##### Table of Contents





UNITED STATES

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, 2011

OR



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

For the transition period from
                     to

OR



| ̈ |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report

Commission file number: 1-14696







|                    
|--------------------
|China Mobile 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)



|                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Grace Wong Company Secretary China Mobile Limited
60th Floor, The Center 99 Queens Road Central Hong Kong, China
Telephone: (852) 3121-8888 Fax: (852) 2511-9092

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)







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



|                                             |  |  |  |                                          
|-------------------------------------------- |  |  |  | -----------------------------------------
|Title of Each Class                          |  |  |  | Name of Each Exchange on Which Registered
|                                             |  | 
|Ordinary shares, par value HK$0.10 per share |  |  |  | New York Stock Exchange*                 



|* | Not for trading, but only in connection with the listing on the New York Stock Exchange 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, 2011, 20,072,065,571 ordinary shares, par value HK$0.10 per share, were
issued and outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.  Yes x  No  ̈

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or (15)(d) of the Securities Exchange Act of
1934.  Yes  ̈  No x

Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those
Sections.

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ̈  No  ̈

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x                 Accelerated
filer   ̈                 Non-accelerated filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing.



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued by the International Accounting Standards Board  x |  | Other   ̈

If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to
follow.    Item 17   ̈  Item 18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).  Yes  ̈  No x









---

##### Table of Contents

TABLE OF CONTENTS

China Mobile Limited



|                           |  |                                                                              |   |      |    | 
|-------------------------- |  | ---------------------------------------------------------------------------- | - | ---- | -- | 
|                           |  |                                                                              |   | Page |   
|Forward-Looking Statements |  |                                                                              | 1 |     
|                          
|PART I                     | 
|                           |  |                                                                             
|Item 1.                    |  | Identity of Directors, Senior Management and Advisers                        |   |      | 2  | 
|Item 2.                    |  | Offer Statistics and Expected Timetable                                      |   |      | 2  | 
|Item 3.                    |  | Key Information                                                              |   |      | 2  | 
|Item 4.                    |  | Information on the Company                                                   |   |      | 12 | 
|Item 4A.                   |  | Unresolved Staff Comments                                                    |   |      | 28 | 
|Item 5.                    |  | Operating and Financial Review and Prospects                                 |   |      | 29 | 
|Item 6.                    |  | Directors, Senior Management and Employees                                   |   |      | 42 | 
|Item 7.                    |  | Major Shareholders and Related Party Transactions                            |   |      | 47 | 
|Item 8.                    |  | Financial Information                                                        |   |      | 51 | 
|Item 9.                    |  | The Offer and Listing                                                        |   |      | 52 | 
|Item 10.                   |  | Additional Information                                                       |   |      | 53 | 
|Item 11.                   |  | Quantitative and Qualitative Disclosures About Market Risk                   |   |      | 59 | 
|Item 12.                   |  | Description of Securities Other than Equity Securities                       |   |      | 60 | 
|                          
|PART II                    | 
|                           |  |                                                                             
|Item 13.                   |  | Defaults, Dividend Arrearages and Delinquencies                              |   |      | 62 | 
|Item 14.                   |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |   |      | 62 | 
|Item 15.                   |  | Controls and Procedures                                                      |   |      | 62 | 
|Item 16A.                  |  | Audit Committee Financial Expert                                             |   |      | 64 | 
|Item 16B.                  |  | Code of Ethics                                                               |   |      | 64 | 
|Item 16C.                  |  | Principal Accountant Fees and Services                                       |   |      | 64 | 
|Item 16D.                  |  | Exemptions from the Listing Standards for Audit Committees                   |   |      | 64 | 
|Item 16E.                  |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |   |      | 64 | 
|Item 16F.                  |  | Change in Registrants Certifying Accountant                                 |   |      | 64 | 
|Item 16G.                  |  | Corporate Governance                                                         |   |      | 64 | 
|Item 16H.                  |  | Mine Safety Disclosure                                                       |   |      | 65 | 
|                          
|PART III                   | 
|                           |  |                                                                             
|Item 17.                   |  | Financial Statements                                                         |   |      | 66 | 
|Item 18.                   |  | Financial Statements                                                         |   |      | 66 | 
|Item 19.                   |  | Exhibits                                                                     |   |      | 66 | 



---

##### Table of Contents

Forward-Looking Statements

This annual report on Form 20-F 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. These forward-looking statements include, without
limitation, statements relating to:



| |  |  | our business objectives and strategies;
| | - |  | ---------------------------------------



| |  |  | our operations and prospects;
| | - |  | -----------------------------



| |  |  | our telecommunications network expansion plans and related capital expenditure plans;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the expected impact of any acquisitions or other strategic transactions;
| | - |  | ------------------------------------------------------------------------



| |  |  | our provision of services, including 3G services and services based on evolution of 3G technology, and our ability to attract customers to these
services;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the planned development of future generations of mobile telecommunications technologies and other technologies and related applications;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the anticipated evolution of the industry chain of 3G and future generations of mobile telecommunications technologies, including future development
in, and availability of, terminals that support our provision of services based on 3G technology and future generations of mobile telecommunications technologies;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | the expected impact of new service offerings on our business, financial condition and results of operations; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | future developments in the telecommunications industry in Mainland China, including changes in the regulatory and competitive landscape.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

The words aim, anticipate, believe, could,
estimate, expect, intend, may, plan, seek, should, target, will and similar expressions, as they relate to us, are intended to identify
certain of these forward-looking statements. We do not intend to update these forward-looking statements and are under no obligation to do so.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, 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. Moreover, our future business expansion and
other capital expenditure and development plans are dependent on numerous factors, including the risk factors set forth in Item 3. Key Information  Risk Factors and the following:



| |  |  | changes in political, economic, legal, tax and social conditions in Mainland China, including, without limitation, the PRC governments policies
with respect to new entrants in the PRC telecommunications industry, the entry of foreign companies into Mainland Chinas telecommunications market and Mainland Chinas continued economic growth; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of qualified management and technical personnel.
| | - |  | -----------------------------------------------------------------



-1-



---

##### Table of Contents

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, 2011. Except for amounts presented in U.S. dollars and per American depositary share, or ADS, data, the selected historical consolidated statement of comprehensive income data and other financial data for the
years ended December 31, 2009, 2010 and 2011 and the selected historical consolidated balance sheet data as of December 31, 2010 and 2011 set forth below are derived from, 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 on Form 20-F. The selected historical consolidated statement of comprehensive income data for the years
ended December 31, 2007 and 2008 and the selected historical consolidated balance sheet data as of December 31, 2007, 2008 and 2009 set forth below are derived from our audited consolidated financial statements that are not included in
this annual report on Form 20-F. Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.

The statistical information set forth in this annual report on Form 20-F 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.



|                                                        |  |                                                                |         |   |         |  |         |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |        |  
|------------------------------------------------------- |  | -------------------------------------------------------------- | ------- | - | ------- |  | ------- | ---- |  |  | ------- | - |  | ---- | ------- | - | ---- |  | ------- | - |  |  | ------ | -
|                                                        |  | As of or for the year ended December 31,                       |        
|                                                        |  | 2007(1)                                                        |         |   | 2008(1) |  |         | 2009 |  |  | 2010    |   |  | 2011 |         |   | 2011 | 
|                                                        |  | RMB                                                            |         |   | RMB     |  |         | RMB  |  |  | RMB     |   |  | RMB  |         |   | US$  | 
|                                                        |  | (in millions, except share, per share and per ADS information) |        
|Consolidated Statement of Comprehensive Income Data:    |  |                                                                |         |   |         |  |         |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |        |  
|Operating revenue                                       |  |                                                                | 357,477 |   |         |  | 411,810 |      |  |  | 452,103 |   |  |      | 485,231 |   |      |  | 527,999 |   |  |  | 83,891 |  
|Operating expenses                                      |  |                                                                | 233,764 |   |         |  | 269,415 |      |  |  | 305,095 |   |  |      | 334,477 |   |      |  | 376,700 |   |  |  | 59,852 |  
|Profit from operations                                  |  |                                                                | 123,713 |   |         |  | 142,395 |      |  |  | 147,008 |   |  |      | 150,754 |   |      |  | 151,299 |   |  |  | 24,039 |  
|Profit before taxation                                  |  |                                                                | 128,883 |   |         |  | 149,523 |      |  |  | 153,836 |   |  |      | 159,071 |   |      |  | 166,582 |   |  |  | 26,467 |  
|Taxation                                                |  |                                                                | (42,143 | ) |         |  | (36,735 | )    |  |  | (38,413 | ) |  |      | (39,047 | ) |      |  | (40,603 | ) |  |  | (6,451 | )
|Profit for the year attributable to equity shareholders |  |                                                                | 86,623  |   |         |  | 112,627 |      |  |  | 115,166 |   |  |      | 119,640 |   |      |  | 125,870 |   |  |  | 19,999 |  
|Basic earnings per share(2)                             |  |                                                                | 4.33    |   |         |  | 5.62    |      |  |  | 5.74    |   |  |      | 5.96    |   |      |  | 6.27    |   |  |  | 1.00   |  
|Diluted earnings per share(2)                           |  |                                                                | 4.26    |   |         |  | 5.53    |      |  |  | 5.67    |   |  |      | 5.89    |   |      |  | 6.20    |   |  |  | 0.99   |  
|Basic earnings per ADS(2)                               |  |                                                                | 21.65   |   |         |  | 28.10   |      |  |  | 28.71   |   |  |      | 29.82   |   |      |  | 31.36   |   |  |  | 4.98   |  
|Diluted earnings per ADS(2)                             |  |                                                                | 21.29   |   |         |  | 27.66   |      |  |  | 28.35   |   |  |      | 29.44   |   |      |  | 30.98   |   |  |  | 4.92   |  



