      =======      =======       ======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-8

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Consolidated Statements of Cash Flows (Continued)
         (Amounts in millions)

(a)      ACQUISITION OF SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                Year ended December 31,
                                                           -----------------------------------
                                                             2000          2001          2002
                                                             RMB           RMB           RMB
<S>                                                        <C>            <C>          <C>
Net assets acquired:
Fixed assets                                                37,391             -        43,665
Construction in progress                                     5,104             -         7,024
Investment securities                                           35             -             -
Deferred tax                                                   723             -           619
Inventories                                                    213             -           323
Amount due from ultimate holding company                       874             -         1,544
Accounts receivable                                          2,656             -         1,206
Other receivables                                            1,790             -           344
Prepayments and other current assets                           510             -           579
Deposits with banks                                             96             -             -
Cash and cash equivalents                                    7,681             -         5,339
Bank and other loans                                        (4,241)            -        (4,342)
Bills payable                                                  (57)            -           (66)
Obligations under capital lease - current portion           (1,706)            -             -
Amount due to ultimate holding company                           -             -          (526)
Accounts payable                                            (4,926)            -        (3,849)
Accrued expenses and other payables                         (2,897)            -        (4,657)
Long-term bank and other loans                              (7,521)            -       (11,285)
Taxes payable                                               (1,436)            -        (1,395)
Obligations under capital lease - long-term portion         (1,305)            -             -
Deferred revenue                                            (1,039)            -        (1,022)
                                                           -------        ------       -------

                                                            31,945             -        33,501

Goodwill arising on acquisition                            239,540             -        37,458
                                                           -------        ------       -------

                                                           271,485             -        70,959
                                                           =======        ======       =======

Satisfied by: Cash consideration                            79,116             -        49,248
              Issue of ordinary shares                     192,369             -        21,711
                                                           -------        ------       -------

                                                           271,485             -        70,959
                                                           =======        ======       =======
</TABLE>

                                       F-9

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Consolidated Statements of Cash Flows (Continued)
         (Amounts in millions)

(b)      ANALYSIS OF NET OUTFLOW OF CASH AND CASH EQUIVALENTS IN RESPECT OF THE
         ACQUISITION OF SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                 Year ended December 31,
                                                           ------------------------------------
                                                            2000           2001         2002
                                                             RMB            RMB          RMB
<S>                                                        <C>            <C>          <C>
Cash consideration                                          79,116             -        49,248
Cash and cash equivalents acquired                          (7,681)            -        (5,339)
Amount due to immediate holding company                     (4,136)            -       (15,176)
                                                           -------        ------       -------

Net outflow of cash and cash equivalents in
 respect of acquisition of subsidiaries                     67,299             -        28,733
                                                           =======        ======       =======
</TABLE>

(c)      SIGNIFICANT NON-CASH TRANSACTIONS:

         The Group incurred payables of RMB10,270 and RMB1,190 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2002. On July 1, 2002, the
         Group issued new shares to China Mobile Hong Kong (BVI) Limited ("CMHK
         (BVI)") at HK$20,458 (RMB equivalent 21,711) respectively as part of
         the consideration for the acquisition of the entire issued share
         capital of Anhui Mobile (BVI) Limited ("Anhui Mobile BVI"), Jiangxi
         Mobile (BVI) Limited ("Jiangxi Mobile BVI"), Chongqing Mobile (BVI)
         Limited ("Chongqing Mobile BVI"), Sichuan Mobile (BVI) Limited
         ("Sichuan Mobile BVI"), Hubei Mobile (BVI) Limited ("Hubei Mobile
         BVI"), Hunan Mobile (BVI) Limited ("Hunan Mobile BVI"), Shaanxi Mobile
         (BVI) Limited ("Shaanxi Mobile BVI") and Shanxi Mobile Communication
         (BVI) Limited ("Shanxi Mobile BVI").

         The Group incurred payables of RMB8,679 and RMB1,337 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2001.

         The Group incurred payables of RMB5,555 and RMB1,005 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2000. In November 2000, the
         Group issued new shares to CMHK (BVI) at HK$181,412 (RMB equivalent
         192,369) as part of the consideration for the acquisition of Beijing
         Mobile (BVI) Limited ("Beijing Mobile BVI"), Shanghai Mobile (BVI)
         Limited ("Shanghai Mobile BVI"), Tianjin Mobile (BVI) Limited ("Tianjin
         Mobile BVI"), Hebei Mobile (BVI) Limited ("Hebei Mobile BVI"), Liaoning
         Mobile (BVI) Limited ("Liaoning Mobile BVI"), Shandong Mobile (BVI)
         Limited ("Shandong Mobile BVI") and Guangxi Mobile (BVI) Limited
         ("Guangxi Mobile BVI").

                                      F-10

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

Consolidated Statements of Shareholders' Equity
(Amounts in millions, except share data)

STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE YEARS:

<TABLE>
<CAPTION>
                                                                              Number of
                                                                               ordinary       Share     Share      Capital   General
                                                                                shares       capital   premium     Reserve   reserve
                                                                                               RMB       RMB         RMB       RMB
<S>                                                                        <C>               <C>       <C>        <C>        <C>
Shareholders' equity at January 1, 2000                                    13,706,287,021     1,467     99,345     (56,930)     72
Goodwill arising on acquisition of subsidiaries                                         -         -          -    (239,540)      -
Transfer from statements of income                                                      -         -          -           -       -
Shares issued under share option scheme                                         3,974,000         -         89           -       -
Issue of new shares to the professional and institutional
   investors                                                                1,115,643,845       119     56,694           -       -
Issue of consideration shares for acquisition of subsidiaries               3,779,407,375       400    191,969           -       -
Expenses incurred in connection with the issue of new shares to
   professional and institutional investors                                             -         -     (1,090)          -       -
Appropriation                                                                           -         -          -           -       -
                                                                           --------------    ------    -------    --------     ---

Shareholders' equity at December 31, 2000                                  18,605,312,241     1,986    347,007    (296,470)     72
                                                                           ==============    ======    =======    ========     ===

Shareholders' equity at January 1, 2001                                    18,605,312,241     1,986    347,007    (296,470)     72
Transfer from statements of income                                                      -         -          -           -       -
Shares issued under share option scheme                                            93,000         -          4           -       -
Appropriation                                                                           -         -          -           -       -
                                                                           --------------    ------    -------    --------     ---

Shareholders' equity at December 31, 2001                                  18,605,405,241     1,986    347,011    (296,470)     72
                                                                           ==============    ======    =======    ========     ===

Shareholders' equity at January 1, 2001                                    18,605,405,241     1,986    347,011    (296,470)     72
Transfer from statements of income                                                      -         -          -           -       -
Shares issued under share option scheme                                         2,100,000         -         24           -       -
Issue of new shares                                                           236,634,212        25      6,180           -       -
Issue of consideration shares for acquisition of subsidiaries                 827,514,446        88     21,623           -       -
Expenses incurred in connection with the issue of consideration
   shares                                                                               -         -       (259)          -       -
Appropriation                                                                           -         -          -           -       -
                                                                           --------------    ------    -------    --------     ---

Shareholders' equity at December 31, 2002                                  19,671,653,899     2,099    374,579    (296,470)     72
                                                                           ==============    ======    =======    ========     ===
</TABLE>

<TABLE>
<CAPTION>
                                                                                  PRC
                                                                               statutory     Retained
                                                                                reserves     earnings      Total
                                                                                   RMB          RMB         RMB
<S>                                                                            <C>           <C>         <C>
Shareholders' equity at January 1, 2000                                           5,727        7,411       57,092
Goodwill arising on acquisition of subsidiaries                                       -            -     (239,540)
Transfer from statements of income                                                    -       18,027       18,027
Shares issued under share option scheme                                               -            -           89
Issue of new shares to the professional and institutional
   investors                                                                          -            -       56,813
Issue of consideration shares for acquisition of subsidiaries                         -            -      192,369
Expenses incurred in connection with the issue of new shares to
   professional and institutional investors                                           -            -       (1,090)
Appropriation                                                                     6,916       (6,916)           -
                                                                               --------      -------     --------

Shareholders' equity at December 31, 2000                                        12,643       18,522       83,760
                                                                               ========      =======     ========

Shareholders' equity at January 1, 2001                                          12,643       18,522       83,760
Transfer from statements of income                                                    -       28,015       28,015
Shares issued under share option scheme                                               -            -            4
Appropriation                                                                     5,033       (5,033)           -
                                                                               --------      -------     --------

Shareholders' equity at December 31, 2001                                        17,676       41,504      111,779
                                                                               ========      =======     ========

Shareholders' equity at January 1, 2001                                          17,676       41,504      111,779
Transfer from statements of income                                                    -       32,742       32,742
Shares issued under share option scheme                                               -            -           24
Issue of new shares                                                                   -            -        6,205
Issue of consideration shares for acquisition of subsidiaries                         -            -       21,711
Expenses incurred in connection with the issue of consideration
   shares                                                                             -            -         (259)
Appropriation                                                                     7,038       (7,038)           -
                                                                               --------      -------     --------

Shareholders' equity at December 31, 2002                                        24,714       67,208      172,202
                                                                               ========      =======     ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-11

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION

         China Mobile (Hong Kong) Limited ("the Company") and its subsidiaries
         (hereinafter collectively referred to as the "Group") are principally
         engaged in the provision of cellular telephone and related services in
         Guangdong, Zhejiang, Jiangsu, Fujian, Henan, Hainan, Hebei, Liaoning,
         Shandong, Anhui, Jiangxi, Sichuan, Hubei, Hunan, Shaanxi and Shanxi
         provinces, Beijing, Shanghai, Tianjin and Chongqing municipalities, and
         Guangxi Zhuang Autonomous Region of the People's Republic of China
         ("PRC") and market their services under the "China Mobile" logo, which
         is a registered trademark owned by China Mobile Communications
         Corporation ("China Mobile"), a company incorporated in the PRC in July
         1999 to hold and operate the cellular telecommunications networks
         nationwide as a result of restructuring of the telecommunications
         industry in the PRC. The telecommunications operations in the PRC
         previously controlled by the Ministry of Information Industry ("MII")
         have been separated into four business lines: fixed line
         communications, mobile communications, paging services and satellite
         communications. Since then, the MII act exclusively as the industry
         regulator and are not involved in managing the day-to-day operations of
         telecommunications service providers in the PRC.

         Prior to the restructuring (as described below, the "Restructuring"),
         the Group's Total Access Communications Systems ("TACS") and Global
         System for Mobile Communications ("GSM") cellular networks in Guangdong
         were owned by Guangdong Mobile Communication Corporation (together with
         the successor wholly-owned foreign enterprise formed in connection with
         the Restructuring, "Guangdong Mobile"), an enterprise formed in
         September 1988 and wholly owned by the MII on behalf of the State.
         Prior to the Restructuring, the Group's GSM cellular network in
         Zhejiang was owned by Zhejiang GSM Mobile Communication Company Limited
         (together with the successor sino-foreign joint venture company formed
         in connection with the Restructuring, "Zhejiang Mobile"), a company
         formed in February 1996 and 98.55% owned by the Zhejiang Provincial
         Posts and Telecommunications Administrations ("PTA") ("Zhejiang PTA"),
         while the Group's TACS cellular networks in Zhejiang were owned and
         operated directly by the Zhejiang PTA.

                                      F-12

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Restructuring

         Pursuant to the Restructuring, the Company was established as a
         wholly-owned subsidiary of China Mobile Hong Kong (BVI) Limited ("CMHK
         (BVI)"), a company incorporated with limited liability in the British
         Virgin Islands. CMHK (BVI) is controlled by China Mobile (Hong Kong)
         Group Limited ("CMHKG"), which in turn is 51% owned by Telpo
         Communications (Group) Limited ("Telpo"), a Hong Kong company wholly
         owned by the MII, and as to 49% by the China Telecommunications
         Corporation (previously known as the Directorate General of
         Telecommunications, or the DGT). At December 31, 1999, the percentages
         of equity interests of CMHK (BVI), which in turn were owned by Telpo
         and DGT were changed to 57% and 43%, respectively. On May 12, 2000,
         China Mobile acquired a 100% controlling interest in CMHKG. As a result
         of this, China Mobile indirectly holds approximately 75% equity
         interest in the Company. Guangdong Mobile was formed as a wholly
         foreign-owned enterprise whereas Zhejiang Mobile was formed as a
         sino-foreign joint venture company. The Company is the sole equity
         owner in Guangdong Mobile and was initially the 99.63% joint venture
         partner in Zhejiang Mobile, with the remaining interests held by
         various local investors. The Company acquired the remaining 0.37%
         interest in Zhejiang Mobile in April 1999. Subsequent to the
         acquisition, Zhejiang Mobile became a wholly foreign-owned enterprise.

         In connection with the Restructuring and in anticipation of the initial
         offering of the Company's ordinary shares, the fixed assets of
         Guangdong Mobile and Zhejiang Mobile were revalued as of May 31, 1997,
         by a firm of independent valuers and approved by the China State-owned
         Assets Administration Bureau. The value of fixed assets of Guangdong
         Mobile and Zhejiang Mobile pursuant to the valuation, based on a
         depreciated replacement cost basis, was determined at RMB15,630. Upon
         the transfer of interests in Guangdong Mobile and Zhejiang Mobile by
         the MII and the DGT to the Company, 9,010,000,000 ordinary shares of
         HK$0.10 each were issued by the Company to CMHK (BVI) for consideration
         valued at RMB19,466. Such amount was based on the net asset value of
         Guangdong Mobile and Zhejiang Mobile at May 31, 1997, the effective
         date of the Restructuring, adjusted for additional earnings to
         September 26, 1997, the completion date of the Restructuring, of
         RMB1,132, which is reflected as capital reserve.

                                      F-13

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Equity offering

         Subsequent to the Restructuring, in October 1997, the Company completed
         an initial public offering (the "Offering") of an aggregate of
         2,770,788,000 ordinary shares. Net proceeds to the Company for the
         Offering, after deduction of offering expenses, were approximately
         RMB33,570.

         Acquisition of Jiangsu Mobile Communication Company Limited ("Jiangsu
         Mobile")

         Pursuant to the ordinary resolution passed by the Company's
         shareholders on June 3, 1998, the Company acquired the entire issued
         share capital of China Telecom Jiangsu Mobile (BVI) Limited ("Jiangsu
         Mobile BVI") from CMHK (BVI) by a total cash consideration of HK$22,475
         (RMB equivalent 24,120) (hereinafter referred to as the "First
         Acquisition").

         The only asset of Jiangsu Mobile BVI is its interest in the entire
         equity of Jiangsu Mobile. Subsequent to the First Acquisition, Jiangsu
         Mobile became a wholly foreign-owned enterprise.

         In connection with the First Acquisition, the fixed assets of Jiangsu
         Mobile were revalued as of December 31, 1997, by a firm of independent
         valuers and approved by the China State-owned Assets Administration
         Bureau. The value of fixed assets of Jiangsu Mobile pursuant to the
         valuation, based on a depreciated replacement cost basis, was
         determined at RMB7,879.

         Goodwill arising on the acquisition of Jiangsu Mobile BVI and Jiangsu
         Mobile (RMB15,622), being the excess of the cost of investments
         (RMB24,120) over the fair value of the Group's share of the separable
         net assets acquired (RMB8,498), was eliminated against reserves
         immediately on acquisition. The fair value of the Group's share of the
         separable net assets acquired was based on the net asset value of
         Jiangsu Mobile at December 31, 1997 (RMB8,009), adjusted for additional
         earnings to June 3, 1998, the completion date of the First Acquisition,
         of RMB489.

                                      F-14

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Acquisition of Fujian Mobile Communication Company Limited ("Fujian
         Mobile"), Henan Mobile Communication Company Limited ("Henan Mobile")
         and Hainan Mobile Communication Company Limited ("Hainan Mobile")

         Pursuant to an ordinary resolution passed by the Company's shareholders
         on November 11, 1999, the Company acquired the entire issued share
         capital of Fujian Mobile (BVI) Limited ("Fujian Mobile BVI"), Henan
         Mobile (BVI) Limited ("Henan Mobile BVI") and Hainan Mobile (BVI)
         Limited ("Hainan Mobile BVI") from CMHK (BVI) for a total consideration
         of HK$49,715 (RMB equivalent 52,953) (hereinafter referred to as the
         "Second Acquisition"). The consideration was satisfied by cash of
         HK$19,031 (RMB equivalent 20,268) and an allotment of 1,273,195,021
         ordinary shares of HK$0.10 each to CMHK (BVI) amounting to HK$30,684
         (RMB equivalent 32,685). The only assets of each of Fujian Mobile BVI,
         Henan Mobile BVI and Hainan Mobile BVI are their interests in the
         entire equity of Fujian Mobile, Henan Mobile and Hainan Mobile,
         respectively.

         In connection with the Second Acquisition, the fixed assets of Fujian
         Mobile, Henan Mobile and Hainan Mobile were revalued as of June 30,
         1999, by a firm of independent valuers and approved by the Ministry of
         Finance. The value of fixed assets of Fujian Mobile, Henan Mobile and
         Hainan Mobile pursuant to the valuation, based on a depreciated
         replacement cost basis, was determined at RMB10,684.

         Goodwill arising on the acquisition of Fujian Mobile, Henan Mobile and
         Hainan Mobile (RMB42,440), being the excess of the cost of investments
         (RMB52,953) over the fair value of the Group's share of the separable
         net assets acquired (RMB10,513), was eliminated against reserves
         immediately on acquisition. The fair value of the Group's share of the
         separable net assets acquired was based on the net assets of Fujian
         Mobile, Henan Mobile and Hainan Mobile at June 30, 1999 (RMB9,524),
         adjusted for additional earnings to November 11, 1999, the completion
         date of the Second Acquisition, of RMB989.

                                      F-15

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Equity offering and debt offering

         In order to finance the acquisition consideration, the Company
         completed an international offering of an aggregate of 644,804,000
         ordinary shares and debt offering with a principal amount of US$600
         with maturity due on November 2, 2004. Further, the Company issued
         1,273,195,021 consideration shares to CMHK (BVI), credited as fully
         paid as part of the acquisition consideration. Net proceeds to the
         Company for such equity offering and debt offering, after deduction of
         offering expenses and discount, were approximately RMB16,134 and
         RMB4,899, respectively.

         Acquisition of Beijing Mobile Communication Company Limited ("Beijing
         Mobile"), Shanghai Mobile Communication Company Limited ("Shanghai
         Mobile"), Tianjin Mobile Communication Company Limited ("Tianjin
         Mobile"), Hebei Mobile Communication Company Limited ("Hebei Mobile"),
         Liaoning Mobile Communication Company Limited ("Liaoning Mobile"),
         Shandong Mobile Communication Company Limited ("Shandong Mobile") and
         Guangxi Mobile Communication Company Limited ("Guangxi Mobile")

         Pursuant to an ordinary resolution passed by the Company's shareholders
         on November 10, 2000, the Company acquired the entire issued share
         capital of Beijing Mobile BVI, Shanghai Mobile BVI, Tianjin Mobile BVI,
         Hebei Mobile BVI, Liaoning Mobile BVI, Shandong Mobile BVI and Guangxi
         Mobile BVI from CMHK (BVI) for a total consideration of HK$256,021 (RMB
         equivalent 271,485) (hereinafter referred to as the "Third
         Acquisition"). The consideration was satisfied by cash of HK$74,609
         (RMB equivalent 79,116) and an allotment of 3,779,407,375 ordinary
         shares of HK$0.10 each to CMHK (BVI) amounting to HK$181,412 (RMB
         equivalent 192,369). The only assets of each of Beijing Mobile BVI,
         Shanghai Mobile BVI, Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning
         Mobile BVI, Shandong Mobile BVI and Guangxi Mobile BVI are their
         interests in the entire equity of Beijing Mobile, Shanghai Mobile,
         Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and
         Guangxi Mobile, respectively.

                                      F-16

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         In connection with the Third Acquisition, the fixed assets of Beijing
         Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile,
         Shandong Mobile and Guangxi Mobile were revalued as of June 30, 2000,
         by a firm of independent valuers and approved by the Ministry of
         Finance. The value of fixed assets of Beijing Mobile, Shanghai Mobile,
         Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and
         Guangxi Mobile pursuant to the valuation, based on a depreciated
         replacement cost basis, was determined at RMB37,252.

         Goodwill arising on the acquisition of Beijing Mobile, Shanghai Mobile,
         Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and
         Guangxi Mobile (RMB239,540), being the excess of the cost of
         investments (RMB271,485) over the fair value of the Group's share of
         the separable net assets acquired (RMB31,945), was eliminated against
         reserves immediately on acquisition. The fair value of the Group's
         share of the separable net assets acquired was based on the net assets
         of Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile,
         Liaoning Mobile, Shandong Mobile and Guangxi Mobile at June 30, 2000
         (RMB29,317), adjusted for additional earnings to November 12, 2000, the
         completion date of the Third Acquisition, of RMB2,628.

         Equity offering and debt offering

         In order to finance the acquisition consideration, the Company
         completed an international offering of an aggregate of 1,115,643,845
         ordinary shares and debt offering with a principal amount of US$690
         with maturity due on November 3, 2005. Further the Company issued
         3,779,407,375 consideration shares to CMHK (BVI), credited as fully
         paid as part of the acquisition consideration. Net proceeds to the
         Company for such equity offering and debt offering, after deduction of
         offering expenses and discount, were approximately RMB55,723 and
         RMB5,580, respectively.

                                      F-17

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Acquisition of Anhui Mobile Communication Company Limited ("Anhui
         Mobile"), Jiangxi Mobile Communication Company Limited ("Jiangxi
         Mobile"), Chongqing Mobile Communication Company Limited ("Chongqing
         Mobile"), Sichuan Mobile Communication Company Limited ("Sichuan
         Mobile"), Hubei Mobile Communication Company Limited ("Hubei Mobile"),
         Hunan Mobile Communication Company Limited ("Hunan Mobile"), Shaanxi
         Mobile Communication Company Limited ("Shaanxi Mobile") and Shanxi
         Mobile Communication Company Limited ("Shanxi Mobile")

         Pursuant to a resolution passed at the extraordinary general meeting
         held on June 24, 2002, the Company acquired the entire issued share
         capital of Anhui Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI,
         Sichuan Mobile BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile
         BVI and Shanxi Mobile BVI from CMHK(BVI). The acquisition was completed
         on July 1, 2002 for a total consideration of US$8,573 (RMB equivalent
         70,959) (hereinafter referred to as the "Fourth Acquisition"). The
         consideration was satisfied by cash of RMB49,248 and an allotment of
         827,514,446 ordinary shares of HK$0.10 each to CMHK (BVI) amounting to
         HK$20,458 (RMB equivalent 21,711). The only assets of each of Anhui
         Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI, Sichuan Mobile
         BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile BVI and Shanxi
         Mobile BVI are their interests in the entire equity of Anhui Mobile,
         Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan
         Mobile, Shaanxi Mobile and Shanxi Mobile, respectively.

         In connection with the Fourth Acquisition, the fixed assets of Anhui
         Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile,
         Hunan Mobile, Shaanxi Mobile and Shanxi Mobile were revalued as of
         December 31, 2001, by a firm of independent valuers and approved by the
         Ministry of Finance. The value of fixed assets of Anhui Mobile, Jiangxi
         Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile,
         Shaanxi Mobile and Shanxi Mobile pursuant to the valuation, based on a
         depreciated replacement cost basis, was determined at RMB39,499.

                                      F-18

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Positive goodwill arising on the acquisition of Anhui Mobile, Jiangxi
         Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile,
         Shaanxi Mobile and Shanxi Mobile (RMB37,458), being the excess of the
         cost of investments (RMB70,959) over the fair value of the Group's
         share of the separable net assets acquired (RMB33,501), is amortized to
         the consolidated statements of income on a straight-line basis over 20
         years. Positive goodwill is stated in the consolidated balance sheet at
         cost less accumulated amortization and any impairment losses. The fair
         value of the Group's share of the separable net assets acquired was
         based on the net assets of Anhui Mobile, Jiangxi Mobile, Chongqing
         Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and
         Shanxi Mobile at December 31, 2001 (RMB30,663), adjusted for additional
         earnings to June 30, 2002, the completion date of the Fourth
         Acquisition, of RMB2,818.

         Equity offering and debt offering

         In order to finance the acquisition consideration, the Company issued
         236,634,212 new shares to Vodafone Holdings (Jersey) Limited at
         HK$5,850 (RMB equivalent 6,205). Further, the Company issued
         827,514,446 consideration shares to CMHK (BVI), credited as fully paid
         as part of the acquisition consideration. Net proceeds to the Company
         for the equity offering, after deduction of offering expenses, was
         approximately RMB5,946. In addition, Guangdong Mobile issued five-year
         guaranteed bonds and fifteen-year guaranteed bonds, with a principal
         amount of RMB3,000 and RMB5,000 respectively, at an issue price equal
         to the face value of the bonds. Net proceeds to the Group for the debt
         offering, after deduction of offering expenses, was approximately
         RMB7,947.

                                      F-19

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         Basis of preparation

         The consolidated financial statements have been prepared on a
         consolidated basis to reflect the financial position and results of
         operations of the Company, Guangdong Mobile and Zhejiang Mobile from
         the date of the Restructuring and of Jiangsu Mobile, Fujian Mobile,
         Henan Mobile, Hainan Mobile, Beijing Mobile, Shanghai Mobile, Tianjin
         Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile, Guangxi Mobile,
         Anhui Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei
         Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi Mobile from their
         respective dates of acquisition. The consolidated statements of income
         for the year ended December 31, 2002 includes the results of the
         Company, Guangdong Mobile, Zhejiang Mobile, Jiangsu Mobile, Fujian
         Mobile, Henan Mobile, Hainan Mobile, Beijing Mobile, Shanghai Mobile,
         Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and
         Guangxi Mobile for the year ended December 31, 2002 and the
         post-acquisition results of Anhui Mobile, Jiangxi Mobile, Chongqing
         Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and
         Shanxi Mobile for the period from July 1, 2002 to December 31, 2002.
         The consolidated statements of income for the year ended December 31,
         2001 includes the results of the Company, Guangdong Mobile, Zhejiang
         Mobile, Jiangsu Mobile, Fujian Mobile, Henan Mobile, Hainan Mobile,
         Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning
         Mobile, Shandong Mobile and Guangxi Mobile for the year ended December
         31, 2001. The consolidated statements of income for the year ended
         December 31, 2000 includes the results of the Company, Guangdong
         Mobile, Zhejiang Mobile, Jiangsu Mobile, Fujian Mobile, Henan Mobile
         and Hainan Mobile for the year ended December 31, 2000 and the
         post-acquisition results of Beijing Mobile, Shanghai Mobile, Tianjin
         Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and Guangxi
         Mobile for the period from November 13, 2000 to December 31, 2000.

         The financial statements have been prepared in accordance with
         accounting principles generally accepted in Hong Kong ("HK GAAP").
         Significant differences between HK GAAP and accounting principles
         generally accepted in the United States ("US GAAP") are set forth in
         Note 33.

                                      F-20

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

1        ORGANIZATION, PRINCIPAL ACTIVITIES AND BASIS OF PRESENTATION
         (CONTINUED)

         The consolidated financial statements are expressed in Renminbi. Solely
         for the convenience of the reader, for the December 31, 2002 financial
         statements have been translated into United States dollars at the rate
         of US$1.00 = RMB8.2772 quoted by the People's Bank of China on December
         31, 2002. No representation is made that the Renminbi amounts could
         have been, or could be, converted into United States dollars at that
         rate or at any other certain rate on December 31, 2002, or any other
         certain date.

2        PRINCIPAL ACCOUNTING POLICIES

(a)      BASIS OF CONSOLIDATION

         The consolidated financial statements include the accounts of the
         Company and all of its subsidiaries (see Note 30 for details of the
         Company's principal subsidiaries). The results of subsidiary companies
         are included in the consolidated statements of income, and the share
         attributable to minority interest is deducted from or added to the
         consolidated income after taxation. All significant inter-company
         balances and transactions have been eliminated.

(b)      CASH AND CASH EQUIVALENTS

         Cash and cash equivalents comprise cash at bank and on hand, demand
         deposits with banks, and short-term, highly liquid investments that are
         readily convertible into known amounts of cash and which are subject to
         an insignificant risk of changes in value, having been within three
         months of maturity at acquisition. None of the Group's cash and cash
         equivalents is restricted as to withdrawal.

(c)      ASSOCIATES

         An associate is a company in which the Group has significant influence,
         but not control or joint control, over its management, including
         participation in the financial and operating policy decisions.

         The Group's share of the results of its associates is included in the
         consolidated statements of income. Such amounts were immaterial for the
         years presented. In the consolidated balance sheets, interest in
         associates is stated at cost adjusted for post-acquisition retained
         result of operations, less impairment losses (see note 2(h)), unless it
         is acquired and held exclusively with a view to subsequent disposal in
         the near future or operates under severe long-term restrictions that
         significantly impair its ability to transfer funds to the investor, in
         which case, it is stated at fair value with changes in fair value
         recognized in the consolidated statements of income as they arise.

                                      F-21

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(d)      GOODWILL

         Positive goodwill arising on consolidation represents the excess of the
         cost of the acquisition over the Group's share of the fair value of the
         identifiable assets and liabilities acquired. In respect of controlled
         subsidiaries:

         -        for acquisitions before January 1, 2001, positive goodwill is
                  eliminated against reserves and is reduced by impairment
                  losses (see note 2(h)); and

         -        for acquisitions on or after January 1, 2001, positive
                  goodwill is amortized to the consolidated statements of income
                  on a straight-line basis over 20 years. Positive goodwill is
                  stated in the consolidated balance sheets at cost less
                  accumulated amortization and any impairment losses (see note
                  2(h)).

         Negative goodwill arising on acquisitions of controlled subsidiaries
         represents the excess of the Group's share of the fair value of the
         identifiable assets and liabilities acquired over the cost of the
         acquisition. Negative goodwill is accounted for as follows:

         -        for acquisitions before January 1, 2001, negative goodwill is
                  credited to a capital reserve; and

         -        for acquisitions on or after January 1, 2001, to the extent
                  that negative goodwill relates to an expectation of future
                  losses and expenses that are identified in the plan of
                  acquisition and can be measured reliably, but which have not
                  yet been recognized, it is recognized in the consolidated
                  statements of income when the future losses and expenses are
                  recognized. Any remaining negative goodwill, but not exceeding
                  the fair values of the non-monetary assets acquired, is
                  recognized in the consolidated statements of income over the
                  weighted average useful life of those non-monetary assets that
                  are depreciable/amortisable. Negative goodwill in excess of
                  the fair values of the non-monetary assets acquired is
                  recognized immediately in the consolidated statements of
                  income.

         In respect of any negative goodwill not yet recognized in the
         consolidated statements of income, it is shown in the consolidated
         balance sheets as a deduction from assets in the same balance sheet
         classification as positive goodwill.

                                      F-22

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(e)      OTHER INVESTMENTS IN SECURITIES

         The Group's policies for investments in securities other than
         investments in subsidiaries and associates are as follows:

         (i)      Investments held on a continuing basis for an identified
                  long-term purpose are classified as investment securities.
                  Investment securities are stated in the consolidated balance
                  sheet at cost less any provisions for diminution in value.
                  Provisions are made when the fair values have declined below
                  the carrying amounts, unless there is evidence that the
                  decline is temporary, and are recognized as an expense in the
                  consolidated statements of income, such provisions being
                  determined for each investment individually.

         (ii)     Profits or losses on disposal of investments in securities are
                  determined as the difference between the estimated net
                  disposal proceeds and the carrying amount of the investments
                  and are accounted for in the consolidated statements of income
                  as they arise.

(f)      FIXED ASSETS AND DEPRECIATION

         (i)      Fixed assets are stated at cost less accumulated depreciation
                  and impairment losses (see note 2(h)). The circumstances and
                  basis under which the revalued amount is arrived at are set
                  out in details in Note 13.

         (ii)     The cost of fixed assets comprises the purchase price and any
                  directly attributable costs of bringing the asset to its
                  working condition and location for its intended use.
                  Expenditure incurred after the fixed asset has been put into
                  operation, such as repairs and maintenance and overhaul costs,
                  is normally charged to the consolidated statements of income
                  in the year in which it is incurred. In situations where it
                  can be clearly demonstrated that the expenditure has resulted
                  in an increase in the future economic benefits expected to be
                  obtained from the use of the fixed asset, the expenditure is
                  capitalized as an additional cost of the fixed asset.

         (iii)    Gains or losses arising from the retirement or disposal of a
                  fixed asset are determined as the difference between the
                  estimated net disposal proceeds and the carrying amount of the
                  asset and are recognized in the consolidated statements of
                  income on the date of retirement or disposal.

                                      F-23

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(f)      FIXED ASSETS AND DEPRECIATION (CONTINUED)

         (iv)     Depreciation is calculated to write-off the cost of fixed
                  assets on a straight-line basis over their estimated useful
                  lives, to residual values, as follows:

<TABLE>
<CAPTION>
                                        Depreciable life         Residual value
<S>                                 <C>                          <C>
Land use rights                     Over the period of grant                  -
Buildings                                        8 -35 years                  3%
Telecommunication transceivers,
  switching centers and other
  network equipment                                  7 years                  3%
Office equipment, furniture and
  fixtures and others                           4 - 18 years                  3%
</TABLE>

(g)      LEASED ASSETS

         Leases of assets under which the lessee assumes substantially all the
         risks and benefits of ownership are classified as capital leases.

         Where the Group acquires the use of assets under capital leases, the
         amounts representing the fair value of the leased asset, or, if lower,
         the present value of the minimum lease payments, of such assets are
         included in the fixed assets and the corresponding liabilities, net of
         finance charges, are recorded as obligations under capital leases.
         Depreciation is provided at rates which write off the cost of the
         assets in equal annual amounts over the term of the relevant lease or,
         where it is likely the Group will obtain ownership of the asset, the
         life of the asset, as set out in note 2(f). Impairment losses are
         accounted for in accordance with the accounting policy as set out in
         note 2(h). Finance charges implicit in the lease payments are charged
         to the consolidated statements of income over the period of the leases
         so as to produce an approximately constant periodic rate of charge on
         the remaining balance of the obligations for each accounting year.

                                      F-24

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(h)      IMPAIRMENT OF ASSETS

         Internal and external sources of information are reviewed at each
         balance sheet date to identify indications that the following assets
         may be impaired or an impairment loss previously recognized no longer
         exists or may have decreased:

         -        fixed assets;

         -        construction in progress;

         -        investments in associates; and

         -        positive goodwill (whether taken initially to reserves or
                  recognized as an asset).

         If any such indication exists, the asset's recoverable amount is
         estimated. An impairment loss is recognized whenever the carrying
         amount of an asset exceeds its recoverable amount.

         (i)      Calculation of recoverable amount

                  The recoverable amount of an asset is the greater of its net
                  selling price and value in use. In assessing value in use, the
                  estimated future cash flows are discounted to their present
                  value using a pre-tax discount rate that reflects current
                  market assessments of time value of money and the risks
                  specific to the asset. Where an asset does not generate cash
                  inflows largely independent of those from other assets, the
                  recoverable amount is determined for the smallest group of
                  assets that generates cash inflows independently (i.e. a
                  cash-generating unit).

         (ii)     Reversals of impairment losses

                  In respect of assets other than goodwill, an impairment loss
                  is reversed if there has been a change in the estimates used
                  to determine the recoverable amount. An impairment loss in
                  respect of goodwill is reversed only if the loss was caused by
                  a specific external event of an exceptional nature that is not
                  expected to recur, and the increase in recoverable amount
                  relates clearly to the reversal of the effect of that specific
                  event.

                  A reversal of impairment losses is limited to the asset's
                  carrying amount that would have been determined had no
                  impairment loss been recognized in prior years. Reversals of
                  impairment losses are credited to the consolidated statements
                  of income in the year in which the reversals are recognized.

                                      F-25

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(i)      CONSTRUCTION IN PROGRESS

         Construction in progress is stated at cost. Cost comprises direct costs
         of construction as well as interest expense and exchange differences
         capitalized during the years of construction and installation.
         Capitalization of these costs ceases and the construction in progress
         is transferred to fixed assets when substantially all the activities
         necessary to prepare the assets for their intended use are completed.
         No depreciation is provided in respect of construction in progress
         until it is completed and ready for its intended use. Exchange
         differences capitalized during the years presented were immaterial.

(j)      INVENTORIES

         Inventories, which consist primarily of handsets, SIM cards and
         accessories, are stated at the lower of cost and net realizable value.
         Cost represents purchase cost of goods calculated using the weighted
         average cost method. Net realizable value is determined by reference to
         the sales proceeds of items sold in the ordinary course of business
         after the balance sheet date or to management's estimates based on
         prevailing market conditions.

         When inventories are sold, the carrying amount of those inventories is
         recognized as a deduction of other income due to its insignificance.
         The amount of any write-down of inventories to net realizable value and
         all losses of inventories are recognized as an expense in the year the
         write-down or loss occurs. The amount of any reversal of any write-down
         of inventories, arising from an increase in net realizable value, is
         recognized as a reduction in the amount of inventories recognized as an
         expense in the year in which the reversal occurs.

(k)      DEFERRED REVENUE

         Deferred revenue, which consists primarily of deferred revenue from
         prepaid service fees received from subscribers and deferred revenue
         from assignment of rights to income from subscribers with distributors
         of telecommunications services are stated in the balance sheet at the
         amount of consideration received according to the relevant assignment
         contracts if applicable, less income recognized in the consolidated
         statements of income up to the balance sheet date.

         Revenue from prepaid service fees is recognized when the cellular
         services are rendered.

                                      F-26

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(k)      DEFERRED REVENUE (CONTINUED)

         Income from assignment of rights is deferred and recognized on a
         straight-line basis over the relevant assignment period. For assignment
         contracts which the distributors surrender for early cancellation, the
         balance of the Group's deferred revenue in respect of those contracts
         is recognized in the consolidated statements of income when the
         assignment contracts are cancelled.

(l)      FIXED RATE NOTES, BONDS AND CONVERTIBLE NOTES

         Fixed rate notes, bonds and convertible notes are stated in the balance
         sheet at face value, less unamortized discount arising thereon, if any.
         The discount is amortized on a straight-line basis over the period from
         the date of issue to the date of maturity.

(m)      DEFERRED EXPENSES

         Deferred expenses comprise incidental costs incurred in relation to the
         issue of the fixed rate notes, bonds and convertible notes of the Group
         and are amortized on a straight-line basis over the periods from the
         date of issue to the date of maturity. In the event that the notes are
         redeemed prior to the maturity date, the unamortized expenses are
         charged immediately to the consolidated statements of income.

(n)      BORROWING COSTS

         Borrowing costs are expensed in the consolidated statements of income
         in the year in which they are incurred, except to the extent that they
         are capitalized as being directly attributable to the acquisition or
         construction of an asset which necessarily takes a substantial period
         of time to get ready for its intended use.

(o)      REVENUE RECOGNITION

         Revenue is recognized when it is probable that the economic benefits
         will accrue to the Group and when the revenue can be measured reliably
         on the following basis:

         (i)      usage fees are recognized as revenue when the service is
                  rendered;

                                      F-27

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(o)      REVENUE RECOGNITION (CONTINUED)

         (ii)     monthly fees are recognized as revenue in the month during
                  which the service is rendered;

         (iii)    connection fees are recognized as revenue when receivable;

         (iv)     deferred revenue from prepaid services is recognized as income
                  when the cellular telephone services are rendered upon actual
                  usage by subscribers;

         (v)      deferred revenue from assignment of rights to income from
                  subscribers is recognized on a straight-line basis over the
                  duration of the assignment period;

         (vi)     interest income is recognized on a time proportion basis by
                  reference to the principal outstanding and at the rate
                  applicable; and

         (vii)    sales of SIM cards and handsets are recognized on delivery of
                  goods to the buyer. Such revenue, net of cost of goods sold,
                  is included in other net income due to its insignificance.

(p)      ALLOWANCE FOR DOUBTFUL ACCOUNTS

         The allowance for doubtful accounts is the Group's best estimate of the
         amount of probable credit losses in the Group's existing accounts
         receivable and other receivable. The Group determines the allowance
         based on the length of time the receivables are past due, the current
         business environment and the Group's historical experience.

(q)      TRANSLATION OF FOREIGN CURRENCIES

         The functional currency of the Group's operations is Renminbi. See Note
         29. Foreign currency transactions are recorded at the applicable rates
         of exchange prevailing on the transaction dates. Monetary assets and
         liabilities denominated in currencies other than the functional
         currency are translated at the exchange rates ruling at the balance
         sheet date. Exchange differences attributable to the translation of
         borrowings denominated in currencies other than the functional
         currency, and used for financing the construction of fixed assets, are
         included in the cost of the related construction in progress. Exchange
         differences capitalized to construction in progress are immaterial for
         the years presented. Other exchange gains and losses are recognized in
         the consolidated statements of income.

                                      F-28

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(r)      DEFERRED TAXATION

         Deferred taxation is provided using the liability method in respect of
         the taxation effect arising from all material timing differences
         between the accounting and tax treatment of income and expenditure,
         which are expected with reasonable probability to crystallize in the
         foreseeable future. Future deferred tax benefits are not recognized
         unless their realization is assured beyond reasonable doubt.

(s)      PROVISIONS AND CONTINGENT LIABILITIES

         Provisions are recognized for liabilities of uncertain timing or amount
         when the Group has a legal or constructive obligation arising as a
         result of a past event, it is probable that an outflow of economic
         benefits will be required to settle the obligation and a reliable
         estimate can be made. Where the time value of money is material,
         provisions are stated at the present value of the expenditures expected
         to settle the obligation.

         Where it is not probable that an outflow of economic benefits will be
         required, or the amount cannot be estimated reliably, the obligation is
         disclosed as a contingent liability, unless the probability of outflow
         of economic benefits is remote. Possible obligations, whose existence
         will only be confirmed by the occurrence or non-occurrence of one or
         more future events are also disclosed as contingent liabilities unless
         the probability of outflow of economic benefits is remote.

(t)      EMPLOYEE BENEFITS

         (i)      Salaries, annual bonuses, paid annual leave, leave passage and
                  the cost to the Group of non-monetary benefits are accrued in
                  the year in which associated services are rendered by
                  employees of the Group. Where payment or settlement is
                  deferred and the effect would be material, these amounts are
                  stated at their present values.

         (ii)     The Company's contributions to the Mandatory Provident Funds,
                  as required under the Hong Kong Mandatory Provident Fund
                  Schemes Ordinance, are recognized as an expense in the
                  consolidated statements of income as incurred.

                                      F-29

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(t)      EMPLOYEE BENEFITS (CONTINUED)

         (iii)    The employees of the subsidiaries participate in defined
                  contribution retirement plans managed by the local government
                  authorities whereby the subsidiaries are required to
                  contribute to the schemes at fixed rates of the employees'
                  salary costs. In addition to the local governmental defined
                  contribution retirement plans, certain subsidiaries also
                  participate in supplementary defined contribution retirement
                  plans managed by independent insurance companies whereby the
                  subsidiaries are required to make contributions to the
                  retirement plans at fixed rates of the employees' salary
                  costs. The Group's contributions to these plans are charged to
                  the consolidated statements of income when incurred. The
                  subsidiaries have no obligation for the payment of retirement
                  and other post-retirement benefits of staff other than the
                  contributions described above.

         (iv)     When the Group grants employees options to acquire shares of
                  the Company at nil consideration, no employee benefit cost or
                  obligation is recognized at the date of grant. When the
                  options are exercised, equity is increased by the amount of
                  the proceeds received.

         (v)      Termination benefits are recognized when, and only when the
                  Group demonstrably commits itself to terminate employment or
                  to provide benefits as a result of voluntary redundancy by
                  having a detailed formal plan which is without realistic
                  possibility of withdrawal.

(u)      NET PROFIT PER SHARE

         The calculation of basic net profit per share for the years ended
         December 31, 2000, 2001 and 2002 are based on the net profit and the
         weighted average number of shares in issue during the years.

                                      F-30

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(u)      NET PROFIT PER SHARE (CONTINUED)

         The calculation of diluted net profit per share for the years ended
         December 31, 2001 and 2002 have been computed after adding back the
         interest expense on the convertible notes and adjusting for the effects
         of all dilutive potential ordinary shares. All dilutive potential
         ordinary shares arise from the share options granted to the directors
         under the share option scheme and convertible notes issued by the Group
         which, if converted to ordinary shares, would decrease net profit per
         share. In 2000, since all potential ordinary shares arising from the
         convertible notes, if converted to ordinary shares, would increase
         profit attributable to shareholders per share as a result of the
         savings on the interest payable on the convertible notes, the effects
         of anti-dilutive potential ordinary shares were ignored in calculating
         diluted net profit per share.

(v)      OPERATING LEASES

         Leases of assets under which the lessor has not transferred all the
         risks and benefits of ownership are classified as operating leases.

         Where the Group has the use of assets under operating lease, payments
         made under the leases are charged to the consolidated statements of
         income in equal instalments over the accounting periods covered by the
         lease term, except where an alternative basis is more representative of
         the pattern of benefits to be derived from the leased asset. Lease
         incentives received are recognized in the consolidated statements of
         income as an integral part of the aggregate net lease payments made.
         Contingent rentals are charged to the consolidated statements of income
         in the accounting period in which they are incurred.

(w)      RELATED PARTIES

         For the purposes of these accounts, parties are considered to be
         related to the Group if the Group has the ability, directly or
         indirectly, to control the party or exercise significant influence over
         the party in making financial and operating decisions, or vice versa,
         or where the Group and the party are subject to common control or
         common significant influence. Related parties may be individuals or
         other entities.

         All material related parties transactions have been disclosed in the
         relevant notes on the accounts.

                                      F-31

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

2        PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

(x)      SEGMENT REPORTING

         A segment is a distinguishable component of the group that is engaged
         either in providing products or services (business segment), or in
         providing products or services within a particular economic environment
         (geographical segment), which is subject to risks and rewards that are
         different from those of other segments.

         No analysis of the Group's operating revenue and contribution to profit
         from operations by geographical segment or business segment has been
         presented as all the Group's operating activities are carried out in
         the PRC and less than 10% of the Group's operating revenue and
         contribution to profit from operations were derived from activities
         outside the Group's cellular telephone and related services activities.
         There is no other geographical or business segment with segment assets
         equal to or greater than 10% of the Group's total assets.