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##### Table of Contents

|                                                                |  |                                                                |            |   |         |  |            |      |  |  |            |   |  |      |            |   |      |  |            |   |  |  |            |  
|--------------------------------------------------------------- |  | -------------------------------------------------------------- | ---------- | - | ------- |  | ---------- | ---- |  |  | ---------- | - |  | ---- | ---------- | - | ---- |  | ---------- | - |  |  | ---------- | -
|                                                                |  | 2007(1)                                                        |            |   | 2008(1) |  |            | 2009 |  |  | 2010       |   |  | 2011 |            |   | 2011 | 
|                                                                |  | RMB                                                            |            |   | RMB     |  |            | RMB  |  |  | RMB        |   |  | RMB  |            |   | US$  | 
|                                                                |  | (in millions, except share, per share and per ADS information) |           
|Number of shares utilized in basic calculation (in thousands)   |  |                                                                | 20,005,123 |   |         |  | 20,043,934 |      |  |  | 20,057,674 |   |  |      | 20,062,910 |   |      |  | 20,068,194 |   |  |  | 20,068,194 |  
|Number of shares utilized in diluted calculation (in thousands) |  |                                                                | 20,339,428 |   |         |  | 20,356,126 |      |  |  | 20,312,459 |   |  |      | 20,321,332 |   |      |  | 20,315,252 |   |  |  | 20,315,252 |  
|                                                                |  |                                                                |            |   |         | 
|Consolidated Balance Sheet Data:                                |  |                                                                |            |   |         |  |            |      |  |  |            |   |  |      |            |   |      |  |            |   |  |  |            |  
|Working capital(3)                                              |  |                                                                | 49,866     |   |         |  | 56,561     |      |  |  | 77,500     |   |  |      | 66,202     |   |      |  | 109,441    |   |  |  | 17,388     |  
|Cash and cash equivalents                                       |  |                                                                | 78,859     |   |         |  | 87,426     |      |  |  | 78,894     |   |  |      | 87,543     |   |      |  | 86,259     |   |  |  | 13,705     |  
|Deposits with banks                                             |  |                                                                | 109,685    |   |         |  | 130,833    |      |  |  | 185,613    |   |  |      | 204,803    |   |      |  | 246,687    |   |  |  | 39,195     |  
|Accounts receivable                                             |  |                                                                | 6,985      |   |         |  | 6,913      |      |  |  | 6,405      |   |  |      | 7,632      |   |      |  | 9,165      |   |  |  | 1,456      |  
|Property, plant and equipment                                   |  |                                                                | 257,170    |   |         |  | 327,783    |      |  |  | 360,075    |   |  |      | 385,296    |   |      |  | 408,165    |   |  |  | 64,851     |  
|Total assets                                                    |  |                                                                | 564,169    |   |         |  | 658,427    |      |  |  | 751,368    |   |  |      | 861,935    |   |      |  | 952,558    |   |  |  | 151,346    |  
|Bondscurrent portion(4)                                        |  |                                                                |           |   |         |  |           |      |  |  |           |   |  |      | 4,981      |   |      |  |           |   |  |  |           |  
|non-current portion                                            |  |                                                                | 9,949      |   |         |  | 9,920      |      |  |  | 9,918      |   |  |      | 4,982      |   |      |  | 4,984      |   |  |  | 792        |  
|Deferred consideration payable(5)                               |  |                                                                | 23,633     |   |         |  | 23,633     |      |  |  | 23,633     |   |  |      | 23,633     |   |      |  | 23,633     |   |  |  | 3,755      |  
|Total liabilities                                               |  |                                                                | 192,020    |   |         |  | 217,776    |      |  |  | 243,734    |   |  |      | 284,532    |   |      |  | 302,139    |   |  |  | 48,005     |  
|Share capital                                                   |  |                                                                | 2,136      |   |         |  | 2,138      |      |  |  | 2,139      |   |  |      | 2,139      |   |      |  | 2,140      |   |  |  | 340        |  
|Shareholders equity                                            |  |                                                                | 371,661    |   |         |  | 440,022    |      |  |  | 506,748    |   |  |      | 576,157    |   |      |  | 649,064    |   |  |  | 103,126    |  
|Other Financial Data:                                           |  |                                                                |            |   |         |  |            |      |  |  |            |   |  |      |            |   |      |  |            |   |  |  |            |  
|Capital expenditures and land lease prepayments(6)              |  |                                                                | 99,551     |   |         |  | 122,814    |      |  |  | 116,675    |   |  |      | 114,338    |   |      |  | 124,414    |   |  |  | 19,767     |  
|Net cash generated from operating activities                    |  |                                                                | 168,612    |   |         |  | 193,647    |      |  |  | 207,123    |   |  |      | 231,379    |   |      |  | 226,756    |   |  |  | 36,028     |  
|Net cash used in investing activities                           |  |                                                                | (123,039   | ) |         |  | (139,026   | )    |  |  | (165,927   | ) |  |      | (171,572   | ) |      |  | (169,356   | ) |  |  | (26,908    | )
|Net cash used in financing activities                           |  |                                                                | (37,276    | ) |         |  | (45,684    | )    |  |  | (49,774    | ) |  |      | (51,051    | ) |      |  | (58,420    | ) |  |  | (9,282     | )
|Dividend declared                                               |  |                                                                | 39,883     |   |         |  | 48,364     |      |  |  | 49,544     |   |  |      | 51,818     |   |      |  | 54,298     |   |  |  | 8,627      |  
|Dividend declared per share (RMB)                               |  |                                                                | 2.000      |   |         |  | 2.415      |      |  |  | 2.471      |   |  |      | 2.595      |   |      |  | 2.730      |   |  |  | 0.43       |  
|Dividend declared per share (HK$)                               |  |                                                                | 2.098      |   |         |  | 2.743      |      |  |  | 2.804      |   |  |      | 3.014      |   |      |  | 3.327      |   |  |  | 0.43       |  



|(1) | With effect from January 1, 2009, the Company retrospectively adopted the IFRIC Interpretation 13. The comparative figures as of and for each of the years ended
December 31, 2007 and 2008 have been restated according to IFRIC Interpretation 13.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The basic earnings per share have been computed by dividing profit attributable to our equity shareholders by the weighted average number of shares outstanding in 2007,
2008, 2009, 2010 and 2011. The diluted earnings per share have been computed after adjusting for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares resulting from the share options granted to our directors and
employees under the share option scheme would decrease profit attributable to equity shareholders per share. The basic and diluted earnings per ADS amounts have been computed based on one ADS representing five ordinary shares.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents current assets minus current liabilities. Certain amounts in 2007, 2008, 2009 and 2010 have been reclassified to conform to the current years
presentation.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The guaranteed bonds due in 2011 with an aggregate principal amount of RMB5,000 million were fully redeemed upon maturity in June 2011.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents the respective balance of the purchase consideration payable to our immediate holding company for our acquisition of the eight regional mobile
telecommunications companies in 2002 and for our acquisition of the ten regional mobile telecommunications companies and other telecommunications assets in 2004. See Item 5. Operating and Financial Review and Prospects  Liquidity
and Capital Resources  Contractual Obligations and Commitments.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Represents payments made for capital expenditures and land lease prepayments during the year and included in net cash used in investing activities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

Exchange Rate Information

We publish our consolidated financial statements in Renminbi. Solely for the convenience of the reader, this annual report on Form 20-F contains translations of certain Renminbi and Hong Kong dollar
amounts into U.S. dollars and vice versa at RMB6.2939 = US$1.00 and HK$7.7663 = US$1.00, the noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York on December 30, 2011.
Effective from January 1, 2009, the noon buying rates in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York are published on a weekly basis in the H.10 statistical release of the Board of
Governors of the Federal Reserve System of the United States. 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.



-3-



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##### Table of Contents

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 RMB6.3080 = US$1.00 and HK$7.7613 = US$1.00, respectively, on April 20, 2012. 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



|                                  |  |                 |        |  |     |  |                 |  |  |                                   |  |  |        |  |  |  |        | 
|--------------------------------- |  | --------------- | ------ |  | --- |  | --------------- |  |  | --------------------------------- |  |  | ------ |  |  |  | ------ | 
|                                  |  | RMB per US$1.00 |        |  |     |  | HK$ per US$1.00 | 
|                                  |  | High            |        |  | Low |  |                 |  |  | High                              |  |  | Low    | 
|October 2011                      |  |                 | 6.3825 |  |     |  | 6.3534          |  |  | October 2011                      |  |  | 7.7884 |  |  |  | 7.7634 | 
|November 2011                     |  |                 | 6.3839 |  |     |  | 6.3400          |  |  | November 2011                     |  |  | 7.7957 |  |  |  | 7.7679 | 
|December 2011                     |  |                 | 6.3733 |  |     |  | 6.2939          |  |  | December 2011                     |  |  | 7.7851 |  |  |  | 7.7663 | 
|January 2012                      |  |                 | 6.3330 |  |     |  | 6.2940          |  |  | January 2012                      |  |  | 7.7674 |  |  |  | 7.7538 | 
|February 2012                     |  |                 | 6.3120 |  |     |  | 6.2935          |  |  | February 2012                     |  |  | 7.7559 |  |  |  | 7.7532 | 
|March 2012                        |  |                 | 6.3315 |  |     |  | 6.2975          |  |  | March 2012                        |  |  | 7.7678 |  |  |  | 7.7551 | 
|April 2012 (up to April 20, 2012) |  |                 | 6.3150 |  |     |  | 6.2975          |  |  | April 2012 (up to April 20, 2012) |  |  | 7.7660 |  |  |  | 7.7580 | 

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 in 2007, 2008, 2009, 2010 and 2011 calculated by averaging the noon buying rates on the last day of each month during the relevant year.

Average Noon Buying Rate



|     |  |                 |        |  |                 |  |        | 
|---- |  | --------------- | ------ |  | --------------- |  | ------ | 
|     |  | RMB per US$1.00 |        |  | HK$ per US$1.00 | 
|     |  |                
|2007 |  |                 | 7.5806 |  |                 |  | 7.8008 | 
|2008 |  |                 | 6.9193 |  |                 |  | 7.7814 | 
|2009 |  |                 | 6.8295 |  |                 |  | 7.7513 | 
|2010 |  |                 | 6.7603 |  |                 |  | 7.7692 | 
|2011 |  |                 | 6.4475 |  |                 |  | 7.7793 | 

Risk Factors

We wish to caution readers that the following important factors, and those important factors described in other reports submitted to, or filed with, the SEC, among other factors, could affect our actual
results and could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf, and that such factors may have a material adverse effect on our business, financial condition,
results of operations and prospects as well as our ordinary shares and ADSs.