(y)      USE OF ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and revenues and expenses during the
         years reported. Actual results could differ from those estimates.
         Estimates are used when accounting for allowance for doubtful accounts,
         the fixed assets' depreciation and amortization periods and impairment
         of long-lived assets including goodwill. Actual results may differ from
         these estimates.

                                      F-32

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

3        OPERATING REVENUE

         The principal activities of the Group are the provision of cellular
         telephone and related services in Guangdong, Zhejiang, Jiangsu, Fujian,
         Henan, Hainan, Hebei, Liaoning, Shandong, Anhui, Jiangxi, Sichuan,
         Hubei, Hunan, Shaanxi and Shanxi provinces, Beijing, Shanghai, Tianjin
         and Chongqing municipalities and Guangxi Zhuang Autonomous Region of
         the PRC. The principal activity of the Company is investment holding.

         Operating revenue primarily represents usage fees, monthly fees,
         connection fees and other operating revenue derived from the Group's
         cellular telephone networks, net of PRC business tax and government
         surcharges. Business tax and government surcharges are charged at 3% to
         3.3% of the corresponding revenue.

         Operating revenue consist of:

         (i)      Usage fees which represent standard local usage fee for
                  airtime and, where applicable, Domestic Direct Dial ("DDD")
                  charges and International Direct Dial ("IDD") charges
                  receivable from subscribers for the use of the Group's
                  cellular telecommunication networks and facilities; revenue
                  from assignment of rights to income from subscribers, and fees
                  in respect of roaming out calls. Roaming out calls are those
                  made by the Group's subscribers outside the local service
                  areas. See Note 4 (ii).

         (ii)     Monthly fees which represent fixed amounts charged to
                  subscribers each month for their entitlement to use the
                  Group's cellular telephone and related services.

         (iii)    Connection fees which represent amounts charged to subscribers
                  for the initial connection to the Group's cellular
                  telecommunications network.

         (iv)     Other operating revenue mainly represents charges for wireless
                  data and value added services, roaming in fees and
                  interconnection revenue.

                                      F-33

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

4        OPERATING EXPENSES

         Operating expenses consist of:

         (i)      Leased line charges which represent expenses paid or payable
                  for the use of leased lines between the main switches, base
                  transceiver stations, base station controllers, base stations,
                  fixed line network connectors and long distance network
                  connectors.

         (ii)     Interconnection charges which represent amounts paid or
                  payable in respect of call made between the Group's cellular
                  networks, the fixed line networks and other GSM network
                  operators in the relevant provinces and other provinces in the
                  PRC. Included in the amounts are also charges in respect of
                  the Group's subscribers roaming outside the service areas of
                  Guangdong Mobile, Zhejiang Mobile, Jiangsu Mobile, Fujian
                  Mobile, Henan Mobile, Hainan Mobile, Beijing Mobile, Shanghai
                  Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile,
                  Shandong Mobile, Guangxi Mobile, Anhui Mobile, Jiangxi Mobile,
                  Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile,
                  Shaanxi Mobile and Shanxi Mobile (see Note 3 (i)).

         (iii)    Personnel expenses which represent staff salaries, bonuses and
                  medical benefits, provision for staff welfare expenses and
                  contributions to staff retirement scheme.

         (iv)     Other operating expenses which consist of:

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                -----------------------------

                                                  2000       2001       2002
                                                  RMB        RMB        RMB
<S>                                             <C>        <C>        <C>
Selling and promotion                             3,940      7,897     12,259
Maintenance                                         745      1,289      2,691
Provision for doubtful accounts                   1,346      1,737      1,749
Operating lease charges                             936      1,347      1,701
Other expenses (Note (a))                         3,611      6,000      9,519
                                                -------    -------    -------

                                                 10,578     18,270     27,919
                                                =======    =======    =======
</TABLE>

                  (a)      Other expenses consist of offices expenses, utilities
                           charges, travelling expenses, entertainment expenses,
                           spectrum charges, insurance expenses, consumables and
                           supplies, debt collection fees and other
                           miscellaneous expenses.

                                      F-34

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

5        WRITE-DOWN AND WRITE-OFF OF ANALOG NETWORK EQUIPMENT

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                -----------------------------

                                                  2000       2001       2002
                                                  RMB        RMB        RMB
<S>                                             <C>        <C>        <C>
Write-down of analog network equipment (a)        1,330          -          -
Write-off of analog network equipment (b)           195          -          -
                                                -------    -------    -------
                                                  1,525          -          -
                                                =======    =======    =======
</TABLE>

         (a)      In 2000, based on the operations and net cash flow position of
                  the analog network, the Group considered that the recoverable
                  amount of the analog network equipment had declined below its
                  carrying amount. Based on the expected future cash flows to be
                  generated by the analog network, a full provision was made
                  against the carrying amount of the analog network equipment at
                  December 31, 2000. The amount of the write-down of RMB1,330
                  was recognized as an expense in the consolidated statements of
                  income. At December 31, 2001, all analog network equipment
                  which were written down in previous years had been removed
                  from service.

         (b)      This represents the write-off of certain analog network
                  equipment which had been removed from service.

6        OTHER NET INCOME

         Other net income primarily consists of the gross margin from sales of
         cellular telephone SIM cards and handsets.

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                -----------------------------

                                                  2000       2001       2002
                                                  RMB        RMB        RMB
<S>                                             <C>        <C>        <C>
Sales of SIM cards and handsets                   1,928      3,338      3,641
Cost of SIM cards and handsets                   (1,013)    (1,744)    (1,955)
                                                -------    -------    -------
                                                    915      1,594      1,686
                                                =======    =======    =======
</TABLE>

                                      F-35

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

7        NON-OPERATING NET (EXPENSES) / INCOME

         Non-operating net (expenses) / income consists of:

<TABLE>
<CAPTION>
                                                    Year ended December 31,
                                                -------------------------------

                                                2000         2001         2002
                                                RMB          RMB          RMB
<S>                                             <C>          <C>          <C>
Exchange (loss) / gain                           (60)          (39)         47
Loss on sale of fixed assets                    (126)         (275)          -
Penalty income on overdue accounts               149           165         192
Others                                            32           143         332
                                                ----          ----         ---
Total non-operating net (expenses) / income       (5)           (6)        571
                                                ====          ====         ===
</TABLE>

         In 2002, there is RMB255 (2001: RMB54) included in others being gain
         recognized on deemed disposal of shareholding in Aspire Holdings
         Limited, a non-wholly owned subsidiary of the Company. The Company has
         no intention to re-acquire the shares of this subsidiary. The loss on
         sale of fixed assets of RMB 205 in 2002 was included in other operating
         expenses - other expenses.

8        INCOME TAX

         (i)   No provision has been made for Hong Kong profits tax as there
               were no estimated Hong Kong assessable profits for the years
               ended December 31, 2000, 2001 and 2002.

         (ii)  The provision for the PRC enterprise income tax is based on a
               statutory rate of 33% of the assessable profit of the Group as
               determined in accordance with the relevant income tax rules and
               regulations of the PRC during the year, except for certain
               subsidiaries of the Company and certain operations of the
               subsidiaries located within special economic zones in the PRC,
               which enjoy a preferential rate of 30% and 15% respectively.

                                      F-36

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

8        INCOME TAX (CONTINUED)

         Income tax in the consolidated statements of income represents:

<TABLE>
<CAPTION>
                                                                  Year ended December 31,
                                                              --------------------------------

                                                              2000          2001        2002
                                                              RMB           RMB         RMB
<S>                                                           <C>          <C>          <C>
 Provision for PRC enterprise income tax on
    the estimated taxable profits for the year                8,371        12,153       17,724
 Under/(over)-provision in respect of PRC
   enterprise income tax for prior year                          12           (20)         (14)
                                                              -----        ------       ------
                                                              8,383        12,133       17,710
 Transfer (to)/from deferred tax (Note 17)                      (17)        1,570       (1,476)
                                                              -----        ------       ------
                                                              8,366        13,703       16,234
                                                              =====        ======       ======
</TABLE>

         The provision for income tax differs from the amount computed by
         applying the PRC statutory income tax rate of 33% to profit before tax
         and minority interests for the following reasons:

<TABLE>
<CAPTION>
                                                                      Year ended December 31,
                                                              -----------------------------------
                                                              2000           2001           2002
                                                              RMB            RMB            RMB
<S>                                                           <C>           <C>            <C>
 Expected PRC taxation at statutory tax rates                 8,710         13,767         16,163
 Non-taxable items
  - Connection fee                                              (36)             -              -
  - Surcharge                                                   (28)             -              -
  - Interest income                                             (74)           (32)           (25)
 Non-deductible expenses                                        422            142            851
 Rate differential on PRC operations                           (718)          (558)          (859)
 Rate differential on Hong Kong operations                       32            165            229
 Reversal of deferred taxation due to change of tax rate          -             29            (97)
 Tax losses not recognized for deferred tax                       -            203            242
 Non-recognition of deferred taxes
  - Generation of timing difference                             423            519            533
  - Reversal of timing difference                              (388)          (565)          (696)
 Others                                                          23             33           (107)
                                                              -----         ------         ------
 Income tax                                                   8,366         13,703         16,234
                                                              =====         ======         ======
</TABLE>

                                      F-37

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

9        DIVIDENDS

         Dividends attributable to the year:

<TABLE>
<CAPTION>
                                                                  Year ended December 31,
                                                              -------------------------------

                                                              2000             2001      2002
                                                              RMB              RMB       RMB
<S>                                                           <C>              <C>      <C>
 Final dividend proposed after the balance sheet date of
  HK$0.32 (equivalent to RMB0.34) (2000 and 2001: Nil)
  per share                                                      -                -     6,678
                                                              ====            =====     =====
</TABLE>

         The final dividend proposed after the balance sheet date has not been
         recognized as a liability at the balance sheet date.

10       ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                       December 31,
                                                  ----------------------

                                                     2001          2002
                                                     RMB           RMB
<S>                                                <C>            <C>
Accounts receivable                                 9,701         10,367

Less: Allowance for doubtful accounts              (3,973)        (4,301)
                                                   ------         ------

                                                    5,728          6,066
                                                   ======         ======
</TABLE>

                                      F-38

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

10       ACCOUNTS RECEIVABLE (CONTINUED)

         The ageing of accounts receivable, net of allowance for doubtful
         accounts, is analyzed as follows:

<TABLE>
<CAPTION>
                                                December 31,
                                            --------------------

                                             2001           2002
                                             RMB            RMB
<S>                                         <C>            <C>
Within 30 days                              5,100          5,150
31-60 days                                    443            580
61-90 days                                    185            336
                                            -----          -----
                                            5,728          6,066
                                            =====          =====
</TABLE>

         Balances are due for payment within one month from the date of billing.
         Customers with balances that are overdue or exceed credit limits are
         required to settle all outstanding balances before any further phone
         calls can be made.

         Allowance for doubtful accounts for the years is analyzed as follows:

<TABLE>
<CAPTION>
                                                   RMB
<S>                                               <C>
At January 1, 2000                                 1,356
Acquired on acquisition of subsidiaries            2,533
Provision for the year                             1,346
Written-off                                       (1,175)
                                                  ------

At December 31, 2000                               4,060
Provision for the year                             1,737
Written-off                                       (1,824)
                                                  ------

At December 31, 2001                               3,973

Acquired on acquisition of subsidiaries              992
Provision for the year                             1,601
Written-off                                       (2,265)
                                                  ------

At December 31, 2002                               4,301
                                                  ======
</TABLE>

                                      F-39

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

11       OTHER RECEIVABLES

<TABLE>
<CAPTION>
                                                   December 31,
                                               -------------------

                                               2001           2002
                                                RMB            RMB
<S>                                            <C>           <C>
Other receivables                              1,189         1,590

Less: Allowance for doubtful accounts              -          (125)
                                               -----         -----

                                               1,189         1,465
                                               =====         =====
</TABLE>

         Included in other receivables as at December 31, 2001 and 2002 are
         amounts due from the PRC fixed line telephone services providers,
         including China Telecommunications Corporation ("China Telecom") and
         its subsidiaries (collectively the "China Telecom Group") and China
         Network Communications Group Corporation ("China Netcom") and its
         subsidiaries (collectively the "China Netcom Group"), amounting to
         RMB227 and RMB108, representing primarily revenue collected on behalf
         of the Group. These balances are unsecured, non-interest bearing and
         repayable within one year.

         Allowance for doubtful accounts for the years is analyzed as follows:

<TABLE>
<CAPTION>
                                RMB
<S>                             <C>
At January 1, 2000                -
Provision for the year            -
Written-off                       -
                                ---

At December 31, 2000              -
Provision for the year            -
Written-off                       -
                                ---

At December 31, 2001              -

Provision for the year          148
Written-off                     (23)
                                ---

At December 31, 2002            125
                                ===
</TABLE>

                                      F-40

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

12       AMOUNTS DUE FROM/TO ULTIMATE HOLDING COMPANY AND AMOUNT DUE TO
         IMMEDIATE HOLDING COMPANY

         Amounts due from/to ultimate holding company are unsecured,
         non-interest bearing, repayable on demand and arose in the ordinary
         course of business.

         At December 31, 2002, amount due to immediate holding company included
         in non-current liabilities primarily represented the balance of the
         purchase consideration for acquisition of subsidiaries as described in
         note 26(b), which is unsecured, bears interest at the rate of two year
         US dollar LIBOR swap rate per annum (at December 31, 2002: 3.801%) and
         is not expected to be settled within one year. The balance is due on
         July 1, 2017 and is subordinated to other senior debts owed by the
         Company from time to time including the fixed rate notes and
         convertible notes. The Company may make early payment of all or part of
         the balance at any time before the date without penalty.

         The current portion of amount due to immediate holding company
         represented interest payable on the unpaid balance of the purchase
         consideration, which is expected to be settled within one year.

13       FIXED ASSETS

<TABLE>
<CAPTION>
                                                                 December 31,
                                                          --------------------------

                                                            2001               2002
                                                             RMB                RMB
<S>                                                       <C>                <C>
Land use rights and buildings                              10,594             19,182
Telecommunications transceivers, switching
 centers and other network equipment                      127,392            202,537
Office equipment, furniture and fixtures and others         6,095              9,600
                                                          -------            -------

                                                          144,081            231,319
Less: accumulated depreciation                            (38,873)           (65,910)
                                                          -------            -------

                                                          105,208            165,409
                                                          =======            =======
</TABLE>

                                      F-41

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

13       FIXED ASSETS (CONTINUED)

         All of the Group's buildings are located outside Hong Kong.

         The carrying value of fixed assets of the Group includes an amount of
         RMB6,836 and RMB111 in respect of assets held under capital lease as at
         December 31, 2001 and 2002, respectively. None of the leases include
         contingent rentals.

         In connection with the Restructuring, pursuant to an approval document
         dated September 5, 1997 issued by China State-owned Assets
         Administration Bureau, the fixed assets of Guangdong Mobile and
         Zhejiang Mobile as of May 31, 1997 were valued by Zhongqihua Assets
         Appraisal Company ("ZAAC"), a firm of independent valuers registered in
         the PRC, on a depreciated replacement cost basis. The value of fixed
         assets of Guangdong Mobile and Zhejiang Mobile has been determined at
         RMB15,630 reflecting a surplus on revaluation of approximately
         RMB3,529.

         In connection with the acquisition of Jiangsu Mobile, and pursuant to
         an approval document dated April 7, 1998 issued by China State-owned
         Assets Administration Bureau, the fixed assets of Jiangsu Mobile as of
         December 31, 1997 were valued by ZAAC on a depreciated replacement cost
         basis. The value of fixed assets of Jiangsu Mobile has been determined
         at RMB7,879 reflecting a surplus on revaluation of approximately
         RMB2,443.

         In connection with the acquisition of Fujian Mobile, Henan Mobile and
         Hainan Mobile, and pursuant to an approval document dated September 27,
         1999 issued by the Ministry of Finance, the fixed assets of Fujian
         Mobile, Henan Mobile and Hainan Mobile as of June 30, 1999 were valued
         by China International Engineering Consulting Corporation ("CIECC") on
         a depreciated replacement cost basis. The aggregate value of fixed
         assets of Fujian Mobile, Henan Mobile and Hainan Mobile has been
         determined at RMB10,684 reflecting a surplus on revaluation of
         approximately RMB391.

                                      F-42

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

13       FIXED ASSETS (CONTINUED)

         In connection with the acquisition of Beijing Mobile, Shanghai Mobile,
         Tianjin Mobile, Hebei Mobile, Liaoning Mobile, Shandong Mobile and
         Guangxi Mobile and pursuant to an approval document dated August 28,
         2000 issued by the Ministry of Finance, the fixed assets of Beijing
         Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile,
         Shandong Mobile and Guangxi Mobile as of June 30, 2000 were valued by
         China Assets Appraisal Corporation Ltd. ("CAAC") on a depreciated
         replacement cost basis. The aggregate value of fixed assets of Beijing
         Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile,
         Shandong Mobile and Guangxi Mobile has been determined at RMB37,252
         reflecting a surplus on revaluation of approximately RMB4,823.

         In connection with the acquisition of Anhui Mobile, Jiangxi Mobile,
         Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi
         Mobile and Shanxi Mobile, and pursuant to an approval document dated
         May 15, 2002 issued by the Ministry of Finance, the fixed assets of
         Anhui Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei
         Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi Mobile as of December
         31, 2001 were valued by China Enterprise Appraisals ("CEA") on a
         depreciated replacement cost basis. The aggregate value of fixed assets
         of Anhui Mobile, Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile,
         Hubei Mobile, Hunan Mobile, Shaanxi Mobile and Shanxi Mobile has
         determined at RMB39,499 reflecting a net deficit on revaluation of
         approximately RMB833.

                                      F-43

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

13       FIXED ASSETS (CONTINUED)

         The Group's land and buildings in Guangdong Mobile and Zhejiang Mobile,
         Jiangsu Mobile, Fujian Mobile, Henan Mobile and Hainan Mobile, Beijing
         Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning Mobile,
         Shandong Mobile and Guangxi Mobile, and Anhui Mobile, Jiangxi Mobile,
         Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi
         Mobile and Shanxi Mobile were also valued separately by Chesterton
         Petty Limited, independent qualified valuers in Hong Kong as of May 31,
         1997, December 31, 1997, June 30, 1999, June 30, 2000 and December 31,
         2001 respectively. The values of such reports have been determined at
         approximately the same amounts as the ZAAC, CIECC, CAAC and CEA
         reports.

         Other than revaluations carried out in compliance with relevant PRC
         rules and regulations, the Group has no plan to revalue its fixed
         assets on a regular basis.

         The effect of the above five revaluations is to increase annual
         depreciation charges by approximately RMB646 (2001: approximately
         RMB1,098).

         The historical cost net book value of the fixed assets of these
         subsidiaries in the Group's financial statements as of the respective
         revaluation dates and the revalued basis of these fixed assets are as
         follows:

<TABLE>
<CAPTION>
                                                                                  Revalued
                                                               Net Book Value      Amount
                                                               --------------     --------
                                                                    RMB             RMB
<S>                                                            <C>                <C>
Land use rights and buildings                                       5,574           8,087
Telecommunications transceivers, switching
 centers and other network equipment                               92,176         100,090
Office equipment, furniture and fixtures and others                 2,841           2,767
                                                                  -------         -------

                                                                  100,591         110,944
                                                                  =======         =======
</TABLE>

                                      F-44

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

14       GOODWILL

<TABLE>
<CAPTION>
                                                                                Positive
                                                                                goodwill
                                                                               carried in
                                                             Goodwill           reserves
                                                             --------          ----------
                                                               RMB                RMB
<S>                                                          <C>               <C>
Cost:
Balance at beginning of year                                        -             297,605
Addition arising on acquisition of subsidiaries                37,458                   -
                                                             --------           ---------

Balance at end of year                                         37,458             297,605
                                                             --------           ---------

Accumulated amortization:
Balance at beginning of year                                        -                   -
Amortization for the year                                         936                   -
                                                             --------           ---------

                                                                  936                   -
Balance at end of year                                       --------           ---------

Carrying amount:

At December 31, 2002                                           36,522             297,605
                                                             ========           =========

At December 31, 2001                                                -             297,605
                                                             ========           =========
</TABLE>

15       INTEREST IN ASSOCIATES

<TABLE>
<CAPTION>
                                                     December 31,
                                                   ----------------

                                                   2001        2002
                                                   RMB         RMB
<S>                                                <C>         <C>
Unlisted shares, at cost                            37          37

Capital contributions, at cost                       9           9
                                                   ---         ---

                                                    46          46
Less:  Provision for impairment                    (30)        (30)
                                                   ---         ---

                                                    16          16
                                                   ===         ===
</TABLE>

                                      F-45

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

15       INTEREST IN ASSOCIATES (CONTINUED)

         Details of the associates, all of which are unlisted corporate
         entities, are as follows:

<TABLE>
<CAPTION>
                                                             Proportion of
                                        Place of               ownership
                                      incorporation          interest held                Principal
Name of associate                     and operation        by the subsidiary              activity
<S>                                   <C>                  <C>                  <C>
China Motion United                     Hong Kong                 30%                         Provision of
 Telecom Limited                                                                telecommunication services

Shenzhen China Motion                      PRC                    30%                         Provision of
 Telecom United                                                                 telecommunication services
 Limited

Fujian Nokia Mobile                        PRC                    50%                 Network planning and
 Communication Technology                                                         optimizing construction-
 Company Limited                                                                  testing and supervising,
                                                                                       technology support,
                                                                               development and training of
                                                                                        Nokia GSM 900/1800
                                                                                      Mobile Communication
                                                                                                    System
</TABLE>

16       INVESTMENT SECURITIES

<TABLE>
<CAPTION>
                                                                December 31,
                                                             ------------------

                                                              2001         2002
                                                              RMB          RMB
<S>                                                           <C>          <C>
Unlisted equity securities in the PRC, at cost                  77           77
                                                              ====         ====
</TABLE>

                                      F-46

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

17       DEFERRED TAX

         Movements on deferred taxation comprise:

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                     -------------------
                                                                      2001         2002
                                                                      RMB          RMB
<S>                                                                   <C>          <C>
Balance at beginning of year                                          3,046        1,476
Acquired on acquisition of subsidiaries                                   -          619
Transferred (to)/from consolidated statements of income (Note 8)     (1,570)       1,476
                                                                     ------       ------

Balance at end of year                                                1,476        3,571
                                                                     ======       ======
</TABLE>

         Deferred tax of the Group provided for are as follows:

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           ---------------------

                                                                              2001         2002
                                                                              RMB          RMB
<S>                                                                        <C>           <C>
Deferred tax assets:
Provision for obsolete inventories                                               4            16
Write-down and write-off of fixed assets relating to network equipment         171           200
Amortization of deferred revenue                                               140           154
Income recognition on prepaid service fees                                   1,161         3,259
                                                                            ------        ------

                                                                             1,476         3,629

Deferred tax liabilities:
Capitalized interest                                                             -           (58)
                                                                            ------        ------

Net deferred tax assets                                                      1,476         3,571

Less: Current portion of net deferred tax assets                            (1,362)       (3,116)
                                                                            ------        ------

                                                                               114           455
                                                                            ======        ======
</TABLE>

         Deferred tax assets of the Group not provided for are as follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                              ------------------

                                                               2001        2002
                                                               RMB         RMB
<S>                                                            <C>         <C>
Provision for doubtful accounts                                1,204       1,362
                                                               =====       =====
</TABLE>

                                      F-47

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

17       DEFERRED TAX (CONTINUED)

         As described in Note 13, in connection with the Restructuring and the
         subsequent acquisitions, the fixed assets of Guangdong Mobile and
         Zhejiang Mobile, Jiangsu Mobile, Fujian Mobile, Henan Mobile and Hainan
         Mobile, Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile,
         Liaoning Mobile, Shandong Mobile and Guangxi Mobile, and Anhui Mobile,
         Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan
         Mobile, Shaanxi Mobile and Shanxi Mobile were revalued on May 31, 1997,
         December 31, 1997, June 30, 1999, June 30, 2000 and December 31, 2001,
         respectively. As a result of such valuation, the fixed assets basis
         differences that gave rise to the potential deferred tax liabilities of
         these subsidiaries as of May 31, 1997, December 31, 1997, June 30,
         1999, June 30, 2000 and December 31, 2001 amounting to RMB547, RMB149,
         RMB825, RMB1,809 and RMB2,011, respectively, were eliminated.

         Additionally, the tax losses carried forward relating to Liaoning
         Mobile and Guangxi Mobile, and Chongqing and Sichuan Mobile of RMB72
         and RMB378 were eliminated as of June 30, 2000 and December 31, 2001
         respectively.

18       DEFERRED EXPENSES

<TABLE>
<CAPTION>
                                                          Year ended December 31,
                                                          -----------------------

                                                           2001              2002
                                                           RMB               RMB
<S>                                                       <C>                <C>
Balance at beginning of year                                164               180
Additions during the year                                    55                53
Less:  Amortization for the year                            (39)              (43)
                                                          -----              ----

Balance at the end of year                                  180               190
                                                          =====              ====
</TABLE>

                                      F-48

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

19       ACCOUNTS PAYABLE

         Included in accounts payable as at December 31, 2001 and 2002 are
         amounts due to the China Telecom Group amounting to RMB1,725 and
         RMB2,119 respectively, representing primarily payables for leased lines
         and interconnection expenses.

         The ageing analysis of accounts payable as at December 31 is analyzed
         as follows:

<TABLE>
<CAPTION>
                                                      December 31,
                                                  ---------------------

                                                   2001           2002
                                                   RMB            RMB
<S>                                               <C>            <C>
Amounts payables in the next:
1 month or on demand                               5,964         10,904
2-3 months                                         1,634          2,160
4-6 months                                         1,022          2,599
7-9 months                                         1,049          1,594
10-12 months                                       1,648          1,994
                                                  ------         ------
                                                  11,317         19,251
                                                  ======         ======
</TABLE>

20       BANK LOANS AND OTHER INTEREST-BEARING BORROWINGS

<TABLE>
<CAPTION>
                                                                 December 31,
                              -----------------------------------------------------------------------------
                                               2001                                        2002
                              ----------------------------------          ---------------------------------
                                                Non-                                      Non-
                                Current        current                      Current      current
                              liabilities    liabilities   Total          liabilities  liabilities    Total
                              ------------   -----------   -----          -----------  ------------   -----
                       Note       RMB            RMB        RMB              RMB          RMB          RMB
<S>                    <C>    <C>            <C>           <C>            <C>          <C>           <C>
Bank loans              (a)     4,319          5,680       9,999           6,243           2,613      8,856
Other loans             (a)       212            247         459           1,889          10,063     11,952
Fixed rate notes        (b)         -          4,956       4,956               -           4,961      4,961
Convertible
 notes                  (c)         -          5,708       5,708               -           5,711      5,711
Bonds                   (d)         -          5,000       5,000               -          13,000     13,000
                                -----         ------      ------           -----          ------     ------
                                4,531         21,591      26,122           8,132          36,348     44,480
                                =====         ======      ======           =====          ======     ======
</TABLE>

                                      F-49

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

20       BANK LOANS AND OTHER INTEREST-BEARING BORROWINGS (CONTINUED)

         All of the above bank and other loans are unsecured.

         At December 31, 2002, other loans include designated loans borrowed
         from China Mobile, the ultimate holding company, totalling RMB11,680,
         which bear interest rates between 3.45% to 3.57% with maturities in
         2003 to 2004.

         The Group's borrowings under short-term bank and other loans are used
         primarily to finance construction projects and generally consist of
         unsecured loans and are repayable in full on respective due dates with
         interest rates ranging from 5.02% to 7.29% at December 31, 2001 and
         from 3.45% to 7.5% at December 31, 2002. The Group's weighted average
         interest rate on short-term loans was 5.67% and 4.48% at December 31,
         2001 and 2002, respectively. Included in short-term bank and other
         loans as of December 31, 2002, there is RMB2,500 syndicated loan.
         Guangdong Mobile, Zhejiang Mobile, Jiangsu Mobile, Fujian Mobile, Henan
         Mobile and Hainan Mobile (the "six subsidiaries") have provided joint
         and several guarantees in respect of these loans. Under these
         guarantees, the six subsidiaries will not be permitted to incur other
         indebtedness or contingent liability without prior written consent of
         the relevant lenders if the aggregate outstanding amount of their
         indebtedness and contingent liabilities exceeds 120% of their
         collective owners' equity. For the years presented, the six
         subsidiaries have complied with their debt covenants.

(a)      LONG-TERM BANK AND OTHER LOANS

<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                         ----------------
                                                                                         2001        2002
                                  Interest rate and final maturity                       RMB         RMB
<S>                               <C>                                                    <C>         <C>
RENMINBI DENOMINATED BANK LOANS:

For construction of               Floating interest rates ranging from 5.22% to
 telecommunications network        6.03% per annum as of December 31, 2002 with
                                   maturities 2003 to 2008 (i)                           2,245       2,899

                                  Fixed interest rates ranging from 5.46% to 5.94%
                                   per annum as of December 31, 2002 with
                                   maturities in 2003                                    3,449         785
</TABLE>

                                      F-50

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                             for the year ended December 31,2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

20       BANK LOANS AND OTHER INTEREST - BEARING BORROWINGS (CONTINUED)

(a)      LONG-TERM BANK AND OTHER LOANS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                         --------------------
                                                                                           2001          2002
                              Interest rate and final maturity                             RMB           RMB
<S>                                                                                       <C>           <C>
RENMINBI DENOMINATED BANK LOANS:

For working capital           Floating interest rate ranging from 4.94% to
                                5.49% per annum as of December 31, 2002 with
                                maturities through 2005                                   2,500          2,950

                              Fixed interest rates ranging from 5.35% to 5.94%
                                per annum as of December 31, 2001 with
                                maturities 2003 to 2004                                      70              -

RENMINBI DENOMINATED OTHER LOANS:

For construction of           Floating interest rate at 3.57% per annum as of
  telecommunications            December 31, 2002 with maturities in 2004
  network                                                                                     -          9,980

US DOLLAR DENOMINATED BANK LOANS:

For construction of           Floating interest rate at 3.68% per annum as of
  telecommunications            December 31, 2002 with maturities in 2003
  network                                                                                    33             69

                              Fixed interest rate ranging from 5.25% to 5.75%
                                per annum as of December 31, 2002 with
                                maturities through 2005                                       -            188

US DOLLAR DENOMINATED OTHER LOANS:

For construction of           Floating interest rates ranging from 4.36% to
  telecommunications            8.24% per annum as of December 31, 2001
  network                       with maturities through 2002                                 46              -

                              Fixed interest rate at 7.5% per annum as of
                                December 31, 2002 with maturities through 2004              413            248
                                                                                         ------         ------

Total long-term loans                                                                     8,756         17,119
Less: current portion                                                                    (2,829)        (4,443)
                                                                                         ------         ------
                                                                                          5,927         12,676
                                                                                         ======         ======
</TABLE>

(i)      At December 31, 2002, bank loans amounting to RMB750 was guaranteed by
         Hebei Provincial Telecommunications Company ("PTC").

                                      F-51

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                             for the year ended December 31,2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

20       BANK LOANS AND OTHER INTEREST - BEARING BORROWINGS (CONTINUED)

(a)      LONG-TERM BANK AND OTHER LOANS (CONTINUED)

         The aggregate maturities of long-term bank and other loans subsequent
         to December 31, 2002 are as follows:

<TABLE>
<CAPTION>
                      RMB
<S>                 <C>
2003                 4,443
2004                11,624
2005                   942
2006                    40
2007                    40
Thereafter              30
                    ------
                    17,119
                    ======
</TABLE>

         Interest expense, net of the amounts capitalized, is as follows:

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                                ------------------------
                                                 2000     2001      2002
                                                  RMB      RMB       RMB
<S>                                             <C>      <C>       <C>
Interest incurred                                477     1,068     1,213
Interest element of capital lease                 52       129        47
Interest capitalized                            (119)      (88)     (181)
                                                ----     -----     -----
                                                 410     1,109     1,079
Interest expenses of fixed rate notes            393       394       394
Interest expenses of convertible notes            21       129       128
Interest expenses of bonds                         -       108       251
                                                ----     -----     -----
Interest expense                                 824     1,740     1,852
                                                ====     =====     =====
</TABLE>

                                      F-52

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                             for the year ended December 31,2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

20       BANK LOANS AND OTHER INTEREST - BEARING BORROWINGS (CONTINUED)

(b)      FIXED RATE NOTES

         On November 2, 1999, the Company issued unsecured fixed rate notes (the
         "FRN") with a principal amount of US$600 at an issue price equal to
         99.724% of the principal amount of the FRN, due on November 2, 2004.
         The FRN bear interest at the rate of 7.875% per annum and such interest
         is payable semi-annually on May 2 and November 2 of each year,
         commencing May 2, 2000. In accordance with the covenants of the FRN,
         there is a limitation on the Group's pledges, sale and leaseback
         transactions and the ability of the Company's subsidiaries to incur
         debt. So long as any notes remain outstanding, whereas no additional
         debt is allowed to incur by any subsidiaries if the aggregate debt of
         the subsidiaries exceeds 120% of the consolidated adjusted earnings
         before interest, tax, depreciation, amortization and write-down and
         write-off of fixed assets ("adjusted EBITDA") for the most recently
         completed 12 months period. For the years presented, the Group has
         complied with the above covenants.

(c)      CONVERTIBLE NOTES

         (i)      On November 3, 2000, the Company issued convertible notes (the
                  "CN") in an aggregate principal amount of US$690 at an issue
                  price equal to 100% of the principal amount of the CN. The CN
                  bear interest at the rate of 2.25% per annum, payable
                  semi-annually on May 3 and November 3 of each year commencing
                  May 3, 2001. Unless previously redeemed, converted or
                  purchased and cancelled, the CN will be redeemed at 100% of
                  the principal amount, plus any accrued and unpaid interest on
                  November 3, 2005. The CN are unsecured, senior and
                  unsubordinated obligations of the Company.

         (ii)     The CN are convertible at any time on or after December 3,
                  2000 and before the close of business on the third business
                  day prior to the earlier of (1) the maturity date of November
                  3, 2005 or (2) the redemption date fixed for early redemption,
                  at an initial conversion price, subject to adjustment in
                  certain events, of HK$59.04 per share.

         (iii)    During the year, no CN were converted into ordinary shares of
                  the Company.

                                      F-53

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                             for the year ended December 31,2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

20       BANK LOANS AND OTHER INTEREST - BEARING BORROWINGS (CONTINUED)

(c)      CONVERTIBLE NOTES (CONTINUED)

         (iv)     In accordance with the covenants given by the Company given to
                  the note holders, there is a limitation on the Group's
                  pledges, sale and leaseback transactions and the ability of
                  the Company's subsidiaries to incur debt. So long as any notes
                  remain outstanding, whereas no additional debt is allowed to
                  incur by any subsidiaries if the aggregate debt of the
                  subsidiaries exceeds 120% of the consolidated adjusted EBITDA
                  for the most recently completed 12 months period. For the
                  years presented, the Group has complied with the above
                  covenants.

(d)      BONDS

         (i)      On June 18, 2001, Guangdong Mobile issued guaranteed bonds
                  with a principal amount of RMB5,000 (the "Ten-year Bonds") at
                  an issue price equal to the face value of the bonds.

                  The Ten-year Bonds bear interest at a floating rate, adjusted
                  annually from the first day of each interest payable year and
                  payable annually. The bonds, redeemable at 100% of the
                  principal amount, will mature on June 18, 2011 and the
                  interest will be accrued up to June 17, 2011. Incidental costs
                  incurred in relation to the issue of the bonds are amortized
                  on a straight-line basis over the period from the date of
                  issue to the date of maturity.

         (ii)     On October 28, 2002, Guangdong Mobile issued five-year
                  guaranteed bonds (the "Five-year Bonds") and fifteen-year
                  guaranteed bonds (the "Fifteen-year Bonds"), with a principal
                  amount of RMB3,000 and RMB5,000 respectively, at an issue
                  price equal to the face value of the bonds.

                  The Five-year Bonds and the Fifteen-year Bonds bear interest
                  at the rate of 3.5% per annum and 4.5% per annum respectively
                  and payable annually. They are redeemable at 100% of the
                  principal amount and will mature on October 28, 2007 and
                  October 28, 2017 and the interest will be accrued up to
                  October 27, 2007 and October 27, 2017 respectively.

         The Company has issued a joint and irrevocable guarantee (the
         "Guarantee") for the performance of the above bonds. China Mobile has
         also issued a further guarantee in relation to the performance by the
         Company of its obligations under the Guarantee. The maximum exposure of
         the Guarantee is the face value of the bonds which have been reflected
         as liabilities in the consolidated balance sheet as at December 31,
         2002.

                                      F-54

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                             for the year ended December 31,2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

21       OBLIGATIONS UNDER CAPITAL LEASE

         (i)      Hainan Mobile entered into certain capital lease agreements to
                  finance the purchase of telecommunications equipment. The
                  leases are denominated in Renminbi and the lease term is
                  expiring in 2003. The legal title of the equipment will be
                  transferred to Hainan Mobile when all outstanding lease
                  payments are paid.

         (ii)     The following is a schedule by years of future minimum lease
                  payments under capital lease together with the present value
                  of the net minimum lease payments as of December 31, 2002:

<TABLE>
<CAPTION>
                                                              RMB
<S>                                                           <C>
2003                                                           71
                                                              ---
Total minimum lease payments                                   71
Less: Amount representing interest                             (3)
                                                              ---
Present value of net minimum lease payments                    68
Less: Obligations under capital lease - current portion       (68)
                                                              ---
                                                                -
                                                              ===
</TABLE>

         (iii)    As of December 31, 2002, capital lease payments of RMB68 is
                  guaranteed by Hainan PTC.

22       ACCRUED EXPENSES AND OTHER PAYABLES

<TABLE>
<CAPTION>
                                               December 31,
                                           ------------------
                                            2001        2002
                                             RMB         RMB
<S>                                        <C>         <C>
Other payables                              6,744       5,355
Receipts in advance                         1,674       8,066
Accrued salaries, wages and benefits        1,792       2,026
Accrued expenses                              630       1,013
                                           ------      ------
                                           10,840      16,460
                                           ======      ======
</TABLE>

                                      F-55

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

23       DEFERRED REVENUE

         Deferred revenue includes primarily prepaid service fees received from
         subscribers which is recognized as income when the cellular telephone
         services are rendered upon actual usage by subscribers.

         Deferred revenue also includes income from assignment of rights. The
         balance at year end represents the unamortized portion of proceeds
         received by Guangdong Mobile from certain distributors of
         telecommunications services pursuant to agreements under which
         Guangdong Mobile sold certain mobile phone numbers to these
         distributors at RMB0.0092 each, in return for assigning to such
         distributors the rights to certain revenue such as usage fees, monthly
         fees, connection fees, telephone number selection fees and 50%
         value-added services fees from those subscribers over a period of seven
         years. The distributors have no recourse to the Group under the
         relevant agreements and the Group retains no credit risk from such
         subscribers during the seven-year period. The proceeds received by
         Guangdong Mobile have been accounted for as deferred revenue and are
         amortized over a period of seven years. After the expiration of the
         relevant agreements, the rights to income from these subscribers will
         revert to the Group.

<TABLE>
<CAPTION>
                                                                December 31,
                                                            -------------------
                                                             2001        2002
                                                              RMB         RMB
<S>                                                         <C>         <C>
Balance at beginning of year                                  3,654       4,237
Additions on acquisition of subsidiaries                          -       1,022
Additions during the year                                    23,191      35,907
Recognized in the consolidated statements of income         (22,608)    (33,537)
                                                            -------     -------

Balance at end of year                                        4,237       7,629

Less:  Current portion                                       (3,417)     (6,760)
                                                            -------     -------

Non-current portion                                             820         869
                                                            =======     =======
</TABLE>

                                      F-56

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

24       COMMITMENTS AND CONTINGENCIES

(a)      OPERATING LEASES

         Future minimum lease payments as of December 31, 2002 under
         non-cancellable operating leases having initial or remaining lease
         terms of more than one year are as follows:

<TABLE>
<CAPTION>
                         RMB
<S>                    <C>
2003                    6,088
2004                    2,751
2005                    1,927
2006                    1,089
2007                      861
Thereafter              2,002
                       ------
                       14,718
                       ======
</TABLE>

(b)      CAPITAL COMMITMENTS

         As of December 31, 2002, the Group had capital commitments as follows:

<TABLE>
<CAPTION>
                                         RMB
<S>                                    <C>
Authorized and contracted for           6,437
Authorized but not contracted for      26,690
                                       ------
                                       33,127
                                       ======
</TABLE>

                                      F-57

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

25       EMPLOYEE AND RETIREMENT BENEFITS

(a)      As stipulated by the regulations of the PRC, the subsidiaries in the
         PRC participate in basic defined contribution pension plans organized
         by their respective Municipal Governments under which they are
         governed.

         Employees in the PRC are entitled to retirement benefits equal to a
         fixed proportion of their salary at their normal retirement age. The
         Group has no other material obligation for payment of basic retirement
         benefits beyond the annual contributions which are calculated at a rate
         based on the salaries, bonuses and certain allowances of its employees.

         Other than the above, certain subsidiaries also participate in
         supplementary defined contribution retirement plans managed by
         independent insurance companies whereby the subsidiaries are required
         to make contributions to the retirement plans at fixed rates of the
         employees' salary costs.

         Expenses incurred by the subsidiaries in connection with the retirement
         scheme were RMB335, RMB287 and RMB451, respectively, for three years
         ended December 31, 2000, 2001 and 2002, respectively.

(b)      The Group also operates a Mandatory Provident Fund Scheme ("the MPF
         scheme") under the Hong Kong Mandatory Provident Fund Schemes Ordinance
         for employees employed under the jurisdiction of the Hong Kong
         Employment Ordinance. The MPF scheme is a defined contribution
         retirement scheme administered by independent trustees. Under the MPF
         scheme, the employer and its employees are each required to make
         contributions to the scheme at 5% of the employees' relevant income,
         subject to a cap of monthly relevant income of HK$0.02. Contributions
         to the scheme vest immediately.

                                      F-58

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

25       EMPLOYEE AND RETIREMENT BENEFITS (CONTINUED)

(c)      Pursuant to PRC regulation and prior to the Restructuring and the
         subsequent acquisitions, the subsidiaries were required to provide
         staff quarters to eligible employees and their immediate families. The
         Group has established separate employee housing reform schemes in order
         to comply with the regulation at the provincial level. Under such
         schemes, the Group is required to either purchase or build housing
         which is to be sold or rented to eligible employees. Through May 31,
         1997, housing provided under the schemes was shared between Guangdong
         Mobile and the Guangdong PTA, in Guangdong Mobile's case, and purchased
         or built entirely by the Zhejiang PTA, in Zhejiang Mobile's case. Prior
         to the acquisitions of Jiangsu Mobile, Fujian Mobile, Henan Mobile,
         Hainan Mobile, Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei
         Mobile, Shandong Mobile, Guangxi Mobile, Anhui Mobile, Jiangxi Mobile,
         Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile and
         Shaanxi Mobile, housing provided under the schemes were purchased or
         built entirely by the relevant PTAs or PTCs, except Liaoning Mobile and
         Shanxi Mobile where prior to the acquisition housing provided under the
         schemes were provided by Liaoning Mobile and Shanxi Mobile
         respectively. All previous costs incurred by the relevant PTAs or PTCs
         have not been charged to the Group.

         Following the Restructuring and the subsequent acquisitions, the Group
         had accrued RMB230 for such housing schemes in respect of employees
         through December 31, 2000. Since the housing schemes had been
         terminated effective from January 1, 2001, no further cost was incurred
         in 2001 and subsequent year.

26       RELATED PARTY TRANSACTIONS

(a)      Companies are considered to be related if one company has the ability,
         directly or indirectly, to control the other company or exercise
         significant influence over the other company in making financial and
         operating decisions. Companies are also considered to be related if
         they are subject to common control or common significant influence.

         The Group has significant transactions with China Mobile (the Company's
         ultimate holding company) and its subsidiaries, other than the Group,
         (the "China Mobile Group").

                                      F-59

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         As a result of the restructuring in May 2000, the MII ceased to have
         controlling interests in China Mobile, the DGT and the PTCs. However,
         the MII continues in its capacity as the industry regulator providing
         policy guidance and exercising regulatory authority over all
         telecommunications services providers in the PRC. China Telecom was set
         up as a result of the restructuring to operate the fixed line telephone
         networks in the PRC previously operated by the DGT and the PTCs, and is
         owned by the PRC government. As such, the MII or entities under the
         control of the MII including the DGT and the PTCs, and the China
         Telecom Group since its formation, are no longer considered to be
         related parties of the Group since May 2000.

         The following is a summary of principal related party transactions
         entered into by the Group with China Mobile Group since its formation,
         and transactions which were carried out by the Group with the MII and
         the entities under the control of the MII including the DGT and the
         PTCs prior to May 2000.

<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                   ------------------------------------------------------
                                                    Note            2000            2001             2002
                                                                    RMB             RMB              RMB
<S>                                                <C>             <C>              <C>             <C>
Interconnection revenue                               (i)          1,744            1,793           2,329
Interconnection charges                              (ii)          2,864            1,772           2,290
Leased line charges                                 (iii)          2,464              278             484
Roaming revenue                                      (iv)          2,674            4,688           5,838
Roaming expenses                                      (v)          2,076            4,559           6,043
Spectrum fees                                        (vi)             15               18             224
Operating lease charges                             (vii)            226              138             189
Sales commission expenses                          (viii)            248                -               -
Debt collection service fees                       (viii)             91                -               -
Roaming billing processing fees                    (viii)            148              201             225
Equipment maintenance service fees                   (ix)              1               46              54
Rental charges of synchronized clock ports            (x)              3                -               -
Construction and related service fees                (xi)             20              161             223
Purchase of transmission tower and
  transmission tower-related service and
  antenna maintenance service fees                  (xii)             16               55              87
Prepaid card sales commission income               (xiii)            114              241             197
Prepaid card sales commission expenses             (xiii)             99              315             195
Technology platform development and
  maintenance service income                        (xiv)              -                -              39
Telecommunications lines maintenance service
  fees                                               (xv)              -                -              22
Interest paid / payable                             (xvi)              -                -             645
</TABLE>

                                      F-60

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         NOTES:

         (i)      Interconnection revenue represents the amounts received or
                  receivable from the China Mobile Group in respect of long
                  distance calls made by non-Group's subscribers.