Risks Relating to Our Business

We may not be able to maintain the same level of growth as we have experienced over the past decade, which could have a material
adverse effect on our financial condition and results of operations as well as our profitability.

We have experienced
significant growth over the past decade, measured by the increase in both our customer base and our revenue. However, in certain of the more recent years, our rate of growth as measured by our revenue showed a sign of decrease. We cannot assure you
that we will be able to achieve a high level of growth in the future due in part to the increased market saturation and competition among mobile telecommunications operators and from other related industries in Mainland China. In particular,
according to data published by the Ministry of Industry and Information Technology, or the MIIT, mobile penetration rate in Mainland China reached 73.6% as of December 31, 2011. Moreover, the restructuring of the telecommunications industry in
2008 that has significantly changed the competitive landscape in the telecommunications industry in Mainland China and the convergence of the telecommunications industry with other related industries have resulted in further intensified competition.
See  Competition from other telecommunications services providers and competitors in other related industries may further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any
potential change in the competitive landscape of the telecommunications industry in Mainland China would not have a material adverse effect on our business, financial condition and results of operations. All of these factors, among others,
have contributed to a slowdown in the growth in demand for our telecommunications services in Mainland China. As a result, our profit from operations grew at a lower rate in 2011 than in prior years. Our efforts to achieve growth could be hampered
if we are unable to compete effectively with other telecommunications services providers in Mainland China. We cannot assure you that we will be successful in our efforts to achieve a high level of customer growth or to increase the utilization of
our telecommunications services. If we are unable to sustain our growth, our financial condition and results of operations as well as our profitability may be materially and adversely affected.



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Competition from other telecommunications services providers and competitors in other
related industries may further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any potential change in the competitive landscape of the telecommunications industry in Mainland China would not
have a material adverse effect on our business, financial condition and results of operations.

We continue to face
increasing competition from other telecommunications services providers in Mainland China. As a result of the restructuring of the PRC telecommunications industry in January 2009, principal participants in the telecommunications industry in Mainland
China include United Network Communications Group Company Limited, or China Unicom, China Telecommunications Corporation, or China Telecom, and us, with both China Telecom and China Unicom being full-service telecommunications services providers
that operate both fixed-line telecommunications networks and mobile telecommunications networks. See Item 4. Information on the Company  The History and Development of the Company  Industry Restructuring and Changes in Our
Shareholding Structure and Item 4. Information on the Company  Business Overview  Competition. In addition, the PRC government has in the past extended favorable regulatory policies to some of our competitors in order
to help them become more viable competitors. See  Risks Relating to the Telecommunications Industry in Mainland China  Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could
materially harm our competitive position. We are also subject to increasing competition from Internet service providers, mobile device manufacturers, mobile software developers and other competitors, who compete against us in the area of data
businesses by offering mobile Internet access and other mobile services and are taking up an increasing share of the value chain of the telecommunications industry. See  Changes in technology and business models may render our current
technologies and business model obsolete and thus affect our business and market position. Further increased competition could reduce the rate at which we add new customers to our network and decrease our market share as customers choose to
receive mobile telecommunications services from other providers. Our market share decreased slightly to approximately 66.5% as of December 31, 2011. We cannot assure you that we will not experience increases in churn rates as competition
intensifies, which may materially reduce our profitability as we may incur significant additional selling expenses to retain existing customers and attract new customers. Furthermore, we cannot assure you that any potential change, and in
particular, any further restructuring in the competitive landscape of the telecommunications industry in Mainland China would not have a material adverse effect on our business, financial condition and results of operations.

The TD-SCDMA industry chain is still at a developing stage. As a result, we have encountered and may continue to encounter
challenges in the deployment of our 3G services, which could have a material adverse effect on our financial condition and results of operations.

We are committed to pursuing our 3G business based on the Time Division Synchronous Code Division Multiple Access, or TD-SCDMA, technology. As a result, our ability to deploy and deliver our 3G services
depends, to a large extent, on the TD-SCDMA technology. The TD-SCDMA industry chain has undergone substantial development in 2011. However, if the evolution of the TD-SCDMA industry chain does not meet the requirements of the operation of our 3G
business, we may not be able to effectively and economically deliver our 3G services based on this technology. Furthermore, we face intense competition in the delivery of 3G services from our competitors, which are delivering 3G services using
Wideband Code Division Multiple Access, or WCDMA, and Code Division Multiple Access 2000, or CDMA2000, technologies, both of which are perceived to be more mature 3G technologies that have been used widely in western Europe and the United States and
may offer more effective global roaming or other services to customers. If the TD-SCDMA technology proves not to be widely adopted, our ability to attract and retain customers or offer services to our customers may be limited, our business and
prospects may suffer and our revenues and profitability could be materially and adversely affected. We may not be able to successfully overcome our current challenges, including gaining sufficient popularity among potential customers, and may
encounter new challenges in the development of our 3G business, and the deployment of our 3G services may not proceed according to anticipated schedules.



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In addition, we have made substantial investments and incurred significant expenses in the
development of our 3G services, including the leasing of network capacity from our parent company, China Mobile Communications Corporation, or CMCC, and the development of our 3G market. We expect to continue making significant investments in the
construction of our core mobile telecommunications network and related systems and facilities, which we intend to use for our 2G and 3G services and other services based on future generations of telecommunications technologies. Accordingly, the
amount of our capital expenditures in future years could remain high. See Item 5. Operating and Financial Review and Prospects  Liquidity and Capital Resources  Capital Expenditures for more information on our expected
capital expenditures. If the deployment of our 3G business does not reach anticipated scale, or if we encounter other challenges in the provision of our 3G services, our ability to realize benefits from our significant capital investment in our
networks and 3G services will be limited, which could have a material adverse effect on our financial condition and results of operations.

Failure to capitalize on new business opportunities may substantially reduce our growth potential.

We may pursue acquisitions or otherwise make investments in other business opportunities as such opportunities arise. We cannot assure you that we will be successful in pursuing such acquisitions or
investments or will otherwise be able to successfully integrate any acquired business into our existing operations. Our ability to capture new business opportunities may also depend on the availability of sufficient financing from internal as well
as external sources. Any failure to capitalize on new business opportunities may have a material adverse effect on our competitive position, as well as materially reduce our future profitability and growth.

In October 2010, we, through our wholly-owned subsidiary China Mobile Group Guangdong Co., Ltd., or Guangdong Mobile, acquired 20% of the
enlarged share capital of Shanghai Pudong Development Bank, or SPD Bank, for an aggregate amount of RMB39.5 billion (approximately US$6.0 billion). In connection with this acquisition, we entered into a strategic cooperation agreement with SPD Bank
in November 2010, pursuant to which we will cooperate with SPD Bank in the areas of mobile finance and mobile e-Commerce businesses such as mobile payment which includes on-site payment and remote payment as well as in the sharing of customers
services and channels resources. See Item 4. Information on the Company  Business Overview  Investment in, and strategic cooperation with, SPD Bank. SPD Banks profitability is impacted to some extent by macroeconomic
conditions and changes in monetary and fiscal policies in Mainland China, and we cannot assure you that our investment in SPD Bank will achieve the desired level of return. In addition, any strategic cooperation may not produce the intended benefits
due to a number of factors, some of which are beyond our control, including the lack of a well-developed consumer market for mobile e-Commerce in Mainland China. If we encounter difficulties in carrying out our cooperation with SPD Bank, the
prospects of the mobile finance and mobile e-Commerce businesses contemplated to be jointly developed by us and SPD Bank may be materially and adversely affected. Furthermore, expected benefits from our investment in networks, licenses and new
technologies may not be realized.

In 2011, we commenced operating certain aspects of our businesses under specialized
subsidiaries, such as procuring and distributing terminals through China Mobile Group Terminal Company Limited, or China Mobile Terminal, and conducting our international businesses through China Mobile International Company Limited, or China Mobile
International, and expect to enhance our operational efficiency. We cannot assure you, however, that this business model would be sustainable or that we will achieve the expected benefits.

Changes in technology and business models may render our current technologies and business model obsolete and thus affect our
business and market position.

The telecommunications industry is characterized by 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. We are also subject to increasing competition from
Internet service providers, mobile device manufacturers, mobile software developers and other competitors, who compete against us in the area of data businesses by offering mobile Internet access and other mobile services and are taking up an
increasing share of the value chain of the telecommunications industry. The intensified competitive landscape requires us to implement new technologies and develop new businesses in order to maintain our share of the value chain and to adapt to the
evolving value chain of the telecommunications industry. As the development of new businesses, such as mobile Internet and Internet of Things, require significant time, costs and risk, we may not be able to successfully launch or develop
such new businesses and may otherwise not be able to achieve the expected benefits.



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Moreover, the substantial increase in data traffic resulting from the growth of our wireless
data traffic business significantly strains the existing capacity of our telecommunications network infrastructure. In order to alleviate such constraints on our telecommunications network, we have made and will continue to make substantial
investments in the construction of our infrastructure network to carry increasing data traffic. We may not be able to achieve the desired return for such investments.

The development and application of new technologies involves time, substantial costs and risks. We may encounter unexpected technological difficulties or risks in developing and implementing new
technologies, including any future generations of mobile technologies, such as the TDD mode long-term evolution, or TD-LTE, technology, and as a result may incur substantial cost or service disruptions, which could have a material adverse effect on
our business, financial condition, results of operations and prospects. We may also encounter limited availability of terminals, such as handsets, notebook and personal digital assistants, to meet the demand of our business development based on
future generations of mobile telecommunications technologies. Moreover, we cannot assure you that the expansion or upgrade plan to implement any future generations of mobile telecommunications technologies, including the TD-LTE technology, will
achieve the expected results, or that we will be able to launch telecommunications services based on the TD-LTE technology in a commercially viable manner and on a timely basis. In addition, our future success will depend partly on our ability to
offer services that address the market demand arising from new growth opportunities in the broader telecommunications industry. 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 achieve and maintain effective internal controls could have a material adverse effect on our reputation, business, results of operations and the market prices of our shares and ADSs.

Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial
reports and to prevent fraud. We are required to comply with various Hong Kong and U.S. laws, rules and regulations on internal controls, including the Sarbanes-Oxley Act of 2002. In particular, Section 404 of the Sarbanes-Oxley Act of 2002
requires that we include a report of management on our internal control over financial reporting in our annual reports on Form 20-F that contains an assessment by our management of the effectiveness of our internal control over financial reporting.
In addition, our independent registered public accounting firm must issue an auditors report on the effectiveness of our internal control over financial reporting.

Internal controls may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. In
addition, projections of any evaluation of the effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in operating conditions or a deterioration
in the degree of compliance with our policies or procedures. As a result, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain
the adequacy of our internal control over financial reporting, our management may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. Moreover, even if our management concludes that our
internal control over financial reporting is effective, our independent registered public accounting firm may disagree. If our independent registered public accounting firm is not satisfied with our internal control over financial reporting or the
level at which our controls are designed or operated, or if the independent registered public accounting firm interprets the requirements, rules or regulations differently from us, it may decline to express an opinion on the effectiveness of our
internal control over financial reporting or may issue an adverse opinion. Any of these possible outcomes could result in a loss of investor confidence in the reliability of our consolidated financial statements, which could cause the market prices
of our ordinary shares and ADSs to decline significantly. In addition, any deficiency in our internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting
from the New York Stock Exchange, regulatory investigations and civil or criminal sanctions.



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We may not be able to timely detect or prevent employee misconduct, including senior
management, and such misconduct may damage our reputation and could cause the trading price of our ordinary shares and ADSs to decrease.

In recent periods, certain of the management personnel of our company and our subsidiaries, including certain executive directors, were alleged to have engaged in unlawful conduct. Such allegations of
unlawful conduct include the acceptance of bribes as well as maintaining improper business relationships. While some of these incidents are still under investigation, we believe that such management misconduct involved isolated incidents resulting
from individual misconduct.

In order to further strengthen our internal system and policies for detecting and preventing
similar and other misconduct, we have re-examined our policies and procedures and have implemented additional operational measures. In particular, with respect to our business cooperation arrangements with third parties, we are in the process of
adjusting the model of business cooperation and have implemented more stringent policies and processes. These efforts are expected to reduce the ability of third parties to engage in improper business relationships with our employees. We have also
further expanded the type of equipment and products that are subject to centralized procurement. Furthermore, we have implemented a rotation policy under which the management of our major operating subsidiaries will rotate among different
subsidiaries every few years. In addition, we have revised our policy in relation to, and strengthened control over, the material investment projects. We cannot assure you, however, that we will timely detect or prevent misconduct or allegations of
misconduct by our management and staff. If various measures we have taken prove ineffective in preventing employee misconduct, our reputation may be harmed, and the trading price of our ordinary shares and ADSs could decrease.

We are controlled by CMCC, which may not always act in our best interest.

As of March 31, 2012, CMCC indirectly owned approximately 74.14% of our outstanding shares. Accordingly, CMCC is, and will be, able
to (i) nominate substantially all of the members of our board of directors and, in turn, indirectly influence the selection of our senior management; (ii) control the timing and amount of our dividend payments; and (iii) otherwise
control or influence actions that require approvals of our shareholders.

The interests of CMCC as our ultimate controlling
person may conflict with the interests of our minority shareholders. In particular, CMCC may take actions with respect to our business that may not be in our other shareholders best interest.

In addition, CMCC provides our operating subsidiaries in Mainland China with services that are necessary for our business activities. See
Item 5. Operating and Financial Review and Prospects  Overview of Our Operations  Our Operating Arrangements with CMCC Have Affected and May Continue to Affect Our Financial Results. Furthermore, we operate our 3G business
pursuant to arrangements with CMCC, which was granted a license by the PRC government to operate a 3G business based on the TD-SCDMA technology. The interests of CMCC as the provider of these services to our operating subsidiaries in Mainland China
may conflict with the interests of us or our other shareholders.

We may conduct a public offering and listing of our
shares in Mainland China, which may result in increased regulatory scrutiny and compliance costs as well as increased fluctuations in the prices of our ordinary shares and ADSs listed in overseas markets.

We may conduct a public offering and listing of our shares on a stock exchange in Mainland China. We have not set a specific timetable or
decided on any specific form for an offering in the PRC. The precise timing of the offering and listing of our shares in Mainland China would depend on a number of factors, including relevant regulatory developments and market conditions. If we
complete a public offering in Mainland China, we would become subject to the applicable laws, rules and regulations governing public companies listed in Mainland China, in addition to the various laws, rules and regulations that we are currently
subject to in the Hong Kong Special Administrative Region of the Peoples Republic of China, or Hong Kong, and the United States. The listing and trading of our securities in multiple jurisdictions and multiple markets may lead to increased
compliance costs for us, and we may face the risk of significant intervention by regulatory authorities in these jurisdictions and markets.

In addition, under the current PRC laws, rules and regulations, our ordinary shares listed on the Hong Kong Stock Exchange will not be interchangeable or fungible with any shares we may decide to list on
a Mainland China stock exchange, and there is no trading or settlement between these two markets. Furthermore, these two markets have different trading characteristics and investor bases, including different levels of retail and institutional
participation. As a result of these differences, the trading prices of our ordinary shares listed on the Hong Kong Stock Exchange may not be the same as the trading prices of any shares we may decide to list on a Mainland China stock exchange. The
issuance of a separate class of shares and fluctuations in its trading price may also lead to increased volatility in, and may otherwise materially and adversely affect, the prices of our ordinary shares and ADSs listed in overseas markets.



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Our future network capacity growth may be constrained by the frequency spectrum
available to us.

A mobile telecommunications networks capacity is to a certain extent limited by the amount of
frequency spectrum available for its use. Since the MIIT controls the allocation of 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 MIIT allocates to our parent company, CMCC. For our GSM network, the MIIT has allocated a total of 45 MHz of spectrum to be used for transmission and reception, respectively, to our parent company, CMCC. Of the 45 MHz of spectrum
allocated to us, 40 MHz in the 900 MHz and 1800 MHZ frequency bands is allocated for use nationwide, and 5 MHz in the 1800 MHz frequency band is allocated for use in the cities of Beijing, Shanghai and Chengdu and Guangdong province. In connection
with our 3G business, the MIIT has allocated to CMCC a total of 35 MHz of spectrum to be used for nationwide coverage, and an additional 50 MHz of spectrum to be used for indoor coverage. Under the existing agreement between CMCC and us, we have the
exclusive rights among mobile telecommunications services providers to use the allocated frequency spectrum in Mainland China.

We believe that our current spectrum allocation is sufficient for anticipated customer growth in the near term. However, we may need
additional spectrum to accommodate future customer growth or to develop mobile telecommunications services based on future generations of mobile telecommunications technologies. We may not be able to obtain additional spectrum from the MIIT that
would meet our expectations on a timely basis. Our network expansion or upgrade 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 and prospects as well as our financial condition and results of operations.

Since our services require
interconnection with networks of other operators, disruption in interconnections with those networks could have a material adverse effect on our business, profitability and growth.

Our mobile telecommunications services depend, in large part, upon our interconnection arrangements and access to other networks.
Interconnection is necessary in the case of all calls between our customers and customers of other networks. We have entered into interconnection and transmission line leasing agreements with other operators. Any disruption on our interconnection
with the networks of other operators with which we interconnect due to technical or competitive reasons may affect our operations, service quality and customer satisfaction, and in turn our business and results of operations. In addition, any
obstacles in existing interconnection arrangements and leased line agreements or any change in their terms, as a result of natural events, accidents, or for regulatory, technological, competitive or other reasons, could lead to temporary service
disruptions and increased costs that can severely jeopardize our operations and materially decrease our profitability and growth.

Risks
Relating to the Telecommunications Industry in Mainland China

We are subject to extensive government regulation and
may be materially affected by any change in the regulatory environment, especially in the telecommunications industry, in the PRC.

As a telecommunications operator in China, we are subject to regulation by, and under the supervision of, the MIIT, the primary regulator of the telecommunications industry in China. Other PRC government
authorities also take part in regulating the telecommunications industry in areas such as tariff policies and foreign investment. The regulatory framework within which we operate may limit our flexibility to respond to changes in market conditions
or competition, including changes in our cost structure. For instance, we cannot predict when or if changes in tariff policies or rates may occur. Future adverse changes in tariff policies and rates could significantly decrease our revenues and
materially reduce our profitability.

The MIIT, under the direction of the State Council, has been preparing a draft
telecommunications law, which, once adopted, will become the fundamental telecommunications statute and the legal basis for telecommunications regulations in Mainland China. In 2000, the State Council promulgated a set of telecommunications
regulations, or the Telecommunications Regulations, that 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 will be its nature and scope. The telecommunications law and other new telecommunications regulations or rules may contain provisions that could have a material adverse effect
on our business, financial condition and results of operations.



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We operate our businesses with approvals granted by the State Council and under licenses
granted by the MIIT. We also have arrangements with CMCC, our parent company, under which we operate a 3G telecommunications business based on a 3G license granted to CMCC by the MIIT. If the conditions or other obligations relating to these
approvals or licenses are amended in a manner that is detrimental to us, our business and operations could be materially and adversely affected. Moreover, we will require a license from the MIIT to operate our business based on future generations of
mobile telecommunications technologies. We cannot assure you whether, when and on what conditions we will be able to obtain this license. If we are unable to obtain or use the license for operating telecommunications business based on future
generations of mobile telecommunications technologies, or if the conditions or other obligations relating to this license are detrimental to us, our business and operations, as well as profitability and growth, could be materially and adversely
affected.

Current or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could
materially harm our competitive position.