                  For the year ended December 31, 2000, interconnection revenue
                  also included amounts received or receivable from the DGT in
                  respect of long distance calls made by non-subscribers in
                  Guangdong, Zhejiang, Jiangsu, Fujian, Henan and Hainan
                  provinces ("the relevant provinces") and amounts received or
                  receivable from the Guangdong PTC, the Zhejiang PTC, the
                  Jiangsu PTC, the Fujian PTC, the Henan PTC and the Hainan PTC
                  ("the relevant PTCs") in respect of long distance calls made
                  between the Group's cellular networks and the fixed line
                  networks in the relevant provinces and outbound calls
                  originating from the fixed line networks in the relevant
                  provinces which terminate on GSM network operators in other
                  provinces in the PRC prior to May 2000.

         (ii)     Interconnection charges represent the amounts paid or payable
                  to the China Mobile Group in respect of long distance calls
                  made by the Group's subscribers roaming outside their
                  registered provinces.

                  For the year ended December 31, 2000, interconnection expenses
                  also included amounts paid or payable to the DGT in respect of
                  long distance calls made by the Group's subscribers in the
                  relevant provinces roaming outside their registered provinces
                  and amounts paid or payable to the relevant PTCs in respect of
                  calls made between the Group's cellular network, the fixed
                  line networks in the relevant provinces and other GSM network
                  operators in other provinces in the PRC prior to May 2000.

         (iii)    Leased line charges represent expenses paid or payable to the
                  China Mobile Group for the use of inter-provincial leased
                  lines which link the Group's mobile switching centers together
                  and with other mobile switching centers of the China Mobile
                  Group.

                  For the year ended December 31, 2000, leased line charges also
                  included expenses paid or payable to the relevant PTCs for the
                  use of leased line prior to May 2000.

                                      F-61

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         NOTES: (CONTINUED)

         (iv)     A cellular telephone user using roaming services is charged at
                  the respective roaming usage rate for roaming in calls, in
                  addition to applicable long distance charges. Roaming revenue
                  represents domestic and international roaming in usage charges
                  from non-subscribers received or receivable from the relevant
                  domestic and international cellular telephone operators
                  through the China Mobile Group.

         (v)      A cellular telephone user using roaming services is charged at
                  the respective roaming usage rate for roaming out calls, in
                  addition to applicable long distance charges. Roaming expenses
                  represent the amount of domestic and international roaming out
                  charges received or receivable from subscribers which is to be
                  remitted to the relevant domestic and international cellular
                  telephone operators for their share of the roaming revenue
                  through the China Mobile Group.

         (vi)     Spectrum fees represent the spectrum usage fees paid or
                  payable to the China Mobile Group for the usage of the
                  frequency bands allocated to the Company's subsidiaries in the
                  PRC.

         (vii)    Operating lease charges represent the rental and property
                  management fees paid or payable to the subsidiaries of China
                  Mobile for operating leases in respect of land and buildings
                  and others.

                  For the year ended December 31, 2000, operating lease charges
                  also included rental and property management fee paid or
                  payable to the relevant PTCs prior to May 2000.

         (viii)   The Group entered into certain services agreements in respect
                  of marketing services with authorized dealers, debt collection
                  services and roaming billing processing with subsidiaries of
                  China Mobile or the relevant PTCs prior to May 2000.

                  Debt collection service fees represent the amounts paid or
                  payable to subsidiaries of China Mobile for their provision of
                  debt collection services to the Company's subsidiaries.

                                      F-62

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         NOTES: (CONTINUED)

                  Roaming billing processing fees represent the amounts paid or
                  payable to the China Mobile Group for the provision of the
                  roaming billing processing services to the Company's
                  subsidiaries.

                  For the year ended December 31, 2000, sales commission, debt
                  collection service fees and roaming billing processing fees
                  also included amounts paid or payable to the relevant PTCs for
                  services rendered in the relevant provinces prior to May 2000.

         (ix)     Equipment maintenance service fees represent the amount paid
                  or payable to subsidiaries of China Mobile for the provision
                  of the maintenance services to the Company's subsidiaries.

                  For the year ended December 31, 2000, equipment maintenance
                  service fees included amounts paid or payable to Fujian PTC
                  for services rendered in the relevant province prior to May
                  2000.

         (x)      Rental charges of synchronized clock ports represent expenses
                  paid or payable to the relevant PTCs for leasing of
                  synchronized clock ports by the Company's subsidiaries prior
                  to May 2000.

         (xi)     Construction and related service fees represent the amount
                  paid or payable to subsidiaries of China Mobile for the
                  provision of telecommunications projects plannings, design and
                  construction services and telecommunications lines and
                  pipelines construction services to the Company's subsidiaries.

         (xii)    This represents payment made by Hebei Mobile to acquire
                  transmission towers from relevant subsidiary of China Mobile
                  and expenses paid or payable to relevant subsidiary of China
                  Mobile for the provision of transmission tower related
                  services and antenna maintenance services provided to Hebei
                  Mobile; and payment made by the Group to Hubei Communications
                  Services Company, a subsidiary of China Mobile in respect of
                  the purchase of transmission towers and for the provision of
                  transmission tower related services.

                                      F-63

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         NOTES: (CONTINUED)

         (xiii)   Prepaid card sales commission income and commission expenses
                  represent handling charges received/receivable from
                  subsidiaries of China Mobile to the Company's subsidiaries or
                  paid/payable by the Company's subsidiaries to subsidiaries of
                  China Mobile in respect of prepaid card services.

         (xiv)    Technology platform development and maintenance service income
                  represents the amounts received or receivable from China
                  Mobile in respect of equipment charges, systems integration
                  fees, software licensing fees, technical support fees and/or
                  major overhaul charges for the mobile information service
                  center platform.

         (xv)     Telecommunications lines maintenance service fees represent
                  the amount paid or payable by Anhui Mobile, Jiangxi Mobile,
                  Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile,
                  Shaanxi Mobile and Shanxi Mobile to the relevant subsidiaries
                  of China Mobile for the provision of telecommunications lines
                  maintenance services.

         (xvi)    Interest paid/payable represents the interest paid or payable
                  to China Mobile and CMHK (BVI) in respect of the designated
                  loans borrowed and the balance of purchase consideration for
                  acquisition of subsidiaries.

(b)      Pursuant to a resolution passed at the extraordinary general meeting
         held on June 24, 2002, the Company acquired the entire issued share
         capital of Anhui Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI,
         Sichuan Mobile BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile
         BVI and Shanxi Mobile BVI from CMHK (BVI), the immediate holding
         company of the Company, for a total consideration of US$8,573 (RMB
         equivalent 70,959). The consideration was satisfied by a cash payment
         of RMB49,248 and allotment of shares to CMHK (BVI) amounted to
         HK$20,458 (RMB equivalent 21,711). The only assets of each of Anhui
         Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI, Sichuan Mobile
         BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile BVI and Shanxi
         Mobile BVI are their interests in the entire equity of Anhui Mobile,
         Jiangxi Mobile, Chongqing Mobile, Sichuan Mobile, Hubei Mobile, Hunan
         Mobile, Shaanxi Mobile and Shanxi Mobile, respectively.

                                      F-64

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

26       RELATED PARTY TRANSACTIONS (CONTINUED)

         Pursuant to the ordinary resolution passed by the Company's
         shareholders on November 10, 2000, the Company acquired the entire
         issued share capital of Beijing Mobile BVI, Shanghai Mobile BVI,
         Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning Mobile BVI, Shandong
         Mobile BVI and Guangxi Mobile BVI from CMHK (BVI), the immediate
         holding company of the Company, for a total consideration of HK$256,021
         (RMB equivalent 271,485). The consideration was satisfied by a cash
         payment of HK$74,609 (RMB equivalent 79,116) and allotment of shares to
         CMHK (BVI) amounted to HK$181,412 (RMB equivalent 192,369). The only
         assets of each of Beijing Mobile BVI, Shanghai Mobile BVI, Tianjin
         Mobile BVI, Hebei Mobile BVI, Liaoning Mobile BVI, Shandong Mobile BVI
         and Guangxi Mobile BVI are their interests in the entire equity of
         Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile, Liaoning
         Mobile, Shandong Mobile and Guangxi Mobile, respectively.

                                      F-65

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY

         SHARE CAPITAL

<TABLE>
<CAPTION>
                                                                                Nominal
                                                         Number of             amount of
                                                         ordinary            Each ordinary
                                                          shares                 share              Amount
                                                                                                     HK$
<S>                                                    <C>                   <C>                    <C>
AUTHORIZED:

Balance at December 31, 2001 and 2002                  30,000,000,000            HK$0.10             3,000
                                                       ==============                               ======

ISSUED AND FULLY PAID:

Balance at January 1, 2001                             18,605,312,241            HK$0.10             1,861

Shares issued under share option scheme                        93,000            HK$0.10                 -
                                                       --------------                               ------

Balance at December 31, 2001                           18,605,405,241                                1,861
                                                       ==============                               ======
                                                                                     RMB
                                                                              equivalent             1,986
                                                                                                    ======

Balance at January 1, 2002                             18,605,405,241            HK$0.10             1,861

Issue of new shares                                       236,634,212            HK$0.10                24

Issue of consideration shares for acquisition
  of subsidiaries                                         827,514,446            HK$0.10                82

Shares issued under share option scheme                     2,100,000            HK$0.10                 -
                                                       --------------                               ------

Balance at December 31, 2002                           19,671,653,899                                1,967
                                                       ==============                               ======
                                                                                     RMB
                                                                              equivalent             2,099
                                                                                                    ======
</TABLE>

                                      F-66
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY (CONTINUED)

         SHARE CAPITAL (CONTINUED)

         The Company was established in Hong Kong on September 3, 1997 as a
         limited company, with a registered share capital of HK$10,000 divided
         into 100,000 shares of HK$0.10 each, two of which were issued and
         credited as fully paid.

         At an extraordinary general meeting of the Company held on September
         27, 1997,

         (i)   the authorized share capital of the Company was increased from
               HK$10,000 to HK$1,600,000,000 by the creation of an additional
               15,999,900,000 shares of HK$0.10 each; and

         (ii)  9,009,999,998 shares were credited as fully paid and issued to
               CMHK (BVI) for the transfer of interests in Guangdong Mobile and
               Zhejiang Mobile to the Company.

         Pursuant to the resolutions passed on October 21, 1997, the Company
         issued 2,600,000,000 shares of HK$0.10 each at HK$11.68 per share and
         the shares were listed on the New York Stock Exchange and The Stock
         Exchange of Hong Kong Limited on October 22, 1997 and October 23, 1997,
         respectively. On November 7, 1997, the Company issued 170,788,000
         shares of HK$0.10 each at HK$11.68 per share by way of a placing among
         professional and institutional investors.

         Pursuant to ordinary resolutions passed at directors' meetings held on
         November 1, 1999 and November 3, 1999 respectively, the Company issued
         560,700,000 and 84,104,000 ordinary shares of HK$0.10 each to
         professional and institutional investors, at a consideration of
         HK$24.10 per share, for financing the acquisition of Fujian Mobile BVI,
         Henan Mobile BVI and Hainan Mobile BVI.

         Pursuant to an ordinary resolution passed at an extraordinary general
         meeting held on November 11, 1999, 1,273,195,021 ordinary shares of
         HK$0.10 each were issued and credited as fully paid to CMHK (BVI), at a
         consideration of HK$24.10 per share as part of the consideration for
         the acquisition of Fujian Mobile BVI, Henan Mobile BVI and Hainan
         Mobile BVI.

                                      F-67
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY (CONTINUED)

         SHARE CAPITAL (CONTINUED)

         Pursuant to resolutions passed at directors' meetings held on November
         2, 2000 and November 8, 2000 respectively, the Company issued
         1,068,396,405 and 47,247,440 ordinary shares of HK$0.10 each to
         professional and institutional investors, at a consideration of HK$48
         per share, for financing the acquisition of Beijing Mobile BVI,
         Shanghai Mobile BVI, Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning
         Mobile BVI, Shandong Mobile BVI and Guangxi Mobile BVI.

         Pursuant to ordinary resolutions passed at an extraordinary general
         meeting held on November 10, 2000, the Company's authorized share
         capital was increased to HK$3,000,000,000 by the creation of an
         additional 14,000,000,000 ordinary shares of HK$0.10 each, ranking pari
         passu with the existing shares of the Company, and 3,779,407,375
         ordinary shares of HK$0.10 each were issued and credited as fully paid
         to CMHK (BVI), at a consideration of HK$48 per share as part of the
         consideration for the acquisition of Beijing Mobile BVI, Shanghai
         Mobile BVI, Tianjin Mobile BVI, Hebei Mobile BVI, Liaoning Mobile BVI,
         Shandong Mobile BVI and Guangxi Mobile BVI.

         Pursuant to a resolution passed at a directors' meeting held on May 16,
         2002, the Company issued 236,634,212 ordinary shares of HK$0.10 each to
         Vodafone Holdings (Jersey) Limited, at a consideration of HK$24.7217
         per share, for financing the acquisition of Anhui Mobile BVI, Jiangxi
         Mobile BVI, Chongqing Mobile BVI, Sichuan Mobile BVI, Hubei Mobile BVI,
         Hunan Mobile BVI, Shaanxi Mobile BVI and Shanxi Mobile BVI.

         Pursuant to an ordinary resolution passed at an extraordinary general
         meeting held on June 24, 2002, 827,514,446 ordinary shares of HK$0.10
         each were issued and credited as fully paid to CMHK (BVI) at HK$24.7217
         per share as part of the consideration of the acquisition of Anhui
         Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI, Sichuan Mobile
         BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile BVI and Shanxi
         Mobile BVI.

                                      F-68
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY (CONTINUED)

         RESERVES

         Capital reserve

         As mentioned in Note 1, this amount represents the total of the
         following:

         -     the additional earnings of Guangdong Mobile and Zhejiang Mobile
               from June 1, 1997 to September 26, 1997, the completion date of
               the Restructuring (RMB1,132);

         -     goodwill arising on the acquisition of Jiangsu Mobile BVI and
               Jiangsu Mobile on June 3, 1998 (RMB15,622), which has been
               eliminated against capital reserve immediately upon acquisition;

         -     goodwill arising on the acquisition of Fujian Mobile BVI, Henan
               Mobile BVI, Hainan Mobile BVI, Fujian Mobile, Henan Mobile and
               Hainan Mobile on November 11, 1999 (RMB42,440), which has been
               eliminated against capital reserve immediately upon acquisition;
               and

         -     goodwill arising on the acquisition of Beijing Mobile BVI,
               Shanghai Mobile BVI, Tianjin Mobile BVI, Hebei Mobile BVI,
               Liaoning Mobile BVI, Shandong Mobile BVI, Guangxi Mobile BVI,
               Beijing Mobile, Shanghai Mobile, Tianjin Mobile, Hebei Mobile,
               Liaoning Mobile, Shandong Mobile and Guangxi Mobile on November
               12, 2000 (RMB239,540), which has been eliminated against capital
               reserve immediately upon acquisition.

         PRC statutory reserves

         PRC statutory reserves include general reserve, enterprise expansion
         fund, statutory surplus reserve and statutory public welfare fund.

                                      F-69
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY (CONTINUED)

         RESERVES (CONTINUED)

         PRC statutory reserves (Continued)

         In accordance with Accounting Regulations for Business Enterprises,
         foreign investment enterprises in the PRC are required to transfer at
         least 10% of their profit after taxation, as determined under
         accounting principles generally accepted in the PRC ("PRC GAAP") to the
         general reserve until the balance of the general reserve is equal to
         50% of their registered capital. Moreover, they are required to
         transfer a certain percentage of their profit after taxation, as
         determined under PRC GAAP, to the enterprise expansion fund. During the
         year, appropriations were made by each of the above subsidiaries to the
         general reserve and the enterprise expansion fund each at 10% of their
         profit after taxation determined under PRC GAAP.

         The general reserve can be used to make good losses and to increase the
         capital of the subsidiaries while the enterprise expansion fund can be
         used to increase the capital of the subsidiaries, to acquire fixed
         assets and to increase current assets.

         At December 31, 2000, Shanghai Mobile has not yet registered as a
         wholly-foreign owned enterprise. As a result, appropriations were made
         by Shanghai Mobile, according to its Articles of Association to the
         statutory surplus reserve and the statutory public welfare fund both at
         10% of its profit after taxation determined under PRC GAAP during the
         year ended December 31, 2000.

         Statutory surplus reserve can be used to make good previous years'
         losses, if any, and may be converted into paid-up capital, provided
         that the balance after such conversion is not less than 25% of the
         registered capital of the subsidiaries. Statutory public welfare fund
         can only be utilized on capital items for the collective benefits of
         the employees such as the construction of staff quarters and other
         staff welfare facilities. This reserve is non-distributable other than
         in liquidation.

                                      F-70
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

27       SHAREHOLDERS' EQUITY (CONTINUED)

         RESERVES (CONTINUED)

         PRC statutory reserves (Continued)

         At December 31, 2001 and 2002, the balances of the general reserve,
         enterprise expansion fund, statutory surplus reserve and statutory
         public welfare fund were RMB5,766 and RMB9,577, RMB11,590 and
         RMB14,905, RMB181 and RMB99 and RMB139 and RMB133, respectively.

         Distributable reserves

         At December 31, 2001 and 2002, the amount of distributable reserves of
         the Company amounted to RMB6,780 and RMB23,430.

28       EQUITY COMPENSATION BENEFITS

         Pursuant to a resolution passed at an annual general meeting held on
         June 24, 2002, the share option scheme established on October 8, 1997
         (the "Old Scheme") was terminated and a new share option scheme (the
         "New Scheme") was adopted.

         Under the Old Scheme, the directors of the Company may, at their
         discretion, invite employees, including executive directors of the
         Company or any of its subsidiaries, to take up options to subscribe for
         shares of the Company. Under the New Scheme, the directors of the
         Company may, at their discretion, invite employees, including executive
         directors and non-executive directors of the Company, any of its
         holding companies and any of their respective subsidiaries and any
         entity in which the Company or any of its subsidiaries holds any equity
         interest, to take up options to subscribe for shares of the Company.

         The maximum aggregate number of shares which can be subscribed pursuant
         to options that are or may be granted under the above schemes equals to
         10% of the total issued share capital of the Company as at the date of
         adoption of the New Scheme. The consideration payable for the grant of
         each option is HK$1.00.

                                      F-71
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

28       EQUITY COMPENSATION BENEFITS (CONTINUED)

         For options granted before September 1, 2001 under the Old Scheme, the
         exercise price of options was determined by the directors of the
         Company at their discretion provided that such price may not be set
         below a minimum price which is the higher of:

         (i)   the nominal value of a share; and

         (ii)  80% of the average of the closing price of the share on The Stock
               Exchange of Hong Kong Limited (the "SEHK") on the five trading
               days immediately preceding the date on which the option was
               granted.

         With effect from September 1, 2001, the SEHK requires that the exercise
         price of options to be at least the higher of the nominal value of a
         share, the closing price of the shares on the SEHK on the date on which
         the option was granted and the average closing price of the shares on
         the SEHK for the five trading days immediately preceding the date on
         which the option was granted.

         For options granted under the New Scheme, the exercise price of options
         shall be determined by the directors of the Company at their discretion
         provided that such price may not be set below a minimum price which is
         the highest of:

         (i)   the nominal value of a share;

         (ii)  the closing price of the shares on the SEHK on the date on which
               the option was granted; and

         (iii) the average closing price of the shares on the SEHK for the five
               trading days immediately preceding the date on which the option
               was granted.

                                      F-72
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

28       EQUITY COMPENSATION BENEFITS (CONTINUED)

         Under both the Old Scheme and the New Scheme, the term of the option is
         determined by the directors at their discretion, provided that all
         options shall be exercised within 10 years after the adoption of the
         scheme (in the case of the Old Scheme) and within 10 years after the
         date on which the option is granted (in the case of the New Scheme).

         During the year ended December 31, 2001, share options involving a
         total number of 76,773,000 were granted under the Old Scheme to certain
         directors and employees of the Company. During the year ended December
         31, 2002, share options involving a total number 150,476,500 ordinary
         shares were granted under the New Scheme to certain directors and
         employees of the Company and no options were granted under the Old
         Scheme.

         During the year ended December 31, 2001 and 2002, options were
         exercised to subscribe for 93,000 and 2,100,000 ordinary shares of
         HK$0.10 each at a total consideration of HK$3.5 (RMB equivalent 3.7)
         and HK$23.3 (RMB equivalent 24.7).

                                      F-73
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

28       EQUITY COMPENSATION BENEFITS (CONTINUED)

         At December 31, 2001 and 2002, the outstanding options were as follows:

<TABLE>
<CAPTION>
                                                                     Price per
                                                                    share to be
                                        Normal period during          paid on                  Number of shares
                                           which options            exercise of            involved in the options
Date of options granted                     exercisable               options            outstanding at the year end
<S>                                     <C>                         <C>                  <C>

AT DECEMBER 31, 2002

November 26, 1999                         November 26, 1999          HK$33.91                    3,500,000
                                         to October 7, 2007

November 26, 1999                         November 26, 2002          HK$33.91                    3,500,000
                                         to October 7, 2007

April 25, 2000                            April 25, 2002 to          HK$45.04                   15,161,000
                                            October 7, 2007

April 25, 2000                            April 25, 2005 to          HK$45.04                   15,161,000
                                            October 7, 2007

June 22, 2001                                 June 22, 2003          HK$32.10                   37,719,750
                                         to October 7, 2007

June 22, 2001                                 June 22, 2006          HK$32.10                   37,719,750
                                         to October 7, 2007

July 3, 2002                                   July 3, 2004          HK$22.85                   75,104,500
                                            to July 2, 2012

July 3, 2002                                   July 3, 2007          HK$22.85                   75,104,500
                                            to July 2, 2012
</TABLE>

                                      F-74
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

28       EQUITY COMPENSATION BENEFITS (CONTINUED)

<TABLE>
<CAPTION>
                                                                     Price per
                                                                    share to be
                                         Normal period during         paid on                 Number of shares
                                            which options           exercise of            involved in the options
Date of options granted                      exercisable              options            outstanding at the year end
<S>                                      <C>                        <C>                  <C>

AT DECEMBER 31, 2001

March 9, 1998                                 March 9, 1998           HK$11.10                    2,100,000
                                           to March 8, 2006

November 26, 1999                         November 26, 1999           HK$33.91                    3,500,000
                                         to October 7, 2007

November 26, 1999                         November 26, 2002           HK$33.91                    3,500,000
                                         to October 7, 2007

April 25, 2000                            April 25, 2002 to           HK$45.04                   15,264,000
                                            October 7, 2007

April 25, 2000                            April 25, 2005 to           HK$45.04                   15,264,000
                                            October 7, 2007

June 22, 2001                                 June 22, 2003           HK$32.10                   38,111,500
                                         to October 7, 2007

June 22, 2001                                 June 22, 2006           HK$32.10                   38,111,500
                                         to October 7, 2007
</TABLE>

                                      F-75
<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated Financial Statements
                                            For the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

29       FOREIGN CURRENCY EXCHANGE

         The Renminbi is not freely convertible into foreign currencies. All
         foreign exchange transactions involving Renminbi must take place
         through the People's Bank of China or other institutions authorized to
         buy and sell foreign exchange or at a swap center.

         Currently the Company's subsidiaries established in the PRC are able to
         purchase foreign exchange for settlement of "current account
         transactions" (as defined in the applicable regulations), including
         payment of dividends without the approval of the State Administration
         of Foreign Exchange ("SAFE"). However, there can be no assurance that
         the current authorization for foreign investment enterprises to retain
         their foreign exchange to satisfy foreign exchange liabilities or to
         pay dividends in the future will not be limited or eliminated or that
         the subsidiaries of the Company will be able to obtain sufficient
         foreign exchange to pay dividends or satisfy their foreign exchange
         requirements. Foreign exchange transactions under the capital account
         continue to be subject to limitations and require approvals of the
         SAFE, which could affect the ability of the Company's subsidiaries
         established in the PRC to obtain foreign exchange through debt or
         equity financing, including by means of loans or capital contribution
         from the Company.

                                      F-76

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

30       PRINCIPAL SUBSIDIARIES

         Details of the Company's principal subsidiaries are as follows:

<TABLE>
<CAPTION>
                         Place and
                          date of                                                   Attributable
                       incorporation/           Authorized, issued and                 equity
 Name of company       establishment               paid up capital                   interest %        Principal activities
---------------------------------------------------------------------------------------------------------------------------
                                          Authorized       Issued and paid up
<S>                    <C>               <C>               <C>                      <C>                <C>
Guangdong Mobile                 PRC                 -            RMB 5,595             100%            Cellular telephone
                           September                                                                              operator
                           28, 1988

Zhejiang Mobile                  PRC                 -            RMB 2,118             100%            Cellular telephone
                         February 2,                                                                              operator
                                1996

Jiangsu Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                       March 6, 1998           at HK$1                                                             company

Jiangsu Mobile                   PRC                 -            RMB 2,800             100%            Cellular telephone
                        December 10,                                                                              operator
                                1992

Fujian Mobile BVI                BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                1999

Fujian Mobile                    PRC                 -            RMB 5,247             100%            Cellular telephone
                        September 7,                                                                              operator
                                1999

Henan Mobile BVI                 BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                           September           at HK$1                                                             company
                             1, 1999

Henan Mobile                     PRC                 -            RMB 4,368             100%            Cellular telephone
                           August 6,                                                                              operator
                                1999

Hainan Mobile BVI                BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                1999

Hainan Mobile                    PRC                 -              RMB 643             100%            Cellular telephone
                          August 19,                                                                              operator
                                1999

Beijing Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Beijing Mobile                   PRC                 -             RMB6,125             100%            Cellular telephone
                            July 26,                                                                              operator
                                2000
</TABLE>

                                      F-77

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

30       PRINCIPAL SUBSIDIARIES (CONTINUED)

         Details of the Company's Principal subsidiaries are as follows
         (Continued):

<TABLE>
<CAPTION>
                         Place and
                          date of                                                   Attributable
                       incorporation/           Authorized, issued and                 equity
 Name of company       establishment               paid up capital                   interest %        Principal activities
---------------------------------------------------------------------------------------------------------------------------
                                          Authorized       Issued and paid up
<S>                    <C>               <C>               <C>                      <C>                <C>
Shanghai Mobile BVI              BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Shanghai Mobile                  PRC                 -             RMB6,039             100%            Cellular telephone
                           August 4,                                                                              operator
                                2000

Tianjin Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Tianjin Mobile                   PRC                 -             RMB2,151             100%            Cellular telephone
                            July 24,                                                                              operator
                                2000

Hebei Mobile BVI                 BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Hebei Mobile                     PRC                 -             RMB4,315             100%            Cellular telephone
                            July 31,                                                                              operator
                                2000

Liaoning Mobile BVI              BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Liaoning Mobile                  PRC                 -             RMB5,140             100%            Cellular telephone
                           August 7,                                                                              operator
                                2000

Shandong Mobile BVI              BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Shandong Mobile                  PRC                 -             RMB6,342             100%            Cellular telephone
                           August 7,                                                                              operator
                                2000

Guangxi Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        September 1,           at HK$1                                                             company
                                2000

Guangxi Mobile                   PRC                 -             RMB2,341             100%            Cellular telephone
                           August 3,                                                                              operator
                                2000
</TABLE>

                                      F-78

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

30       PRINCIPAL SUBSIDIARIES (CONTINUED)

         Details of the Company's principal subsidiaries are as follows
         (Continued):

<TABLE>
<CAPTION>
                         Place and
                          date of                                                   Attributable
                       incorporation/           Authorized, issued and                 equity
 Name of company       establishment               paid up capital                   interest %        Principal activities
---------------------------------------------------------------------------------------------------------------------------
                                          Authorized       Issued and paid up
<S>                    <C>               <C>               <C>                      <C>                <C>
Anhui Mobile BVI                 BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

Anhui Mobile                     PRC                 -             RMB4,099             100%            Cellular telephone
                         January 29,                                                                              operator
                                2002

Jiangxi Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

Jiangxi Mobile                   PRC                 -             RMB2,933             100%            Cellular telephone
                         January 18,                                                                              operator
                                2002

Chongqing Mobile BVI             BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

Chongqing Mobile                 PRC                 -             RMB3,030             100%            Cellular telephone
                         January 28,                                                                              operator
                                2002

Sichuan Mobile BVI               BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

Sichuan Mobile                   PRC                 -             RMB7,484             100%            Cellular telephone
                         February 4,                                                                              operator
                                2002

Hubei Mobile BVI                 BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

Hubei Mobile                     PRC                 -             RMB3,961             100%            Cellular telephone
                         February 1,                                                                              operator
                                2002

Hunan Mobile BVI                 BVI     10,000 shares      1 share at HK$1             100%            Investment holding
                        May 10, 2002           at HK$1                                                             company

</TABLE>

                                      F-79

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

30       PRINCIPAL SUBSIDIARIES (CONTINUED)

         Details of the Company's principal subsidiaries are as follows
         (Continued):

<TABLE>
<CAPTION>
                             Place and
                              date of                                                   Attributable
                           incorporation/           Authorized, issued and                 equity
 Name of company           establishment               paid up capital                   interest %     Principal activities
----------------------------------------------------------------------------------------------------------------------------
                                                Authorized       Issued and paid up
<S>                        <C>                <C>                <C>                    <C>             <C>
Hunan Mobile                         PRC                  -             RMB4,016            100%         Cellular telephone
                             February 6,                                                                           operator
                                    2002

Shaanxi Mobile BVI                   BVI      10,000 shares      1 share at HK$1            100%         Investment holding
                            May 10, 2002            at HK$1                                                         company

Shaanxi Mobile                       PRC                  -             RMB3,171            100%         Cellular telephone
                             February 3,                                                                           operator
                                    2002

Shanxi Mobile BVI                    BVI      10,000 shares      1 share at HK$1            100%         Investment holding
                            May 10, 2002            at HK$1                                                         company

Shanxi Mobile                        PRC                  -             RMB2,773            100%         Cellular telephone
                             February 4,                                                                           operator
                                    2002

China Mobile (Shenzhen)              PRC                  -                US$30            100%        Corporate operation
  Limited                        June 9,                                                                         controller
                                    2000

Aspire Holdings Limited           Cayman      1,500,000,000                HK$94          66.41%         Investment holding
                                 Islands          shares at                                                         company
                                 June 5,             HK$0.1
                                    2000

Aspire (BVI) Limited                 BVI      50,000 shares             US$0.001          66.41%         Investment holding
                                 June 7,            at US$1                                                         company
                                    2000

Aspire Technologies                  PRC              US$10               US$1.5          66.41%                 Technology
(Shenzhen) Limited           December 1,                                                                           platform
                                    2000                                                                    development and
                                                                                                                maintenance

Aspire Information                   PRC               US$5               US$1.5          66.41%        Provision of mobile
  Network (Shenzhen)           August 1,                                                                    data solutions,
  Limited                           2001                                                                 system integration
                                                                                                            and development
</TABLE>

                                      F-80

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

30      PRINCIPAL SUBSIDIARIES (CONTINUED)

         Dividend declared in respect of previous financial year, approved and
         paid by the Company's subsidiaries for the financial years ended
         December 31, 2000, 2001 and 2002 amounting to RMB985, RMB4,863 and
         RMB18,000 respectively.

         In prior years, dividend income from subsidiaries was recognized as
         income in the Company's statements of income in the period in which
         they related. With effect from January 1, 2001, in order to comply with
         Statement of Standard Accounting Practice No. 9 (revised) issued by the
         Hong Kong Society of Accountants, the Company recognizes dividend
         income as income in the accounting period in which the dividends are
         declared or proposed and approved by the shareholders of the relevant
         subsidiaries.

         The new accounting policy has been adopted retrospectively, with the
         opening balance of retained earnings and the comparative information of
         the Company adjusted for the amounts relating to prior periods.

31       POST BALANCE SHEET EVENTS

         After the balance sheet date the directors proposed a final dividend.
         Further details are disclosed in Note 9.

32       COMPARATIVE FIGURES

         The presentation and classification of items in the consolidated cash
         flow statement have been changed due to the adoption of the
         requirements of Statement of Standard Accounting Practice No. 15
         (revised 2001) "Cash flow statements". As a result, cash flow items
         from taxation, returns on investments and servicing of finance have
         been classified into operating, investing and financing activities
         respectively and a detailed breakdown of cash flows from operating
         activities has been included on the face of the consolidated cash flow
         statement. Comparative figures have been reclassified to conform with
         the current year's presentation.

                                      F-81

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP

         The Group's accounting policies conform with generally accepted
         accounting principles in Hong Kong ("HK GAAP") which differ in certain
         material respects from those applicable generally accepted accounting
         principles in the United States of America ("US GAAP").

         The significant differences relate principally to the following items
         and the adjustments considered necessary to present the net profit and
         shareholders' equity in accordance with US GAAP are shown in the tables
         set out below:

(a)      EFFECT OF COMBINATION OF ENTITIES UNDER COMMON CONTROL

         Under HK GAAP, the Group adopted the purchase accounting method to
         account for the purchase of subsidiaries from the holding company.
         Under the purchase accounting method, the acquired results are included
         in the results of operations from the date of their acquisition. For
         acquisitions before January 1, 2001, goodwill arising on the
         acquisition, being the excess of the cost over the fair value of the
         Group's share of the separable net assets acquired, is eliminated
         against reserves immediately on acquisition. For acquisitions on or
         after January 1, 2001, goodwill arising on the acquisition is amortized
         to the consolidated statements of income on a straight-line basis over
         20 years.

         As a result of the Group and the acquired subsidiaries being under
         common control prior to the acquisition, such acquisitions under US
         GAAP are considered "combinations of entities under common control".
         Under US GAAP, combinations of entities under common control are
         accounted for under the "as if pooling-of-interests" method, whereby
         assets and liabilities are accounted for at historical cost and the
         financial statements of previously separate companies for periods prior
         to the combination are restated on a combined basis. The consideration
         paid and payable by the Group has been treated as an equity transaction
         in the year of acquisition. Goodwill arising on consolidation and the
         amortisation of goodwill which are recognized under HK GAAP has been
         reversed for US GAAP purposes.

(b)      CAPITALIZATION OF INTEREST

         Under HK GAAP, the Group capitalizes interest costs to the extent that
         the related borrowings are directly attributable to the acquisition or
         construction of an asset which necessarily takes a substantial period
         of time to get ready for its intended use.

                                      F-82

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(b)      CAPITALIZATION OF INTEREST (CONTINUED)

         Under US GAAP, interest costs capitalized are determined based on
         specific borrowings related to the acquisition or construction of an
         asset, if an entity's financing plans associate a specific new
         borrowing with a qualifying asset. If average accumulated expenditures
         for the asset exceed the amounts of specific new borrowings associated
         with an asset, additional interest costs capitalized are based on the
         weighted average interest rate applicable to other borrowings of the
         entity.

(c)      REVALUATION AND IMPAIRMENT OF FIXED ASSETS

         For certain periods prior to May 31, 1997, the fixed assets of the
         subsidiaries were revalued in compliance with PRC rules and
         regulations, resulting in an increase in shareholders' equity.

         Additionally, the fixed assets of the subsidiaries were revalued as a
         result of the restructuring occurred in 1997 and the subsequent
         acquisitions. These fixed asset revaluations result in an increase in
         shareholders' equity with respect to the increase in carrying amount of
         certain fixed assets above their historical cost bases.

         The carrying amount of fixed assets under HK GAAP is reviewed
         periodically in order to assess whether the recoverable amount has
         declined below the carrying amount. When such a decline occurs, the
         carrying amount is reduced to the recoverable amount based on the
         expected future cash flows generated by the fixed assets, discounted to
         their present values using a pre-tax discount rate that reflects
         current market assessments of time value of money and the risks
         specific to the asset. A subsequent increase in the recoverable amount
         is written back to results of operations when circumstances and events
         that led to the write-down or write-off cease to exist.

         Under US GAAP, fixed assets are stated at their historical cost, less
         accumulated depreciation. However, as a result of the tax deductibility
         of the revaluation reserve, a deferred tax asset related to the
         reversal of the revaluation reserve is created under US GAAP with a
         corresponding increase in shareholders' equity.

                                      F-83

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(c)      REVALUATION AND IMPAIRMENT OF FIXED ASSETS (CONTINUED)

         Under US GAAP, fixed assets are reviewed for impairment whenever events
         or changes in circumstances indicate that the carrying amount of an
         asset may not be recoverable. Recoverability of assets to be held and
         used is measured by a comparison of the carrying amount of an asset to
         future undiscounted net cash flows expected to be generated by the
         asset. If such assets are considered to be impaired, the impairment to
         be recognized is measured by the amount by which the carrying amounts
         of the assets exceed the fair value of the assets. Assets to be
         disposed of are reported at the lower of the carrying amount or fair
         value less costs to sell.

         For the years presented, there were no differences related to
         impairment charges under HK GAAP and US GAAP. The US GAAP difference as
         shown in the reconciliation represents the reversal of revaluation
         reserves and the related depreciation which are recognised under HK
         GAAP.

(d)      EMPLOYEE HOUSING SCHEME

         The Group provides staff quarters under its employee housing schemes at
         below market prices. Under HK GAAP, employee housing scheme costs borne
         by the corresponding PTAs and not charged to the subsidiaries are not
         recognized by the subsidiaries.

         Under US GAAP, employee housing scheme costs borne by the corresponding
         PTAs and not charged to the subsidiaries are reflected as an expense in
         the statement of income and a corresponding capital contribution.
         Additionally, under US GAAP, the costs to be borne by the subsidiaries
         are accrued over the term of the program.

(e)      DEFERRED TAXATION

         Under HK GAAP, the Group provides for deferred tax liabilities only to
         the extent that there is a reasonable probability that such deferred
         tax liabilities will become payable in the foreseeable future. Deferred
         tax assets are not recognized unless their realization is assured
         beyond reasonable doubt.

         Under US GAAP, provisions are made for all deferred taxes as they
         arise, except a valuation allowance is provided against deferred tax
         assets when realization of such amounts does not meet the criterion of
         "more likely than not".

                                      F-84

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(f)      SHARE OPTION SCHEME

         The Group grants share options to directors and employees. Under HK
         GAAP, the proceeds received are recognized as an increase to capital
         upon the exercise of the share options.

         Under US GAAP, the Group determines compensation expenses based upon
         the excess, if any, of the quoted market price of the shares on the
         date of grant over the exercise price of the options and amortizes this
         amount over the vesting period of the option concerned.

(g)      REVENUE RECOGNITION

         Until June 30, 1999, under both HK GAAP and US GAAP, connection fees
         revenue and telephone number selection fees were recognized as
         received. Under US GAAP, effective July 1, 1999, net connection fees
         and telephone number selection fees received in excess of direct costs
         were deferred and recognized over the estimated customer usage period
         for the related service.

         Under US GAAP, effective January 1, 2000, the Group adopted the
         provisions of Staff Accounting Bulletin No. 101, "Revenue Recognition
         in Financial Statements" ("SAB101"). Under SAB 101, connection fees and
         telephone number selection fees received and incremental direct costs
         up to, but not exceeding such fees, are deferred and amortized over the
         estimated customer usage period for the related service. The cumulative
         effect from the adoption of SAB 101 was not material.

(h)      INTERCONNECTION, ROAMING AND LEASED LINE AGREEMENTS

         In May 2000, the Group entered into new agreements with China Mobile
         for inter-provincial interconnection and domestic and international
         roaming services, and inter-provincial long distance transmission
         leased line arrangement with retrospective effect from October 1, 1999
         for Guangdong Mobile, Zhejiang Mobile and Jiangsu Mobile and from April
         1, 1999 for Fujian Mobile, Henan Mobile and Hainan Mobile. Under HK
         GAAP, the net savings refunded to the Group as a result of the two
         agreements taking retrospective effect were recorded in operations for
         the year ended December 31, 2000. Under US GAAP, such net savings are
         deferred and amortized on a straight-line basis over seven years.

                                      F-85

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(i)      RECENTLY ISSUED ACCOUNTING STANDARDS

         STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 145

         In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
         Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
         Technical Corrections". SFAS No. 145 amends existing guidance on
         reporting gains and losses on the extinguishment of debt to prohibit
         the classification of the gain or loss as extraordinary, as the use of
         such extinguishments have become part of the risk management strategy
         of many companies. SFAS No. 145 also amends SFAS No. 13 to require
         sale-leaseback accounting for certain lease modifications that have
         economic effects similar to sale-leaseback transactions. The provisions
         of the Statement related to the rescission of Statement No. 4 are
         applied in fiscal years beginning after May 15, 2002. Earlier
         application of these provisions is encouraged. The provisions of the
         Statement related to Statement No. 13 were effective for transactions
         occurring after May 15, 2002, with early application encouraged. The
         adoption of SFAS No. 145 is not expected to have a material effect on
         the Company's consolidated financial statements.

         SFAS NO. 146

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
         Associated with Exit or Disposal Activities". SFAS No. 146 addresses
         financial accounting and reporting for costs associated with exit or
         disposal activities and nullifies Emerging Issues Task Force ("EITF")
         Issue 94-3, "Liability Recognition for Certain Employee Termination
         Benefits and Other Costs to Exit an Activity". The provisions of this
         Statement are effective for exit or disposal activities that are
         initiated after December 31, 2002, with early application encouraged.
         The adoption of SFAS No. 146 is not expected to have a material effect
         on the Company's consolidated financial statements.

                                      F-86

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(i)      RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)

         INTERPRETATION NO. 45

         In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
         Accounting and Disclosure Requirements for Guarantees, Including
         Indirect Guarantees of Indebtedness to Others, an interpretation of
         FASB Statements No. 5, 57 and 107 and a rescission of FASB
         Interpretation No. 34". This Interpretation elaborates on the
         disclosures to be made by a guarantor in its interim and annual
         financial statements about its obligations under guarantees issued. The
         Interpretation also clarifies that a guarantor is required to
         recognize, at inception of a guarantee, a liability for the fair value
         of the obligation undertaken. The initial recognition and measurement
         provisions of the Interpretation are applicable to guarantees issued or
         modified after December 31, 2002 and are not expected to have a
         material effect on the Company's consolidated financial statements. The
         disclosure requirements are effective for financial statements of
         interim or annual reports ending after December 15, 2002.

         SFAS NO. 148

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
         Stock-Based Compensation - Transition and Disclosure, an amendment of
         FASB Statement No. 123". The Statement amends FASB Statement No. 123,
         "Accounting for Stock-Based Compensation", to provide alternative
         methods of transition for a voluntary change to the fair value method
         of accounting for stock-based employee compensation. In addition, this
         Statement amends the disclosure requirements of Statement No. 123 to
         require prominent disclosures in both annual and interim financial
         statements.

                                      F-87

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

(i)      RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)

         INTERPRETATION 46

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
         of Variable Interest Entities, an interpretation of ARB No. 51". This
         Interpretation addresses the consolidation by business enterprises of
         variable interest entities as defined in the Interpretation. The
         Interpretation applies immediately to variable interests in variable
         interest entities created after January 31, 2003, and to variable
         interests in variable interest entities obtained after January 31,
         2003. The application of this Interpretation is not expected to have a
         material effect on the Company's consolidated financial statements.

(j)      RELATED PARTY TRANSACTIONS

         Under HK GAAP, transactions of the Group entered into with entities
         under the control by the MII prior to May 2000, and China Telecom Group
         are not disclosed as related party transactions.

         Under US GAAP, transactions between the Group and the entities under
         the control by MII prior to May 2000, and China Telecom Group are also
         disclosed as related party transactions.