The PRC government has in the past extended favorable regulatory policies
to some of our competitors in order to help them become more viable competitors to us. Under the restructuring initiatives relating to the telecommunications industry in Mainland China announced in May 2008, the PRC government may also implement
necessary asymmetrical regulatory measures over a period of time, in order to optimize the allocation of telecommunications resources in the PRC and improve the competitive landscape. One of the regulatory measures announced by the MIIT in 2008 as
part of the restructuring initiatives was the offering of roaming services across different mobile telecommunications networks. Under such roaming services, the prices at which the mobile telecommunications services providers may settle for these
inter-network roaming services would be initially set by the PRC regulatory authorities. We cannot predict at this point in time the impact, if any, such offering of roaming services or other measures may have on our business and prospects. In
addition, the PRC government may implement other asymmetrical regulatory measures. For example, a one-way mobile number portability policy is under trial implementation in Hainan Province, which allows our 2G customers to switch to services of China
Unicom or China Telecom while being able to retain their existing mobile numbers. A two-way mobile number portability policy has been under trial implementation in Tianjin since November 2010, which allows our 2G customers, as well as the 2G and 3G
customers of China Unicom and China Telecom, to switch to services of another telecommunications services provider while being able to retain their existing mobile numbers. The implementation of asymmetrical regulatory measures could materially harm
our competitive position, which could in turn significantly reduce our revenues and profitability, and our financial condition and results of operations may be materially and adversely affected.

The PRC government may require major operators, including us, to provide universal services with specified obligations, and we may
not be compensated adequately for providing these services.

Under the Telecommunications Regulations,
telecommunications operators in Mainland China are required to fulfill universal service obligations in accordance with relevant regulations to be promulgated by the PRC government, and the MIIT has the authority to delineate the scope of these
service obligations. However, the specific rules have not been promulgated and there are currently no specific regulatory requirements relating to the provision of universal services in Mainland China.

While the scope of specific universal services obligations is not yet clear, we believe that these services may include mandatory
provision of basic mobile telecommunications services in less economically developed areas in Mainland China and mandatory contribution to a universal service fund. In addition, as part of the transitional measure prior to the formalization of a
universal service obligation framework, the MIIT has required major telecommunications services providers in Mainland China, including CMCC, to participate in a project to provide basic telecommunications services in remote villages in Mainland
China.

We cannot predict whether we will be required to provide universal services in the future and, if so, whether we will
be adequately compensated by the government or by the universal service fund. We also cannot assure you whether we will be required to make contribution to the universal service fund. Any of these events could reduce our revenues and/or net income.



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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, due in part to highly volatile securities markets, particularly for telecommunications companies shares, as well as variations in our sales and profit from operations. 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 and new technologies, products and services. See Item 9. The Offer and Listing for information regarding the trading
price history of our ordinary shares and ADSs.

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 continues to be public speculation about possible health risks to individuals from exposure to electromagnetic fields from base stations and from the use of mobile devices. 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 were 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 radio wave transmission will not impair our ability to retain customers and attract new customers, reduce wireless telecommunications usage or result in litigation.

Risks Relating to Mainland China

An economic slowdown in Mainland China may reduce the demand for our services and have a material adverse effect on our financial condition, results of operations and business prospects.

We conduct most of our business and generate substantially all our revenues in Mainland China. As a result, economic,
political and legal developments in Mainland China have a significant effect on our financial condition and results of operations, as well as our future prospects. In recent years, Mainland China has been one of the worlds fastest growing
economies in terms of gross domestic product, or GDP, growth. If Chinas economic growth slows down, there will be reduced business activities and reduced demand for our services, which could materially and adversely affect our business, as
well as our financial condition and results of operations.

The PRC legal system contains uncertainties which could
limit the legal protections available to our shareholders.

Most of our operating subsidiaries are organized under the
laws of the PRC and are subject to laws, rules and regulations in China. The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases may be cited for reference but have
limited precedential value. The PRC government has promulgated laws, rules and regulations dealing with economic matters, such as corporate organization and governance, commerce, property, taxation, trade and foreign investment. However, because
some of these laws and regulations are relatively new, and because of the relatively limited volume of published cases and their non-binding nature, interpretation and/or enforcement of these laws, rules and regulations involves uncertainties, which
may limit the remedies available to our investors and to us in the event of any claims or disputes with third parties. In addition, any litigation in the PRC may be protracted and result in substantial costs and diversion of resources and management
attention. Consequently, the protection provided by the PRC legal system may not be the same as the legal protection available to investors in the United States or elsewhere. Furthermore, various uncertainties involved in the rulemaking,
interpretation and enforcement process of the laws, rules and regulations in the PRC that are related to our business and operations, particularly those relating to telecommunications and enterprise income tax, may also materially and adversely
affect our financial condition, result of operations and prospects.



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Natural disasters and health hazards in China may severely disrupt our business and
operations and may have a material adverse effect on our financial condition and results of operations.

Several
natural disasters have struck Mainland China in recent years. Our network equipment, including our base stations, in the affected areas sustained extensive damages in some of these natural disasters, leading to service stoppage and other disruptions
in our operations in those areas. We are unable to predict the effect, if any, that any future natural disasters and health hazards may have on our business. Any future natural disasters and health hazards may, among other things, significantly
disrupt our ability to adequately staff our business, and may generally disrupt our operations. Furthermore, such natural disasters and health hazards may severely restrict the level of economic activity in affected areas, which may in turn
materially and adversely affect our business and prospects. As a result, any natural disasters or health hazards in China may have a material adverse effect on our financial condition and results of operations.



|Item 4. | Information on the Company.
|------- | ---------------------------

We provide a full range of mobile telecommunications services in all 31 provinces, autonomous regions and directly-administered municipalities in Mainland China as well as in Hong Kong. As of
December 31, 2011, the total population residing in Mainland China exceeded 1.3 billion. Based on publicly available information, we are the leading provider of mobile telecommunications services in Mainland China and the largest provider of
mobile telecommunications services in the world as measured by total number of customers as of December 31, 2011. As of the same date, our total number of customers reached approximately 649.6 million, representing approximately 66.5% of
all mobile customers in Mainland China. As of March 31, 2012, our total number of customers reached approximately 667.2 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 and to China Mobile Limited on May 29, 2006 after
obtaining the approval of our shareholders.

Our ordinary shares are listed on the Hong Kong Stock Exchange, and our ADSs,
each currently representing the right to receive five ordinary shares, are listed on the New York Stock Exchange.

Expansion Through Acquisitions

Our initial mobile telecommunications operations included those in Guangdong Province and Zhejiang Province, conducted by Guangdong Mobile Communication Company Limited (currently known as China Mobile
Group Guangdong Co., Ltd.), or Guangdong Mobile, and Zhejiang Mobile Communication Company Limited (currently known as China Mobile Group Zhejiang Co., Ltd.), or Zhejiang Mobile, respectively. 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. We subsequently increased our shareholding in Zhejiang
Mobile to 100%.

We carried out a series of acquisitions between 1998 and 2004, through which we acquired from CMCC, our
parent company, mobile telecommunications operations conducted by its other regional subsidiaries. As a result, we significantly expanded the geographical coverage of our operations to all 31 provinces, autonomous regions and directly-administered
municipalities in Mainland China.

In addition, we acquired all of the issued and outstanding shares of China Resources
Peoples Telephone Company Limited (currently known as China Mobile Hong Kong Company Limited, or Hong Kong Mobile), a mobile telecommunications services provider based in Hong Kong, in 2006.



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In 2011, we, through our wholly-owned subsidiary, CMC, acquired 100% of the share capital of
Topssion, a company primarily engaged in the sale of mobile phone handsets and devices, from CMCC, ZTE, Eastern Communications Co., Ltd., Beijing Digital China Limited, Ningbo Bird Co., Ltd. and Shenzhen Huawei Investment & Holding Co.,
Ltd. for an aggregate purchase price of RMB237,070,000 (approximately US$37,666,630). CMC subsequently transferred 1% of the share capital of Topssion to CMCC, and further subscribed for additional share capital of Topssion. Topssion thereafter
changed its name to China Mobile Terminal. As of April 25, 2012, we held 99.97% of equity interest in China Mobile Terminal.

These acquisitions have significantly enlarged our customer base and expanded the geographical coverage and scope of our business. The
integration of these acquired operations has also enabled us to realize synergies and economies of scale.

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.

Between 1993 and 2008, the telecommunication industry of Mainland China underwent significant reforms and
restructuring that resulted in improved competitive environment and enhanced regulation of the industry.

In March 2008, the
MIIT was created as the industry regulator providing industry policy guidance and exercising regulatory authority over all telecommunications services providers in Mainland China, including, among others, formulating and enforcing industry policy,
standards and regulations, granting telecommunications licenses and permits, formulating interconnection and settlement standards for implementation between telecommunications networks, formulating tariff and service charge standards for certain
telecommunications services together with other relevant regulatory authorities, supervising the operations of telecommunications services providers, promoting fair and orderly market competition among operators, and allocating and administering
public telecommunications resources.

On May 24, 2008, the MIIT, the National Development and Reform Commission, or the
NDRC, and the Ministry of Finance, or the MOF, jointly issued a joint announcement relating to the further reform of the telecommunications industry in Mainland China, which led to a future restructuring of the then-existing telecommunications
services providers. The restructuring resulted in: (i) the acquisition by China Telecom of the CDMA network (including both assets and customer base) then owned by China United Telecommunications Corporation in July 2008; (ii) the merger
between China United Telecommunications Corporation and China Netcom to form China Unicom in January 2009; (iii) the transfer of the basic telecommunications services business then operated by China Satellite into China Telecom; and
(iv) the consolidation of China Tietong Telecommunications Corporation, or China Tietong, into CMCC in July 2008.

On
January 7, 2009, the MIIT issued a CDMA 2000 3G license to China Telecom, a WCDMA 3G license to China Unicom and a TD-SCDMA 3G license to CMCC, our parent company.

As a result of the industry restructuring in 2008 and early 2009, principal participants in the telecommunications industry in Mainland China, other than China Tietong and us, currently also include China
Telecom and China Unicom. China Telecom and China Unicom currently operate both mobile and fixed-line telecommunications services. We currently operate mobile telecommunications services, while China Tietong currently operates fixed-line
telecommunications services.