                                      F-88

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         The effect on net profit of significant differences between HK GAAP and
         US GAAP is as follows:

<TABLE>
<CAPTION>
                                                     Year ended December 31,
                                                  -----------------------------
                                                   2000       2001        2002
                                                   RMB        RMB         RMB
<S>                                               <C>        <C>        <C>
Net profit under HK GAAP                           18,027     28,015     32,742

Adjustments:
  Effect of combination of entities
     under common control                           7,757      3,295      2,818
  Capitalized interest                                 17         85       (100)
  Revaluation of fixed assets                         603      3,211        672
  Employee housing scheme                            (180)         -          -
  Deferred taxation                                  (937)      (623)      (107)
  Share option scheme                                 (99)      (277)      (331)
  Amortization of net connection fees and
     telephone number selection fees                 (526)       764        853
  Amortization of net savings from
     interconnection, roaming and leased
     line agreements                                 (543)        86         85
  Reversal of goodwill amortisation                     -          -        936
  Deferred tax effects of US GAAP adjustments          18       (320)      (366)
                                                  -------    -------    -------

Net profit under US GAAP                           24,137     34,236     37,202
                                                  =======    =======    =======

Basic net profit per share in
  accordance with US GAAP                            1.31       1.76       1.90
                                                  =======    =======    =======

Diluted net profit per share in
  accordance with US GAAP                            1.30       1.76       1.90
                                                  =======    =======    =======
</TABLE>

                                     F-89

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         The effect on shareholders' equity of significant differences between
         HK GAAP and US GAAP is as follows:

<TABLE>
<CAPTION>
                                                                         As of December 31,
                                                                        --------------------
                                                                          2001        2002
                                                                          RMB          RMB
<S>                                                                     <C>         <C>
Shareholders' equity under HK GAAP                                       111,779     172,202

Adjustments:
  Effect of combination of entities under common control                  30,663           -
  Capitalized interest                                                       576         476
  Revaluation of fixed assets
  - Cost                                                                 (10,577)    (10,577)
  - Accumulated depreciation and other                                     7,265       7,937
  Deferred tax adjustments on revaluations                                 1,135         849
  Employee housing scheme                                                 (1,583)     (1,583)
  Deemed capital contribution for employee housing scheme                  1,583       1,583
  Deferral of net connection fees and telephone number selection fees     (1,627)       (774)
  Deferral of net savings from interconnection, roaming and leased
    line agreements                                                         (457)       (372)
  Recognition of deferred taxes                                            1,447       1,362
  Reversal of goodwill                                                         -     (36,522)
  Deferred tax effects of US GAAP adjustments                                 96          (6)
                                                                        --------    --------

Shareholders' equity under US GAAP                                       140,300     134,575
                                                                        ========    ========
</TABLE>

                                      F-90

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         The following are condensed consolidated balance sheets of the Group as
         of December 31, 2001 and 2002, and the related condensed consolidated
         statements of income, total shareholders' equity and cash flows for
         each of the years in the three-year period ended December 31, 2002,
         restated to reflect the impact of the differences between HK GAAP and
         US GAAP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                             Year ended December 31,
                                                        --------------------------------
                                                          2000        2001        2002
                                                          RMB         RMB          RMB
<S>                                                     <C>         <C>         <C>
OPERATING REVENUE

Usage fees                                                79,218      92,478     104,373
Monthly fees                                              18,336      18,237      19,032
Connection fees                                            2,009       2,091       1,505
Other operating revenue                                   12,899      14,943      20,421
                                                        --------    --------    --------

TOTAL OPERATING REVENUE                                  112,462     127,749     145,331
                                                        --------    --------    --------
OPERATING EXPENSES

Leased lines                                              10,124       6,422       5,985
Interconnection                                           16,795      16,234      14,733
Depreciation                                              19,129      22,516      28,445
Personnel                                                  6,520       7,129       7,832
Other operating expenses                                  19,222      26,297      34,045
Write-down and write-off of analog network equipment       5,499           -           -
                                                        --------    --------    --------

TOTAL OPERATING EXPENSES                                  77,289      78,598      91,040
                                                        ========    ========    ========

OPERATING PROFITS                                         35,173      49,151      54,291

OTHER NET INCOME                                           1,238       1,715       1,739

NON-OPERATING NET INCOME                                     230         322         632

INTEREST INCOME                                            1,112         947         732

FINANCE COSTS                                             (2,287)     (1,941)     (1,976)
                                                        --------    --------    --------

PROFIT BEFORE TAX                                         35,466      50,194      55,418

INCOME TAX                                               (11,328)    (15,959)    (18,214)
                                                        --------    --------    --------

PROFIT AFTER TAX                                          24,138      34,235      37,204

MINORITY INTERESTS                                            (1)          1          (2)
                                                        --------    --------    --------

NET PROFIT                                                24,137      34,236      37,202
                                                        ========    ========    ========
</TABLE>

                                      F-91

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                December 31,
                                             -----------------
                                              2001       2002
                                              RMB        RMB
<S>                                          <C>       <C>
ASSETS

Current assets
  Cash and cash equivalents                   25,181    32,575
  Deposits with banks                         14,995    11,069
  Accounts receivable                          7,169     5,899
  Other receivables                            1,292     1,231
  Deferred tax - current portion                 624     3,116
  Inventories                                  1,472     1,586
  Prepayments and other current assets         2,061     2,059
  Amount due from ultimate holding company     2,997     1,282
  Amounts due from related parties               219       401
                                             -------   -------

  Total current assets                        56,010    59,218

Fixed assets                                 141,396   163,232
Construction in progress                      31,004    23,026
Investment securities                             77        77
Interest in associates                            16        16
Deferred tax - long term portion               4,164     2,660
Deferred expenses                              1,597       912
                                             -------   -------

TOTAL ASSETS                                 234,264   249,141
                                             =======   =======
</TABLE>

                                      F-92

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                         December 31,
                                                      -----------------
                                                       2001      2002
                                                       RMB        RMB
<S>                                                   <C>       <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
  Accounts payable                                     15,799    17,069
  Bills payable                                         1,785     1,256
  Bank loans and other interest-bearing borrowings      9,296     8,132
  Obligation under capital lease - current portion        994        68
  Taxes payable                                         6,089     6,568
  Amounts due to related parties                        2,700     2,414
  Accrued expenses and other payables                  13,741    16,228
  Amount due to immediate holding company                   -       402
  Amount due to ultimate holding company                  659     1,217
  Deferred revenue - current portion                      824     6,760
                                                      -------   -------

  Total current liabilities                            51,887    60,114

Bank loans and other interest-bearing borrowings       24,513    36,348
Deferred revenue - long term portion                    7,970     2,737
Amount due to ultimate holding company                  8,750         -
Amount due to immediate holding company                     -    15,176
Obligation under capital leases - long-term portion       812         -
                                                      -------   -------

TOTAL LIABILITIES                                      93,932   114,375

Minority interests                                         32       191

SHAREHOLDERS' EQUITY                                  140,300   134,575
                                                      -------   -------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            234,264   249,141
                                                      =======   =======
</TABLE>

                                      F-93

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         CONDENSED CONSOLIDATED STATEMENTS OF TOTAL SHAREHOLDERS' EQUITY FOR THE
         FOLLOWING YEARS:

<TABLE>
<CAPTION>
                                                             RMB
<S>                                                       <C>
Shareholders' equity at January 1, 2000                     87,373

Net profit for the year ended December 31, 2000             24,137
Issue of ordinary shares                                   248,181
Deemed capital distribution                               (271,485)
Distribution to owner                                       (1,866)
Contribution by owner                                        6,500
Deemed capital contribution for employee housing scheme        264
Tax effect of revaluation                                    2,469
Stock-based compensation                                        99
Others                                                         (22)
                                                          --------

Shareholders' equity at December 31, 2000                   95,650

Net profit for the year ended December 31, 2001             34,236
Issue of ordinary shares                                         4
Distribution to owner                                         (794)
Contribution by owner                                        9,839
Tax effect of revaluation                                    1,088
Stock-based compensation                                       277
                                                          --------

Shareholders' equity at December 31, 2001                  140,300

Net profit for the year ended December 31, 2002             37,202
Issue of ordinary shares                                    27,681
Deemed capital distribution                                (70,959)
Distribution to owner                                          (28)
Contribution by owner                                           48
Stock-based compensation                                       331
                                                          --------

Shareholders' equity at December 31, 2002                  134,575
                                                          ========
</TABLE>

                                      F-94

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

         The Group applies Hong Kong Statement of Standard Accounting Practice
         No. 15 (revised 2001) "Cash Flow Statements" ("HK SSAP 15"). Its
         objectives and principles are similar to those set out in Statement of
         Financial Accounting Standards No. 95, "Statement of Cash Flows" ("SFAS
         95"). The principal differences between the standards relate to
         classification. Under HK SSAP 15, the Group presents its cash flows for
         (a) operating activities; (b) investing activities; and (c) financing
         activities. Dividend received and interest received under investing
         activities and interest paid under financing activities shown under HK
         SSAP 15 would be included as operating activities under SFAS 95, with
         the exception of distributions, which under SFAS 95 would be classified
         as financing activities. Summarized cash flow data by operating,
         investing and financing activities in accordance with SFAS 95 are as
         follows:

<TABLE>
<CAPTION>
                                                      Year ended December 31,
                                                   -----------------------------
                                                    2000        2001      2002
                                                     RMB        RMB        RMB
<S>                                                <C>        <C>        <C>
Net cash inflow from
  Operating activities                              57,766     60,863     79,445
  Investing activities                             (46,167)   (69,166)   (44,070)
  Financing activities                              (8,232)     2,557    (27,981)
                                                   -------    -------    -------

Increase/(decrease) in cash and cash equivalents     3,367     (5,746)     7,394

Cash and cash equivalents at beginning of year      27,560     30,927     25,181
                                                   -------    -------    -------

Cash and cash equivalents at end of year            30,927     25,181     32,575
                                                   =======    =======    =======

Interest paid (net of amounts capitalized)           2,420      2,541      1,740
                                                   =======    =======    =======

Income taxes paid                                    7,406     14,104     18,723
                                                   =======    =======    =======
</TABLE>

                                      F-95

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

33       SIGNIFICANT DIFFERENCES BETWEEN HK GAAP AND US GAAP (CONTINUED)

         SIGNIFICANT NON-CASH TRANSACTIONS

         The Group incurred payables of RMB10,803 and RMB1,257 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2002.

         The Group incurred payables of RMB14,005 and RMB1,337 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2001.

         The Group incurred payables of RMB10,448 and RMB1,068 to equipment
         suppliers and banks respectively for additions of construction in
         progress during the year ended December 31, 2000.

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP

         The following additional financial statement disclosures are required
         under US GAAP and are presented on a US GAAP basis.

         WRITE-DOWN AND WRITE-OFF OF ANALOG NETWORK EQUIPMENT

<TABLE>
<CAPTION>
                                                                          Year ended December 31,
                                                                ------------------------------------------
                                                                  2000            2001               2002
                                                                   RMB             RMB                RMB
<S>                                                             <C>              <C>               <C>
Write-down of analog network equipment                             4,718                -                -

Write-off of analog network equipment                                781                -                -
                                                                --------         --------          -------

                                                                   5,499                -                -
                                                                ========         ========          =======
</TABLE>

                                      F-96

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         WRITE-DOWN AND WRITE-OFF OF ANALOG NETWORK EQUIPMENT (CONTINUED)

         Due to the rapid change of technology, the Company re-assessed the
         recoverability of the carrying amount of the analog network equipment
         which was held for use at December 31, 2000. The Company determined the
         existence of impairment by comparing the carrying amount of these
         equipment to their future undiscounted net cash flows expected to be
         generated over the economic life of analog network in service at
         December 31, 2000. The Company has recognized write downs of RMB4,718
         on these equipment in 2000. Such amount of loss was measured by the
         amount by which the carrying amounts of the individual analog network
         assets exceed their fair value determined based on the discounted net
         cash flow expected to be generated by each analog network.
         Additionally, the Company has written-off RMB781 of certain analog
         network equipment which have been removed from service at December 31,
         2000. At December 31, 2001, all analog network equipment which were
         written down in previous years had been removed from service.

         INCOME TAX

         The Company is subject to Hong Kong profits tax at 16% for the years
         ended December 31, 2000, 2001 and 2002.

         The Group's PRC subsidiaries are subject to the statutory income tax
         rate of 33%, except for certain subsidiaries of the Company and certain
         operations of the subsidiaries located within special economic zones in
         the PRC, which enjoys a preferential rate of 30% and 15%, respectively.

         The components of income tax expense are as follows:

<TABLE>
<CAPTION>
                                   Year ended December 31,
                          ----------------------------------------
                           2000             2001             2002
                            RMB              RMB              RMB
<S>                       <C>              <C>              <C>
Current                    9,371           12,826           19,202
Deferred                   1,957            3,133             (988)
                          ------           ------           ------
                          11,328           15,959           18,214
                          ======           ======           ======
</TABLE>

                                      F-97

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         INCOME TAX (CONTINUED)

         The provision for income tax differs from the amount computed by
         applying the PRC statutory income tax rate of 33% to profit before tax
         and minority interests for the following reasons:

<TABLE>
<CAPTION>
                                                  Year ended December 31,
                                               -----------------------------
                                                 2000       2001       2002
                                                 RMB        RMB        RMB
<S>                                            <C>        <C>        <C>
Expected PRC taxation at statutory tax rates    11,704     16,564     18,288
Non-taxable items
  - Connection fee                                (353)      (171)      (182)
  - Surcharge                                     (309)        (5)         -
  - Interest income                                (74)       (32)       (25)
Non-deductible expenses                            952        272        685
Rate differential on PRC operations               (688)    (1,095)      (897)
Rate differential on Hong Kong operations           32        165        229
Reversal of deferred taxation due to
  change of income tax rate                          -         27         (9)
Tax losses not recognized for deferred tax           -        203        242
Others                                              64         31       (117)
                                               -------    -------    -------

Income tax                                      11,328     15,959     18,214
                                               =======    =======    =======
</TABLE>

                                      F-98

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

 INCOME TAX (CONTINUED)

 The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below.

<TABLE>
<CAPTION>
                                                      December 31,
                                                    ----------------
                                                     2001      2002
                                                     RMB       RMB
<S>                                                 <C>       <C>
 Deferred tax assets:
   Provision for obsolete inventories                    7        16
   Provision for doubtful accounts                   1,447     1,362
   Revaluation of fixed assets                       1,306     1,049
   Amortization of deferred items                      487       295
   Income recognition on prepaid service fees        1,719     3,259
                                                    ------    ------

 Gross deferred tax assets                           4,966     5,981

 Deferred tax liabilities:
   Capitalized interest                               (178)     (205)
                                                    ------    ------

 Net deferred tax assets                             4,788     5,776

 Less: Current portion of net deferred tax assets     (624)   (3,116)
                                                    ------    ------

                                                     4,164     2,660
                                                    ======    ======
</TABLE>

ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                           December 31,
                                        ------------------
                                         2001       2002
                                         RMB        RMB
<S>                                     <C>        <C>
Accounts receivable                      11,959     10,200

Less: Allowance for doubtful accounts    (4,790)    (4,301)
                                        -------    -------

                                          7,169      5,899
                                        =======    =======
</TABLE>

                                      F-99

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         ACCOUNTS RECEIVABLE (CONTINUED)

         Allowance for doubtful accounts is analyzed as follows:

<TABLE>
<CAPTION>
                                                                                                      RMB
<S>                                                                                                 <C>
At January 1, 2000                                                                                   5,925
Provision for the year                                                                               2,584
Written-off                                                                                         (2,986)
                                                                                                    ------
At December 31, 2000                                                                                 5,523
Provision for the year                                                                               2,236
Written-off                                                                                         (2,969)
                                                                                                    ------
At December 31, 2001                                                                                 4,790
Provision for the year                                                                               1,857
Written-off                                                                                         (2,346)
                                                                                                    ------
At December 31, 2002                                                                                 4,301
                                                                                                    ======
</TABLE>

         OTHER RECEIVABLES

<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                               ---------------------------
                                                                               2001                  2002
                                                                                RMB                   RMB
<S>                                                                            <C>                   <C>
Other receivables                                                              1,292                 1,356

Less: Allowance for doubtful accounts                                              -                  (125)
                                                                               -----                 -----
                                                                               1,292                 1,231
                                                                               =====                 =====
</TABLE>

                                     F-100

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         OTHER RECEIVABLES (CONTINUED)

         Allowance for doubtful accounts is analyzed as follows:

<TABLE>
<CAPTION>
                                                                                                       RMB
<S>                                                                                                    <C>
At January 1, 2000                                                                                       -
Provision for the year                                                                                   -
Written-off                                                                                              -
                                                                                                       ---
At December 31, 2000                                                                                     -
Provision for the year                                                                                   -
Written-off                                                                                              -
                                                                                                       ---
At December 31, 2001                                                                                     -
Provision for the year                                                                                 148
Written-off                                                                                            (23)
                                                                                                       ---
At December 31, 2002                                                                                   125
                                                                                                       ===
</TABLE>

         FIXED ASSETS

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                             -----------------------------
                                                                               2001                  2002
                                                                               RMB                   RMB
<S>                                                                          <C>                   <C>
Land use rights and buildings                                                 12,295                16,805
Telecommunications transceivers, switching
 centers and other network equipment                                         180,500               223,642
Office equipment, furniture and fixtures and others                            8,282                 9,512
                                                                             -------               -------
                                                                             201,077               249,959

Less: accumulated depreciation                                               (59,681)              (86,727)
                                                                             -------               --------
                                                                             141,396               163,232
                                                                             =======               =======
</TABLE>

                                     F-101

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         DEFERRED REVENUE AND OTHER ITEMS

<TABLE>
<CAPTION>
                                                                               Year ended December 31,
                                                                            -----------------------------
                                                                              2001                  2002
                                                                              RMB                   RMB
<S>                                                                         <C>                   <C>
Balance at beginning of year                                                  8,930                 8,794
Addition during the year                                                     28,114                38,387
Recognized in the condensed consolidated statements
   of income                                                                (28,250)              (37,684)
                                                                            -------               -------
Balance at end of year                                                        8,794                 9,497

Less: Current portion                                                          (824)               (6,760)
                                                                            -------               -------
                                                                              7,970                 2,737
                                                                            =======               =======
</TABLE>

         Deferred revenue comprises:

         (i)      the unamortized portion of proceeds received by Guangdong
                  Mobile from certain distributors of telecommunications
                  services which are amortized over a period of seven years;

         (ii)     the unamortized portion of connection fees and telephone
                  number selection fees received which are recognized over the
                  estimated subscriber usage period for the related services;

         (iii)    the prepaid services fee received from subscribers which is
                  recognized as income when the cellular telephone services are
                  rendered upon actual usage by subscribers; and

         (iv)     the unamortized portion of net savings attributable to the
                  Group as a result of the provincial interconnection, roaming
                  and leased line agreements.

                                     F-102

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         DEFERRED EXPENSES

<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                                             ----------------------------
                                                                              2001                   2002
                                                                               RMB                   RMB
<S>                                                                          <C>                    <C>
Balance at beginning of year                                                  2,153                 1,597
Addition during the year                                                        920                    53
Recognized in the condensed consolidated statements
   of income                                                                 (1,476)                 (738)
                                                                             ------                 -----
Balance at end of year                                                        1,597                   912
                                                                             ======                 =====
</TABLE>

         Deferred expenses comprises:

         (i)      the unamortized portion of issuance costs in respect of the
                  fixed rate notes, convertible notes and bonds; and

         (ii)     the unamortized portion of direct costs related to connection
                  fees and telephone number selection fees received.

         STOCK OPTION PLAN

         Details of the Company's stock option plan and options granted under
         the plan are contained in Note 28. The fair value of each option grant
         is estimated on the date of grant using the Black-Scholes
         option-pricing model with the following assumptions used for grants:
         expected dividend yield of 0%, 0% and 20% during 2000, 2001 and 2002;
         expected volatility of 89.97%, 65.92% and 32.44% for the share option
         granted during 2000, 2001 and 2002 respectively; risk-free interest
         rate of 9.5%, 5.5% and 5.3% during 2000, 2001 and 2002 respectively;
         and expected life of 8 years, 6 years and 10 years during 2000, 2001
         and 2002 respectively. The per share fair value of stock options
         granted during 2000, 2001 and 2002 were HK$48.92, HK$29.46 and HK$9.15
         on the date of grant, respectively.

                                     F-103

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         STOCK OPTION PLAN (CONTINUED)

         The Company applies the intrinsic-value-based method of accounting
         prescribed by Accounting Principles Board ("APB") Opinion No. 25,
         "Accounting for Stock Issued to Employees", and related interpretations
         including FASB Interpretation No.44, "Account for Certain Transactions
         involving Stock Compensation, an interpretation of APB Opinion No. 25",
         issued in March 2000, to account for its plan. Under this method,
         compensation expense is recorded on the date of grant only if the
         current market price of the underlying stock exceeds the exercise
         price. SFAS No. 123, "Accounting for Stock-Based Compensation",
         established accounting and disclosure requirements using a
         fair-value-based method of accounting for stock-based employee
         compensation plans. As allowed by SFAS No. 123, the Company has elected
         to continue to apply the intrinsic-valued-based method of accounting
         described above, and has adopted only the disclosure requirements of
         SFAS No. 123. The compensation cost that has been charged against
         income for US GAAP for the Company's stock option plan was RMB99 for
         2000, RMB277 for 2001 and RMB331 for 2002. The following table
         illustrates the effect on net income if the fair-value-based method had
         been applied to all outstanding and unvested awards in each period.

<TABLE>
<CAPTION>
                                                                                  Year ended December 31,

                                                                                  2001               2002
                                                                                   RMB               RMB
<S>                                                                              <C>                <C>
Net profit, as reported                                                          34,236             37,202

Add stock-based employee compensation expense
   included in net income                                                           277                331
Deduct total stock-based employee compensation
   expense determined under fair-value-based
   method                                                                        (1,078)            (1,403)
                                                                                 ------             ------

                                                                                 33,435             36,130
Pro forma net income                                                             ======             ======

Basic net profit per share                           As reported                   1.76               1.90
                                                     Pro forma                     1.72               1.85

Diluted net profit per share                         As reported                   1.76               1.90
                                                     Pro forma                     1.72               1.84
</TABLE>

                                     F-104

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         NET PROFIT PER SHARE

         The following is a reconciliation of the numerators and denominators of
         the basic and diluted net profit per share computations prepared under
         US GAAP.

<TABLE>
<CAPTION>
                         For the year ended December 31, 2000     For the year ended December 31, 2001
                       ----------------------------------------  ---------------------------------------
                          Income        Shares        Per share    Income        Shares        Per share
                       (Numerator)   (Denominator)     amount    (Numerator)  (Denominator)     Amount
<S>                    <C>           <C>              <C>        <C>          <C>              <C>
BASIC NET PROFIT
 PER SHARE                24,137        18,494          1.31       34,236        19,433          1.76
                                                        ====                                     ====
EFFECT OF DILUTIVE
 SECURITIES

Convertible  notes             -             -                        129            91
Stock options                  -            16                          -             2
                          ------        ------                     ------        ------
DILUTED NET PROFIT
 PER SHARE                24,137        18,510          1.30       34,365        19,526          1.76
                          ======        ======          ====       ======        ======          ====
</TABLE>

<TABLE>
<CAPTION>
                         For the year ended December 31, 2002
                       ----------------------------------------
                          Income        Shares        Per share
                       (Numerator)   (Denominator)     Amount
<S>                    <C>           <C>              <C>
BASIC NET PROFIT
 PER SHARE                37,202        19,561          1.90
                                                        ====
EFFECT OF DILUTIVE
 SECURITIES

Convertible  notes           129            91
Stock options                  -             1
                          ------        ------
DILUTED NET PROFIT
 PER SHARE                37,331        19,653          1.90
                          ======        ======          ====
</TABLE>

         FAIR VALUE

         Financial assets of the Group include cash and cash equivalents,
         deposits with banks, accounts receivable, other receivables and amounts
         due from related parties. Financial liabilities of the Group include
         accounts payable, bank and other loans, other payables and amounts due
         to related parties. It is not practicable to estimate the fair value of
         the amounts due from and due to related parties without incurring
         excessive cost.

         The following table presents the carrying amounts and fair values of
         the Group's bank and other loans as of December 31, 2001 and 2002:

<TABLE>
<CAPTION>
                                                    December 31, 2001                  December 31, 2002
                                                 Carrying          Fair             Carrying        Fair
                                                  amount           Value             amount         value
                                                    RMB             RMB                RMB           RMB
<S>                                              <C>              <C>               <C>            <C>
Fixed rate bank and other loans                    9,746           9,706              4,769         4,762
Variable rate bank and other loans                 8,399           8,399             16,039        16,039
Fixed rate notes                                   4,956           5,375              4,961         5,418
Convertible notes                                  5,708           5,400              5,711         5,576
Bonds                                              5,000           5,045             13,000        13,309
                                                  ------          ------             ------        ------
Total                                             33,809          33,925             44,480        45,104
                                                  ======          ======             ======        ======
</TABLE>

         The fair values of all other financial instruments approximate their
         carrying amounts due to the nature or short maturity of these
         instruments.