Organizational Structure

As of March 31, 2012, CMCC owned 74.14% equity interest in us through intermediate holding companies. We operate in all thirty-one provinces, autonomous regions and directly-administered
municipalities throughout Mainland China and in Hong Kong. As of March 31, 2012, we owned, directly or through intermediate holding companies, 100% equity interests in the following companies:



|                                               |  |                                               
|---------------------------------------------- |  | ----------------------------------------------
|       China Mobile Communication Co., Ltd.   |  |        China Mobile Group Hubei Co., Ltd.    
|                                               | 
|       China Mobile Group Guangdong Co., Ltd. |  |        China Mobile Group Hunan Co., Ltd.    
|                                               | 
|       China Mobile Group Zhejiang Co., Ltd.  |  |        China Mobile Group Shaanxi Co., Ltd.  
|                                               | 
|       China Mobile Group Jiangsu Co., Ltd.   |  |        China Mobile Group Shanxi Co., Ltd.   
|                                               | 
|       China Mobile Group Fujian Co., Ltd.    |  |        China Mobile Group Neimenggu Co., Ltd.
|                                               | 
|       China Mobile Group Henan Co., Ltd.     |  |        China Mobile Group Jilin Co., Ltd.    



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|                                              |  |                                                     
|--------------------------------------------- |  | ----------------------------------------------------
|      China Mobile Group Hainan Co., Ltd.    |  |       China Mobile Group Heilongjiang Co., Ltd.    
|                                              | 
|      China Mobile Group Beijing Co., Ltd.   |  |       China Mobile Group Guizhou Co., Ltd.         
|                                              | 
|      China Mobile Group Shanghai Co., Ltd.  |  |       China Mobile Group Yunnan Co., Ltd.          
|                                              | 
|      China Mobile Group Tianjin Co., Ltd.   |  |       China Mobile Group Xizang Co., Ltd.          
|                                              | 
|      China Mobile Group Hebei Co., Ltd.     |  |       China Mobile Group Gansu Co., Ltd.           
|                                              | 
|      China Mobile Group Liaoning Co., Ltd.  |  |       China Mobile Group Qinghai Co., Ltd.         
|                                              | 
|      China Mobile Group Shandong Co., Ltd.  |  |       China Mobile Group Ningxia Co., Ltd.         
|                                              | 
|      China Mobile Group Guangxi Co., Ltd.   |  |       China Mobile Group Xinjiang Co., Ltd.        
|                                              | 
|      China Mobile Group Anhui Co., Ltd.     |  |       China Mobile Group Design Institute Co., Ltd.
|                                              | 
|      China Mobile Group Jiangxi Co., Ltd.   |  |       China Mobile Hong Kong Company Limited       
|                                              | 
|      China Mobile Group Chongqing Co., Ltd. |  |       China Mobile International Limited           
|                                              | 
|      China Mobile Group Sichuan Co., Ltd.   |  |                                                     

In addition, we indirectly own a 99.97% equity interest in China Mobile Terminal through CMC, and
directly own a 66.41% equity interest in Aspire Holdings Limited, or Aspire, a company incorporated in the Cayman Islands. In January 2012, we, through Beijing Mobile, and CMCC established China Mobile Finance whose primary business is to centralize
the management of our internal funds and allocate our internal capital resources. We indirectly own a 92% equity interest in China Mobile Finance.

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 our regional mobile telecommunications companies in Mainland China and Hong Kong. Our web site address
is www.chinamobileltd.com. The information on our web site is not a part of this annual report on Form 20-F.

Business Overview

We offer mobile telecommunications services principally using the Global System for Mobile Communications, or GSM,
standard. We intend to use our GSM network to primarily carry voice usage and certain data traffic from mobile phones. Our GSM networks reach virtually all cities and counties and major roads and highways, as well as a substantial part of rural
areas, throughout Mainland China and, through the network of Hong Kong Mobile, a substantial part of Hong Kong.

Starting
from January 7, 2009, we also offer mobile telecommunications services using the TD-SCDMA standard. We operate our 3G business based on an Internet Protocol based core mobile telecommunications network that is shared by our 2G and 3G services
and will be shared with other services based on future generations of telecommunications technologies as well as the TD-SCDMA wireless network capacity leased from CMCC. See  Mobile Telecommunications Networks below. We intend to
use the TD-SCDMA network to primarily carry data traffic from mobile phones. CMCCs TD-SCDMA wireless network covered all county-level or above cities in Mainland China as of December 31, 2011.

In addition, we provide our customers with high-speed Internet access through wireless local area networks, or WLAN (also known as
Wi-Fi), through our WLAN access points located throughout Mainland China. We intend to use our WLAN network to primarily carry Internet data from computers and mobile phones. As of December 31, 2011, we had approximately 2.2 million access
points covering locations such as airports, hotels, conference centers, schools and exhibition centers throughout Mainland China.

Moreover, we assist CMCC in the development of networks based on the TD-LTE technology. We intend to use the TD-LTE network to primarily carry high bandwidth and high quality wireless broadband
businesses.



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Our Business Strategy

As a pioneer and the market leader in the worlds largest mobile telecommunications market, we intend to enhance our businesses in
the mobile telecommunications market by further developing our mobile Internet business, promoting the co-ordinated and synergistic development of our businesses carried by the four networks based on their respective GSM, TD-SCDMA, WLAN and TD-LTE
technologies and strengthening our full service capabilities.

Developing Mobile Internet Business. We intend to
function as a smart pipe that provides value beyond that of data connectivity only. In order to achieve this purpose, we intend to accelerate the development of our mobile Internet business to maintain a fair share of the growing value
chain of the mobile Internet industry. We intend to build an open platform for innovative application services, develop featured businesses that are distinctive and competitive compared to our competitors products and convert terminals into a
user-friendly interface to enhance customers experience in accessing our services.

Co-ordinated and Synergistic
Development of Businesses Carried by the Four Networks.We intend to continue promoting the co-ordinated and synergistic development of our businesses carried by the four networks based on their respective GSM, TD-SCDMA, WLAN and TD-LTE
technologies to create a world-class wireless network with wide and deep coverage, high quality and high speed. To achieve this goal, we intend to continue maintaining high voice quality and optimizing the utilization rate of our GSM network. We
also intend to continue working with CMCC to optimize the TD-SCDMA network with broad and in-depth coverage to improve its utilization rate. With respect to our WLAN network, we will focus on enhancing its coverage and network quality to alleviate
the data traffic capacity constraints on our networks and to reduce costs. In addition, we will continue to assist CMCC in promoting the TD-LTE technology within and outside the PRC, accelerating commercialization of TD-LTE technology and furthering
the synchronized development and compatibility of LTE TDD and LTE FDD technologies.

Strengthening Full Service
Capabilities.We intend to strengthen our capabilities in response to competition from the telecommunications operators that provide full services. In order to achieve this goal, we intend to continue constructing infrastructure networks and
cooperating with CMCC in the integration of mobile telecommunications business with fixed-line telecommunications business. In addition, we intend to improve the efficiency of our business by focusing on high-bandwidth and high-value mobile Internet
access and developing standardized products on a large scale. Moreover, we will differentiate our services in response to different needs of our customers. We intend to further penetrate into the individual customer market by emphasizing excellence
in serving quality individual customers, focusing on expanding our corporate customer base and selectively expanding into family customer market.

In order to achieve the foregoing goals, we will focus on improving the quality of our networks, the quality of our services and our business support capabilities. See  Service Quality.
Moreover, we will continue to improve our customer services to achieve broader customer satisfaction. See  Customer Services. In addition, we will make efforts to enhance our operational efficiency by operating certain aspects of
our businesses under specialized subsidiaries, such as China Mobile International and China Mobile Terminal.

Customers
and Usage

Our customer base has grown substantially from approximately 584.0 million at the end of 2010 to
approximately 649.6 million at the end of 2011. As of December 31, 2011, we had a market share of approximately 66.5% in Mainland China. As of March 31, 2012, our total number of customers reached approximately 667.2 million, and
our total number of 3G customers reached approximately 59.6 million. Our customer growth is primarily attributable to a number of factors, including:



| |  |  | economic growth in our markets, including in rural areas;
| | - |  | ---------------------------------------------------------



| |  |  | the PRC governments promotion of informatization and reform and development initiatives targeting the rural areas of Mainland China;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | growth potential in small and medium-sized cities, rural areas and migrant population markets;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | decreased cost of initiating services due to a decline in handset prices as well as the decrease in other tariffs for our services;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



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| |  |  | our increased marketing and sales efforts and new business initiatives; and
| | - |  | ---------------------------------------------------------------------------



| |  |  | our competitive advantages in terms of scale of operations, networks, support systems, brands, marketing and sales channels and services.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------

We continued to experience growth in our corporate customer base in 2011. As of December 31, 2011, the
total number of our corporate accounts reached 3.24 million, and the number of individual customers served under corporate accounts reached 36.0% of our total customer base.

However, due to the increasing mobile penetration rate and intensified competition among mobile telecommunications operators and from
competitors in other related industries, our customer base may not continue to grow as fast as it has been over the past few years, if at all.

Our total voice usage reached 3,887.2 billion minutes in 2011, representing an increase of approximately 12.3% from 2010. Our short message services, or SMS, usage reached 736.1 billion messages in 2011,
representing an increase of approximately 3.5% from 2010. Furthermore, wireless data traffic reached 361.4 billion megabytes in 2011 from 143.3 billion megabytes in 2010.

The following table sets forth selected historical information about our customer base and customer usage as of or for the periods indicated.



|                                                         |  |                                         |         |  |      |  |         |      |  |  |         | 
|-------------------------------------------------------- |  | --------------------------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                         |  | As of or for the year endedDecember 31, |        
|                                                         |  | 2009                                    |         |  | 2010 |  |         | 2011 | 
|Customer Base (in millions)                              |  |                                         | 522.3   |  |      |  | 584.0   |      |  |  | 649.6   | 
|Total Voice Usage (in billions of minutes)               |  |                                         | 2,918.7 |  |      |  | 3,461.6 |      |  |  | 3,887.2 | 
|Average Minutes of Usage Per User Per Month (minutes)(1) |  |                                         | 494     |  |      |  | 521     |      |  |  | 525     | 
|Average Revenue Per User Per Month (RMB)(2)              |  |                                         | 77      |  |      |  | 73      |      |  |  | 71      | 
|Average Monthly Churn Rate (%)(3)                        |  |                                         | 3.30    |  |      |  | 3.22    |      |  |  | 3.21    | 



|(1) | Calculated by (A) dividing the total minutes of usage during the relevant year by the average number of customers during the year (calculated as the average of the
numbers of customers 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Calculated by (A) dividing the operating revenue during the relevant year by the average number of customers during the year (calculated in the same manner as in
note (1) above) and (B) dividing the result by 12. The operating revenue in 2009, 2010 and 2011 is derived from our consolidated statements of comprehensive income for the years ended December 31, 2009, 2010 and 2011,
respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Measures the monthly rate of customer 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 customers during the year (calculated in the same manner as in note
(1) above) by (B) 12.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Businesses

Our businesses primarily consist of voice business and data business.