                                     F-105

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         RELATED PARTY TRANSACTIONS

<TABLE>
<CAPTION>
                                                                        Year ended December 31,
                                                              ------------------------------------------
                                                               2000              2001               2002
                                                                RMB              RMB                RMB
<S>                                                           <C>               <C>                <C>
Interconnection revenue                                        5,759            5,132              4,560
Interconnection charges                                       11,619            9,746              8,105
Leased line charges                                           10,277            5,839              5,926
Roaming revenue                                                4,968            5,945              6,629
Roaming expenses                                               4,486            5,803              6,735
Spectrum fees                                                     35               26                226
Operating lease charges                                          666              527                527
Sales commission expenses                                        406              110                 69
Debt collection service fees                                     226              135                 74
Billing service fees                                              18               19                 10
Roaming billing processing fees                                  150              201                225
Equipment maintenance service fees                                 8               48                 55
Rental charges of synchronized clock ports                        17               21                 26
Construction and related service fees                            498            2,523                345
Purchases of transmission tower and
  transmission tower-related service
  and antenna maintenance service fees                            86              156                146
Prepaid card sales commission income                             158              356                219
Prepaid card sales commission expenses                           158              373                216
 Technology platform development and
   maintenance service income                                      -                -                 39
Telecommunications lines maintenance
  service fees                                                    12               46                 34
Interest paid/payable                                             28               41                821
Housing reform                                                     6                4                  -
Rental income                                                      6                6                  7
Capital contributions                                          6,222            9,838                  -
Distributions                                                    569              794                  -
</TABLE>

         Descriptions of the nature of the related party transactions are set
         forth in Note 26.

                                     F-106

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         SEGMENT REPORTING

         Statement of Financial Accounting Standards No. 131, "Disclosures about
         Segments of an Enterprise and Related Information", established
         standards for reporting information about operating segments in
         financial statements. Operating segments are defined as components of
         an enterprise about which separate financial information is available
         that is evaluated regularly by the chief operating decision maker, or
         decision making group, in deciding how to allocate resources and in
         assessing performance.

         The Company's operating segments are comprised of its cellular
         businesses operated within the Guangdong, Zhejiang, Jiangsu, Fujian,
         Henan, Hainan, Hebei, Liaoning, Shandong, Anhui, Jiangxi, Sichuan,
         Hubei, Hunan, Shaanxi and Shanxi provinces, Beijing, Shanghai, Tianjin
         and Chongqing municipalities, and Guangxi Zhuang Autonomous Region of
         the PRC. The operating segments are managed separately because each
         operating segment represents a strategic business unit that serves
         different markets. All operating segments provide cellular services to
         individual customers within their geographic market. The Company's
         operating segments have been aggregated into a single operating segment
         as they are expected to exhibit similar future economic
         characteristics.

         BUSINESS RISKS

         The Group conducts its principal operations in the PRC and accordingly
         is subject to special considerations and significant risks not
         typically associated with investments in equity securities of United
         States and Western European companies. These include risks associated
         with, among others, the political, economic and legal environment,
         extensive government regulations and competition in the cellular
         telephone industry.

                                     F-107

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         NEW TELECOMMUNICATIONS LAW

         In order to provide a uniform regulatory framework for the
         telecommunications industry in the PRC, the MII, pursuant to the
         direction of the PRC State Council, is currently preparing a draft of
         the Telecommunications Law of the PRC (the "Telecommunications Law").
         The draft law, when formulated, will be submitted to the National
         People's Congress for review and adoption. It is unclear if and when
         the Telecommunications Law will be adopted, and the nature and scope of
         regulation envisaged by the Telecommunications Law are not fully known.
         There can be no assurance that the Telecommunications Law, if adopted,
         would not have a material adverse effect on the Group's business,
         financial condition and results of operations.

         AMOUNT OF SPECTRUM AVAILABILITY

         The Group's cellular system's subscriber capacity is limited by the
         amount of spectrum available for use by the system. The former State
         Radio Regulatory Commission, now a department within the MII, is
         responsible for the overall allocation of radio frequency spectrum in
         the PRC. There can be no assurance that the Group would be granted
         additional spectrum when and if required, and any resulting levels of
         system congestion could result in subscriber dissatisfaction, decreased
         system usage by subscribers and increased churn rate.

         INTERCONNECTION ARRANGEMENT WITH NETWORKS OF OTHER OPERATORS

         The Group's cellular services depend in large part upon access to the
         network of other operators. Any disruption of interconnection with the
         networks of operators could have a material adverse effect on the
         Group's results of operations.

                                     F-108

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         CHANGES IN TECHNOLOGY

         The telecommunications industry is subject to rapid and significant
         changes in technology. Accordingly, the mobile telecommunications
         technologies that the Group currently employs may become obsolete or
         subject to competition from new technologies in the future, including
         new wireless telecommunications technologies. In addition, the new
         technologies the Group implements, such as wireless data applications,
         may not generate an acceptable rate of return.

         NEW COMPETITION

         Current Chinese government policy concerning the telecommunications
         sector is to encourage orderly competition. There can be no assurance
         that the State Council will not approve additional telecommunications
         service providers in the future, including providers of mobile
         telecommunications services, that may compete against the Group. In
         additions, China's accession into the WTO could lead to increased
         foreign investment in the telecommunications market in Mainland China,
         thereby increasing competition and foreign participation in the mobile
         telecommunications service sector in Mainland China. Increased
         competition and foreign participation may have a material adverse
         effect on the Group's financial conditions and result of operation.

         SELF INSURANCE RISK

         The Group does not maintain any insurance policies to cover its assets.

         INTEREST RATE RISK

         The interest rates and terms of repayment of the bank and other loans
         payable of the Group are disclosed in Note 20.

                                     F-109

<PAGE>

                                                China Mobile (Hong Kong) Limited
                                               Consolidated financial statements
                                            for the year ended December 31, 2002

         Notes to Consolidated Financial Statements (Continued)
         (Amounts in millions, except share data)

34       ADDITIONAL INFORMATION REQUIRED BY US GAAP (CONTINUED)

         FOREIGN CURRENCY RISK

         The Group has foreign currency risk as certain loans and cash and cash
         equivalents are denominated in foreign currencies, principally US
         dollars and Hong Kong dollars. Depreciation or appreciation of the
         Renminbi against foreign currencies affects the Group's results of
         operations.

         CREDIT RISK

         Substantially all of the Group's cash and cash equivalents are
         deposited with Hong Kong and PRC financial institutions. The accounts
         receivable of the Group are spread among a number of customers.

                                     F-110

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
  1.1            Memorandum and Articles of Association (as amended).(6)

  2.1            We agree to provide the Securities and Exchange Commission, upon request, copies of instruments
                 defining the rights of holders of our long-term debt.

  2.2            Guarantee from China Mobile Communications Corporation for the RMB 5 billion guaranteed bonds due
                 2011 issued by Guangdong Mobile.(6)

  2.3            Letter of Guarantee from China Mobile Communications Corporation for the RMB 3 billion guaranteed
                 bonds due 2007 and RMB 5 billion guaranteed bonds due 2017, both issued by Guangdong Mobile in
                 2002 (with English translation).

  4.1            Trademark License Agreement, dated July 18, 2002, between China Mobile Communications Corporation and
                 China Mobile (Hong Kong) Limited (with English translation).

  4.2            Tax Indemnity dated July 1, 2002 between China Mobile Hong Kong (BVI) Limited, China Mobile (Hong
                 Kong) Limited and China Mobile Communications Corporation.

  4.3            Amendment Letter dated June 18, 2002 between China Mobile (Hong Kong) Limited, Vodafone Group Plc
                 and Vodafone Holdings.

  4.4            Supplemental Agreement relating to Frequency Spectrum/Numbering Resources Usage Agreement, Sharing
                 Agreement of Inter-provincial Long Distance Transmission Line Leasing Fee, Inter-provincial
                 Interconnection and Domestic and International Roaming Settlement Agreement, Agreement on
                 "Shenzhouxing" Roaming Settlement and Sharing of Revenue From Sales of Top-Off Cards From Network
                 Operators Other Than Their Home Network Operators, and Supplemental Agreement to Agreement on
                 "Shenzhouxing" Roaming Settlement and Sharing of Revenue from Sales And Value-Adding of Top-Off Cards
                 from Network Operators Other Than Their Home Network Operators dated April 29, 2002 between China
                 Mobile Communications Corporation, China Mobile (Hong Kong) Limited and the eight regional mobile
                 communications companies (Anhui Mobile Communication Company Limited, Jiangxi Mobile Communication
                 Company Limited, Chongqing Mobile Communication Company Limited, Sichuan Mobile Communication Company
                 Limited, Hubei Mobile Communication Company Limited, Hunan Mobile Communication Company Limited,
                 Shaanxi Mobile Communication Company Limited, and Shanxi Mobile Communication Company Limited) (with
                 English translation).

  4.5            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Anhui
                 Mobile Communication Company Limited and Anhui Communication Service Company (with English
                 translation).

  4.6            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Jiangxi Mobile Communication Company Limited and Jiangxi Communication Service Company (with
                 English translation).

  4.7            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation,
                 Chongqing Mobile Communication Company Limited and Chongqing Communication Service Company (with
                 English translation).

  4.8            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Sichuan
                 Mobile Communication Company Limited and Sichuan Communication Service Company (with English
                 translation).

  4.9            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Hubei
                 Mobile Communication Company Limited and Hubei Communication Service Company (with English
                 translation).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.10            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Hunan
                 Mobile Communication Company Limited and Hunan Communication Service Company (with English
                 translation).

 4.11            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Shaanxi
                 Mobile Communication Company Limited and Shaanxi Communication Service Company (with English
                 translation).

 4.12            Asset Injection Agreement dated May 15, 2002 among China Mobile Communications Corporation, Shanxi
                 Mobile Communication Company Limited and Shanxi Communication Service Company (with English
                 translation).

 4.13            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Anhui Mobile
                 Communication Company Limited and Anhui Communication Service Company (with English translation).

 4.14            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Jiangxi Mobile
                 Communication Company Limited and Jiangxi Communication Service Company (with English translation).

 4.15            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Chongqing Mobile
                 Communication Company Limited and Chongqing Communication Service Company (with English translation).

 4.16            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Sichuan Mobile
                 Communication Company Limited and Sichuan Communication Service Company (with English translation).

 4.17            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Hubei Mobile
                 Communication Company Limited and Hubei Communication Service Company (with English translation).

 4.18            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Hunan Mobile
                 Communication Company Limited and Hunan Communication Service Company (with English translation).

 4.19            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Shaanxi Mobile
                 Communication Company Limited and Shaanxi Communication Service Company (with English translation).

 4.20            Agreement on the Confirmation of Rights and Obligations dated May 15, 2002 between Shanxi Mobile
                 Communication Company Limited and Shanxi Communication Service Company (with English translation).

 4.21            Telecommunications Services Agreement dated April 10, 2002 between Anhui Mobile Communication Company
                 Limited and Anhui Communication Service Company (with English translation).

 4.22            Telecommunications Services Agreement dated April 10, 2002 between Jiangxi Mobile Communication
                 Company Limited and Jiangxi Communication Service Company (with English translation).

 4.23            Telecommunications Services Agreement dated April 10, 2002 between Chongqing Mobile Communication
                 Company Limited and Chongqing Communication Service Company (with English translation).

 4.24            Telecommunications Services Agreement dated April 27, 2002 between Sichuan Mobile Communication
                 Company Limited and Sichuan Communication Service Company (with English translation).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.25            Telecommunications Services Agreement dated April 10, 2002 between Hubei Mobile Communication Company
                 Limited and Hubei Communication Service Company (with English translation).

 4.26            Telecommunications Services Agreement dated April 10, 2002 between Hunan Mobile Communication Company
                 Limited and Hunan Communication Service Company (with English translation).

 4.27            Telecommunications Services Agreement dated April 10, 2002 between Shaanxi Mobile Communication
                 Company Limited and Shaanxi Communication Service Company (with English translation).

 4.28            Telecommunications Services Agreement dated April 10, 2002 between Shanxi Mobile Communication
                 Company Limited and Shanxi Communication Service Company (with English translation).

 4.29            Service Agreement for Supply Installation and Maintenance of Steel Towers dated May 8, 2002 between
                 China Mobile (Hong Kong) Limited and Hubei Communication Services Company (with English translation).

 4.30            Co-operation Framework Agreement in respect of Indirect Loan dated May 10, 2002 between China Mobile
                 Communications Corporation and China Mobile (Hong Kong) Limited (with English translation).

 4.31            Trademark License Agreement, dated April 24, 2002, between China Mobile Communications Corporation
                 and China Mobile (Hong Kong) Limited. (7)

 4.32            Conditional Sale and Purchase Agreement, dated May 16, 2002, among China Mobile Hong Kong (BVI)
                 Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(7)

 4.33            Subscription Agreement, dated May 16, 2002, among Vodafone Group Plc, Vodafone Holdings (Jersey)
                 Limited and China Mobile (Hong Kong) Limited. (7)

 4.34            Prepaid services agreement dated May 11, 2001, between China Mobile (Hong Kong) Limited and China
                 Mobile Communications Corporation.(6)

 4.35            Inter-Provincial Long-Distance Transmission Leased Line Fee Sharing Agreement, dated May 5, 2000,
                 between China Mobile Communications Corporation and China Telecom (Hong Kong) Limited.(4)

 4.36            Inter-Provincial Network Interconnection, Domestic and International Roaming and Settlement
                 Agreement, dated May 5, 2000, between China Mobile Communications Corporation and China Telecom
                 (Hong Kong) Limited.(4)

 4.37            Tenancy Agreement, dated June 7, 2000, between Fu Hao Properties Limited and China Telecom (Hong
                 Kong) Limited.(4)

 4.38            Agreement Regarding the Roaming Settlement of "Shenzhouxing" Prepaid Services "Shenzhouxing" and
                 Revenues Sharing for Sales of Stored Value for Stored Value Cards, dated October 4, 2000, between
                 China Mobile Communications Corporation and China Mobile (Hong Kong) Limited.(1)

 4.39            Contract on Termination of the Trademark Licensing, dated September 15, 2000, between China
                 Telecommunications Corporation and China Mobile (Hong Kong) Limited.(1)

 4.40            Building Leasing and Property Management Agreement, dated September 18, 2000, between Beijing
                 Mobile and Beijing Communications Service Company ("Beijing Service").(1)

 4.41            Building Leasing and Property Management Agreement, dated September 18, 2000, between Beijing
                 Mobile and Beijing Service.(1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.42            Agreement on Mobile Communications Equipment Maintenance and Modulation, dated September 18, 2000,
                 between Beijing Mobile and Beijing Huarui Wireless Communications Equipment Installation Company
                 ("Beijing Huarui").(1)

 4.43            Agreement on Communications Projects Design and Construction, dated September 18, 2000, between
                 Beijing Mobile and Beijing Huarui.(1)

 4.44            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications
                 Corporation, Beijing Mobile and Beijing Service.(1)

 4.45            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Beijing Mobile and Beijing Service.(1)

 4.46            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Beijing Mobile and Beijing Service.(1)

 4.47            Agreement on Mobile Communications Equipment Maintenance, dated September 20, 2000, between Shanghai
                 Mobile and Shanghai Long-distance Telecommunications Engineering Company ("Shanghai Engineering").(1)

 4.48            Agreement on Contracting Mobile Communications Projects, dated September 20, 2000, between
                 Shanghai Mobile and Shanghai Engineering.(1)

 4.49            Building Leasing and Property Management Agreement, dated September 20, 2000, between Shanghai
                 Mobile and Shanghai Communications Service Company ("Shanghai Service").(1)

 4.50            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shanghai Mobile and Shanghai Service. (1)

 4.51            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shanghai Mobile and Shanghai Service. (1)

 4.52            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Shanghai Mobile and Shanghai Service.(1)

 4.53            Building Leasing Agreement, dated August 1, 2000, between Tianjin Mobile and Tianjin Communications
                 Service Company ("Tianjin Service"). (1)

 4.54            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Tianjin Mobile and Tianjin Service.(1)

 4.55            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation, Tianjin
                 Mobile and Tianjin Service.(1)

 4.56            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Tianjin Mobile and Tianjin Service.(1)

 4.57            Building Leasing and Property Management Agreement, dated August 1, 2000, between Hebei Mobile and
                 Hebei Communications Service Company ("Hebei Service").(1)

 4.58            Agreement on the Sales and Maintenance of Masts and Maintenance of Antennas and Feeder Lines, dated
                 August 1, 2000, between Hebei Mobile and Hebei Provincial Posts and Telecommunications Equipment and
                 Machinery Plant.(1)

 4.59            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Hebei Mobile and Hebei Service.(1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.60            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation, Hebei
                 Mobile and Hebei Service.(1)

 4.61            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Hebei Mobile and Hebei Service.(1)

 4.62            Building Leasing and Property Management Agreement, dated August 10, 2000, between Liaoning Mobile
                 and Liaoning Communications Service Company ("Liaoning Service").(1)

 4.63            Agreement on Communications Equipment Maintenance, dated September 8, 2000, between Liaoning Mobile
                 and Liaoning Provincial Posts and Telecommunications Engineering Bureau ("Liaoning Engineering").(1)

 4.64            Agreement on Mobile Communications Projects Construction, dated September 8, 2000, between Liaoning
                 Mobile and Liaoning Engineering.(1)

 4.65            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Liaoning Mobile and Liaoning Service.(1)

 4.66            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Liaoning Mobile and Liaoning Service.(1)

 4.67            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Liaoning Mobile and Liaoning Service.(1)

 4.68            Building Leasing and Property Management Agreement, dated September 1, 2000, between Shandong Mobile
                 and Shandong Communications Service Company ("Shandong Service").(1)

 4.69            Agreement on Contracting Mobile Communications Projects, dated September 1, 2000, between Shandong
                 Mobile and Shandong Mobile Communications Engineering Bureau.(1)

 4.70            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shandong Mobile and Shandong Service.(1)

 4.71            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation,
                 Shandong Mobile and Shandong Service.(1)

 4.72            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Shandong Mobile and Shandong Service.(1)

 4.73            Building Lease Agreement, dated August 26, 2000, between Guangxi Mobile and Guangxi Communications
                 Service Company ("Guangxi Service").(1)

 4.74            Capital Contribution Agreement, dated August 30, 2000, among China Mobile Communications Corporation,
                 Guangxi Mobile and Guangxi Service.(1)

 4.75            Agreement Regarding the Transfer of Personnel, Finances and Assets Not Directly Related to Mobile
                 Communication Services, dated August 30, 2000, among China Mobile Communications Corporation, Guangxi
                 Mobile and Guangxi Service.(1)

 4.76            Agreement on the Confirmation of the Transfer of Personnel, Finances and Assets and the Related
                 Rights and Obligations, dated August 30, 2000, between Guangxi Mobile and Guangxi Service.(1)

 4.77            Strategic Investor Placing Agreement among China Mobile (Hong Kong) Limited, Vodafone Group Plc,
                 China International Capital Corporation, Goldman Sachs (Asia) L.L.C. and Merrill Lynch Far East
                 Limited.(1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.78            Syndicated loan agreement for RMB 7,500,000,000 among China Mobile (Shenzhen) Limited, Construction
                 Bank of China, Bank of China, State Development Bank, Agriculture Bank of China, Industrial and
                 Commercial Bank of China, Bank of Communications, Hong Kong and Shanghai Banking Corporation Ltd.,
                 China Merchants Bank and Construction Bank of China, Shenzhen Branch, dated October 7, 2000.(1)

 4.79            Syndicated loan agreement for RMB 5,000,000,000 among China Mobile (Shenzhen) Limited, Construction
                 Bank of China, Bank of China, State Development Bank, Agriculture Bank of China, Industrial and
                 Commercial Bank of China, Bank of Communications, Hong Kong & Shanghai Banking Corporation Ltd.,
                 China Merchants Bank and Construction Bank of China, Shenzhen Branch, dated October 7, 2000.(1)

 4.80            Conditional Sale and Purchase Agreement, dated October 4, 2000, among China Mobile Communications
                 Corporation, China Mobile Hong Kong (BVI) Limited and China Mobile (Hong Kong) Limited.(1)

 4.81            Conditional Sale and Purchase Agreement, dated October 4, 1999, among China Telecom Hong Kong (BVI)
                 Limited, China Telecom (Hong Kong) Group Limited and China Telecom (Hong Kong) Limited.(2)

 4.82            Agreement Regarding Provincial Network Interconnection, Roaming and Settlement of Account, dated
                 October 8, 1999, between China Telecom (Hong Kong) Limited and China Mobile (Hong Kong) Limited.(2)

 4.83            Agreement Regarding the Use of Frequency/Number Resources, dated October 8, 1999, between China
                 Telecom (Hong Kong) Limited and China Mobile (Hong Kong) Limited.(2)

 4.84            Agreement Regarding Network Interconnection and Settlement of Account, dated October 8, 1999, between
                 Guangdong Mobile and Guangdong Posts and Telecommunications Administration ("PTA").(2)

 4.85            Agreement Regarding Network Interconnection and Settlement of Account, dated October 5, 1999, between
                 Zhejiang Mobile and Zhejiang PTA.(2)

 4.86            Agreement Regarding Network Interconnection and Settlement of Account, dated October 8, 1999, between
                 Jiangsu Mobile and Jiangsu PTA.(2)

 4.87            Agreement Regarding Network Interconnection and Settlement of Account, dated August 30, 1999,
                 between Fujian Mobile Communication Bureau and Fujian PTA.(2)

 4.88            Synchronous Clock Port Leasing Agreement, dated August 30, 1999, between Fujian Mobile Communication
                 Bureau and Fujian PTA.(2)

 4.89            Building and Facilities Leasing Agreement, dated August 30, 1999, between Fujian Mobile and Fujian
                 PTA.(2)

 4.90            Building and Facilities Leasing Agreement (leasing to PTA), dated August 30, 1999, between Fujian
                 Mobile Communication Bureau and Fujian PTA.(2)

 4.91            Building and Facility Leasing Agreement, dated September 25, 1999, between Fujian Mobile and Fujian
                 Xunjie Communications Technical Services Company ("Xunjie").(2)

 4.92            Agreement Regarding Network Interconnection and Settlement of Account, dated August 20, 1999, between
                 Henan Mobile and Henan PTA.(2)

 4.93            Synchronous Clock Port Leasing Agreement, dated August 19, 1999, between Henan Mobile and Henan
                 PTA.(2)

 4.94            Building and Facilities Leasing Agreement, dated August 19, 1999, between Henan Mobile and Henan
                 PTA.(2)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                            DESCRIPTION OF EXHIBIT
<S>              <C>
 4.95            Agreement Regarding Network Interconnection and Settlement of Account, dated August 20, 1999, between
                 Hainan Mobile and Hainan PTA.(2)

 4.96            Building and Facilities Leasing Agreement, dated August 20, 1999, between Hainan Mobile and Hainan
                 PTA.(2)

 4.97            Real Estates Leasing Agreement, dated September 24, 1999, between Hainan Mobile and Hainan
                 Communication Service Company ("Hainan Service").(2)

 8.1             List of major subsidiaries.
</TABLE>

-----------------------
(1) Incorporated by reference to our Registration Statement on Form F-3 (File
    No. 333-47256), filed with the Securities and Exchange Commission on October
    30, 2000.

(2) Incorporated by reference to our Registration Statement on Form F-3 (File
    No. 333-10956), filed with the Securities and Exchange Commission on October
    30, 1999.

(3) Incorporated by reference to our Registration Statement on Form F-1 (File
    No. 333-7634), filed with the Securities and Exchange Commission on
    September 29, 1997.

(4) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 1999 (File No. 1-14696), filed with the Securities
    and Exchange Commission on June 20, 2000.

(5) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 1998 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 25, 1999.

(6) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 2000 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 26, 2001.

(7) Incorporated by reference to our Annual Report on Form 20-F for the fiscal
    year ended December 31, 2001 (File No. 1-14696), filed with the U.S.
    Securities and Exchange Commission on June 13, 2002.