Voice Business. Our voice business includes voice usage services and voice value-added services.

Our voice usage services focus on enabling our customers make and receive calls with a mobile phone at any point within the coverage area
of our mobile telecommunications networks. The services include local calls, domestic long distance calls, international long distance calls, domestic roaming and international roaming. Our voice usage services have continued to grow, and total
voice usage increased approximately 12.3% in 2011 compared to 2010.

Our voice value-added services mainly include caller
identity display, caller restrictions, call waiting, call forwarding, call holding, voice mail, conference calls and other services.

Data Business. Our data business includes short message and multimedia message services, or SMS and MMS, wireless data traffic business and applications and information services.



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SMS refers to services that employ the existing network resources and the corresponding
functions of mobile telecommunications terminals to deliver and receive text messages, mainly including customer-to-customer messages, corporate SMS, Monternet-based short messages. SMS offers convenience and multi-functionality to our
customers. MMS is a technology that allows users to exchange multimedia communications, such as graphics, animated color pictures, sound files and short text messages, over wireless networks. Our SMS usage reached 736.1 billion messages in 2011
compared to 711.0 billion messages in 2010. Revenue generated from SMS and MMS reached RMB46,462 million in 2011, compared to RMB46,889 million in 2010.

Our wireless data traffic business includes mobile data traffic service and WLAN service.

Mobile Data Traffic. Our mobile data traffic service is a service that we provide to our customers that enables wireless access to the Internet through 2G or 3G networks. We experienced a
significant growth in the provision of mobile data traffic services in 2011, with mobile data traffic reaching 161.0 billion megabytes in 2011, representing a 56.1% increase compared to 2010. Revenue generated from mobile data traffic service
reached RMB43,689 million in 2011, compared to RMB30,453 million in 2010.

WLAN.WLAN service refers to a service that
provides high-speed Internet access through WLAN. We experienced significant growth in our WLAN service in 2011. As of December 31, 2011, we had approximately 2.2 million access points covering locations such as airports, hotels,
conference centers, schools and exhibition centers throughout Mainland China. Data traffic carried by WLAN reached 200.4 billion megabytes in 2011 compared to 40.2 billion megabytes in 2010. Revenue generated from WLAN service reached RMB739 million
in 2011, compared to RMB191 million in 2010.

Our applications and information services mainly include Wireless Music, Mobile
Reading, Mobile Video, Mobile Mailbox, Fetion, Mobile Paper, 12580 Integrated Information Service Line, Mobile Gaming, Mobile Payment/Wallet, Mobile TV and location-based services.

Wireless Music. Wireless Music refers to a service that provides music services to customers through mobile telecommunications
networks. In 2011, we continued our efforts in business model innovation and strengthened our cooperation with the music media to stimulate and direct customers to use wireless music products including Wireless Music Club, Color Ring,
and Music Download. Revenue generated from Wireless Music reached RMB22,069 million in 2011, compared to RMB20,468 million in 2010.

Mobile Reading. Mobile Reading provides our customers with content services, including books, magazines and comics, through mobile phones and mobile e-book devices. Revenue generated from Mobile
Reading reached RMB627 million in 2011, compared to RMB247 million in 2010.

Mobile Video. Mobile Video provides our
customers with mobile network-based audio and video services, which enable our customers to download or stream various types of videos such as news, movies, entertainment and sports programs on their mobile phones. Revenue generated from Mobile
Video reached RMB571 million in 2011, compared to RMB242 million in 2010.

Mobile Mailbox. Mobile Mailbox provides our
customers with e-mail services with multiple value-added functions. In addition to the regular functions of Internet mail services, our customers will receive notifications on their mobile phones when they receive new e-mails and are able to read
and send e-mails via mobile phones. Revenue generated from Mobile Mailbox reached RMB1,539 million in 2011, compared to RMB964 million in 2010.

Our other applications and information services, including Fetion, Mobile Paper 12580 Integrated Information Service Line, Mobile Gaming, Mobile Payment/Wallet, Mobile TV and
location-based services, also experienced further growth in 2011, and we have strengthened our efforts in developing other new products and applications in our data business.

We made efforts to build up open platforms through our Mobile Market in the past few years. Mobile Market serves as a platform for software developers and their applications as well as our own businesses
so that our customers may use their terminals to download applications and subscribe for our businesses. We intend to build Mobile Market into a sales platform for our customers to subscribe for our businesses, a platform for developers to upload
their applications and a platform that provides support to our terminal and content suppliers. We will also make available our five major capacities, namely cloud services for Mobile Market, Internet of Things, e-Commerce, location-based
services and Fetion+, to the users through Mobile Market. As of December 31, 2011, the cumulative number of registered customers of Mobile Market reached 158 million, with the number of application downloads from Mobile Market
exceeding 630 million.



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We launched the development of standardized and modularized applications of the
Internet of Things in 2011. In addition, we are in the process of building a nationwide Wireless City platform which provides the government authorities and citizens with various information services covering ten categories,
including public administration, traffic control, healthcare and employment service through wireless network coverage in the city. We have entered into Wireless City cooperation agreements with 217 cities and 31 provinces, autonomous
regions and directly-administered municipalities in Mainland China.

We believe that data business will continue to be one of
the fastest growing segments of the telecommunications market in Mainland China in the coming years. In 2011, we increased the promotion of our data business by providing customers with diversified and personalized services. Our data services
revenue increased to RMB139,330 million in 2011, representing an increase of 15.4% from 2010. As a percentage of operating revenue, data services revenue increased to 26.4% in 2011 from 24.9% in 2010.

We also plan to continue promoting industry-specific applications of data business to corporate customers to further enhance the
penetration and utilization of our data business. During 2011, we further strengthened and broadened the scope of key industry-specific application solutions to cover major sectors of the society and the economy. These efforts, coupled with our
efforts to enhance service quality and improve customer relationship, led to an expansion of our customer base among multi-provincial and multi-national corporations. We also expanded our Internet of Things applications and Mobile
e-Commerce businesses in different areas involving our corporate customers. As of December 31, 2011, the total number of our corporate accounts reached 3.24 million.

Tariffs

The tariffs payable by our customers include primarily
usage charges, monthly fees (if applicable) and service fees for voice value-added services and data services. Effective on January 1, 2010, when not using roaming services, our customers incur usage charges in the form of either local usage
charges or, for outgoing domestic and international long distance calls, domestic and international long distance charges. When using domestic roaming services, our customers incur either domestic roaming usage charges or, for outgoing international
long distance calls, international long distance charges. When using international roaming services, our customers incur charges based on tariffs that vary depending on whether it is an incoming call or an outgoing call and on the destination of the
call.

We offer our customers a variety of tariff packages that have varied monthly charges, minimum charges for basic usage,
charges for usage exceeding the covered basic usage, fixed charges for selected features and functions, as well as charges for voice value-added services. The tariff for wireless data traffic is generally charged by the actual data traffic usage. We
also offer different tariff packages with respect to SMS and MMS, each of the wireless data traffic business and applications and information services.

We have flexible tariff plans distinguishing between peak time and non-peak time usage, and offer tailored service plans based upon the needs of different customer groups as well as our network resources.
Given the rapid growth in mobile penetration rates and increased competition, in order to remain competitive in terms of price and performance with other mobile telecommunications operators, we provide certain discounts and promotional offers in and
during certain service areas and call periods targeting various customers. These discounts and promotional offers mainly include rewards for the pre-payment of fees, free trials of voice value-added services or data services, tariff discounts during
off-peak hours and in low-traffic areas, and tariff discounts for specified call recipients.

In 2011, in response to our
customers needs and to increase the usage of our services, we reduced voice and data tariffs, in particular domestic roaming charges. We also reduced international roaming charges for 38 destinations across the world.

The level and categorization of most of our current tariffs are subject to regulation by various government authorities. The MIIT has
gradually liberalized the tariff level by allowing telecommunications service providers to set tariffs below certain tariff ceilings and permitting them to group their products and services, which could essentially lower the actual price for certain
products and services included in the plan. The MIIT has also been encouraging mobile telecommunications operators in Mainland China to implement the caller-party-pays regime. See  Regulation  Tariff Setting included
elsewhere under this Item. We generally expect usage volume to increase as a result of decreases in tariffs.



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Interconnection

Interconnection refers to various arrangements that permit the connection of our networks to other mobile or fixed-line networks. These
agreements provide for the sharing and settlement of revenues from the local usage charges and, if applicable, roaming usage charges and domestic and international long distance charges.

Our networks interconnect with the networks of other operators, which enables our customers to communicate with the customers of those
operators and to make and receive local, domestic and international long distance calls. Each of our operating subsidiaries has interconnection agreements with those operators in its service area. The economic terms of these agreements are
standardized from province to province.

Roaming

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

A mobile customer using domestic roaming services is charged at our per-minute roaming usage charges or, for outgoing international long
distance calls, international long distance charges. A mobile customer using international roaming services incur charges based on tariffs that vary depending on whether it is an incoming call or an outgoing call and on the destination of the call.
In recent years, our international and domestic roaming usage charges have generally declined, resulting in lower average revenue per minute from roaming services. In March 2008, the PRC regulators reduced the maximum rate at which a mobile
telecommunications services provider may charge on domestic roaming services. In December 2009, the PRC regulators further promulgated policies to eliminate domestic roaming usage charges on outgoing international long distance calls when domestic
roaming services are used. We believe that the decrease in roaming usage charges helped drive growth in voice volume usage and that growth in voice volume usage helped partially offset the negative impact of the decline in roaming usage charges.

Research and Development

Our research and development efforts, undertaken jointly by our research institute and other relevant departments and business units, primarily focus on:



| |  |  | developing advanced business solutions and end-to-end data application solutions suitable for the consumer markets in Mainland China;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | monitoring technological trends, including advancement in future generations of mobile telecommunications technologies, which may have an impact on the
development of our current business and the implementation of our wireless data strategy; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | researching post-TD-SCDMA technologies and promote the synchronized development and compatibility of LTE TDD and LTE FDD technologies, the two models
of the LTE technology.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SOFTBANK Corp., Vodafone International Holdings B.V., Cellco Partnership (doing
business as Verizon Wireless) and we jointly invested in JIL to promote the development of new mobile technologies, applications and services, particularly the rapidly growing area of mobile Internet services.

We have applied for a number of patents in Mainland China. Moreover, we have submitted to international standardization organizations a
number of contributions, many of which have been accepted. 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.



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Sales and Customer Services

Sales Channels. We offer our services through an extensive network of proprietary sales outlets, retail outlets and
electronic sales and marketing channels. In addition to providing retail sales and network connection services, most of our proprietary sales outlets also offer differentiated services to customers under different service brands, including billing
information and payment collection, services consultation, handset repair and other customer services. Furthermore, most of our proprietary sales outlets provide training and service demonstrations to retail outlets. The retail outlets offer our
services according to agency agreements with us. In connection with these sales, all applicable fees payable after initial connection are paid to us. Moreover, we offer certain services to our customers through electronic channels, including, among
others, subscription of voice value-added services and data business, change of tariff plans, credit loading for pre-paid services, and redemption of GoTone points. Sales effected through our electronic channels have increased
consistently in recent years and the percentage of our business transactions that were processed through our electronic channels increased significantly in 2011. Furthermore, we have enhanced our service capabilities through the expansion and
optimization of our proprietary sales channels, the expansion of electronic channels and the integration of resources relating to sales and marketing channels. We are able to establish sales and service networks at lower cost by utilizing existing
resources in rural areas to serve and expand our customer base in these areas. We have also established concept stores in major cities within Mainland China to showcase our services and products, particularly our wireless data services, and to
facilitate certain sales and marketing activities.

Market Segmentation Strategy. As customers demands for
mobile telecommunications become more varied and complex, we have conducted research on market segmentation and have launched brands and products which cater to the specific needs of different customer groups. We mainly promote three brands, each
with a different focus. GoTone targets high to middle-end customers, Easy own targets the mass market and the M-Zone brand targets the young user group through the integration of voice and data services, in each
case supported by a series of tailored service packages.

Moreover, we provide differentiated applications and services to our
corporate customers under customized service contracts. As of December 31, 2011, we had signed service contracts with approximately 3.24 million corporate accounts, and individual customers served under these service contracts with
corporate accounts accounted for approximately 36.0% of our total customers. With the expansion of our corporate customer base, we also seek to provide customized total solutions to these corporate customers in response to their particular
requirements.

Furthermore, we have developed customized products and service packages in response to the unique consumption
characteristics of rural areas, such as the Easy own Village-only Card, small denomination top-ups, over-the-air recharging and the Agricultural Information Service, and have developed advertising and distribution channels unique to the
rural markets to promote and expand our business in the rural areas. We have also encouraged handset producers to introduce inexpensive handsets with moderate functions to lower the barrier of using mobile phones in the rural areas.

Strategies Relating to 3G Services.We have been operating our 3G business by leasing wireless network capacity from CMCC
since 2009. We have been focusing on the integration of the core components of our 2G and 3G networks by employing new mechanisms, new standards and new measurements and by promoting the integration of networks, businesses and applications, which
have enabled our 2G customers to upgrade to our 3G services without changing their mobile telephone numbers or SIM cards or requiring re-registration. In addition, we have enhanced our efforts to market new 3G services, products and applications,
including through our voice and data businesses, to individuals, families, corporations and those in need of industry information products. We intend to further expand our 3G business by, among other things, leveraging the support from the PRC
government in terms of land use, frequency resources and construction of wireless cities.

Customer Services.Our customer support service centers offer 24-hour staff-answering and automatic-answering service hotlines in Mainland China, dealing with customer enquiries regarding services and billing, as well as handling customer complaints. In order
to retain high-value and corporate customers and enhance customer satisfaction, we offer a series of personalized and differentiated services targeted at high-value and corporate customers, including dedicated account executives, on-site visits and
systems for collecting comments and handling complaints.

In 2011, we continued to optimize our customer service processes
through efforts such as improving service quality at both sales outlets and our 10086 hotline. The connection rate of our 10086 hotline reached 89.4%, and 87.5% of issues were resolved after the first call of the 10086 hotline. We have also actively
promoted electronic channels, including expanding scope of services provided through our electronic channel and shortening the processing time at the electronic channel, and the percentage of our business transactions that were processed through the
electronic channels increased significantly in 2011. In addition, we implemented service measures such as increasing transparency in the billing process, inquiry and data services unsubscription function through SMS and refunding before
investigation in case of a billing dispute for Monternet services to ensure our customers would be fully informed of the payments they would make. The number of spam SMS reported to us decreased 38% compared to 2010. Our continued improvement in
customer services resulted in broader customer satisfaction in 2011.



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Service Quality.We strive to improve the quality of our services through
improvements in the quality of our infrastructure network. In particular, with respect to our 2G services, the voice call drop rate decreased to 0.32% and successful connection rate increased to 99.26% in 2011, and with respect to our 3G services,
the voice call drop rate decreased to 0.35% and successful connection rate increased to 98.99% in 2011. The success rate for key performance indicators, such as subscription and un-subscription for key products, increased to approximately 99%. In
addition, the network speed of our Internet business has been further enhanced. We have also improved our business support capabilities, especially in the areas of billing and data business subscription support.

Customer Retention. Due to increasing competition, we place great emphasis on customer retention. Our strategy is to
attract and retain high-value customers by providing high quality services. We have implemented a Customer Point Reward Program, which is a bonus point-based scheme that rewards customers according to their service consumption, loyalty
and payment history. This represents an important measure by us to retain high-value customers. Customers are identified and grouped as GoTone Diamond, GoTone Gold and GoTone Silver card members according to their
respective value contribution and points accrued. Different levels of membership entitle members to different privileges. Customers in these classifications are eligible to receive targeted rewards, including some of our own products and services,
as well as those of our business partners. In 2011, we further differentiated our GoTone service and enhanced customer loyalty of our GoTone service through the targeted allocation of marketing resources. In addition, we
offer special services to our GoTone members, including cross-region services, airport VIP services, hospital VIP services, golf clubs and handset service clubs.

In developing our M-Zone brand, we focused on expanding our customer base, offering new services and gaining recognition as symbol of youth culture. We enhanced our brand image and the number
of customers increased as a result of our increased advertising efforts and expansion of new services, including the launch of brand alliances and the implementation of product and service upgrades.

In addition, we further enhanced customer loyalty through a series of efforts in 2011 including, among others, entering into long-term
contracts with our mid to high-end customers, offering customized services packages and improving customer services and quality of our services.

Churn Management. We have devised internal monitoring systems to detect customers who are prone to discontinue their subscriptions. In particular, our churn alert system prompts customer
service representatives to proactively approach those customers, and customers who have recently discontinued their service, to improve customer relations and minimize churn.

Credit Control. We have implemented customer registration procedures, such as identity checks for individual customers and information checks for corporate customers, to assist in credit
control. In certain situations, we require our customers to pay an advance deposit representing a pre-determined amount of usage charges before certain telecommunications services are activated. The actual usage charges incurred are verified against
the balance of the amount deposited at regular intervals on a daily basis and, if there are unusual circumstances, additional measures will be implemented. Direct debit services are available in each geographical area. The accounts of contract
customers are required to be settled on a monthly basis, and a late payment fee is imposed on each customer whose account balance is not settled by the monthly due date. If the customers account remains overdue, the customers services
will be deactivated and such customer must pay all overdue amounts, including applicable late payment fees, to reactivate services. As a majority of our existing customers pre-pay for our services, we have limited credit risk exposure to our
customers. We make an allowance for doubtful accounts based on our assessment of the recoverability of accounts receivable.

Corporate Social Responsibility and Sustainability Development. We are committed to fulfilling our responsibility to the
sustainable development of the community. We have focused on energy conservation and environmental protection in many aspects of our operations. We have also strived to provide more environment-friendly information solutions to our customers and
support philanthropic activities. When natural disasters such as the severe earthquakes in Yunnan province and heavy rain in southern part of Mainland China occurred in 2011, we reacted with timely and effective telecommunications support and
services and relief efforts. In 2011, we were recognized for the fourth consecutive year by the Dow Jones Sustainability Indexes, or DJSI, being the only company from Mainland China listed on DJSI.



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Information Systems

Our information systems primarily consist of a network management system, a business operation support system and a management information
system. 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. 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 human resources. Furthermore, we have an internal communications network, which consists of our office automation system, our internal computer network, video conference system,
telephone system and others, the combination of which supports our internal communications.

Trademark

We market our services under the CHINA MOBILE trademark, which is the trademark we use throughout Mainland
China. CHINA MOBILE is a registered trademark in the PRC owned by our parent company, CMCC. On January 1, 2008, we entered into a new trademark license agreement to replace the then existing trademark license agreements with CMCC.
Under the new trademark license agreement, we and our operating subsidiaries have a non-exclusive right to use the CHINA MOBILE trademark in Mainland China and Hong Kong. No license fee is payable by us to CMCC under the agreement until
December 31, 2012.

In addition, the CHINA MOBILE name has been registered as a trademark by CMCC in
Australia, Brunei, Canada, Hong Kong, India, Indonesia, Macau, New Zealand, South Korea, Taiwan, Thailand, the United States, Vietnam, South Africa and Yemen. Furthermore, CMCC has filed applications to register the CHINA MOBILE name and
logo as a trademark in Malaysia and Pakistan, in connection with certain goods and services. CMCC has also registered the CHINA MOBILE name and logo as a trademark under the Protocol Relating to the Madrid Agreement Concerning the
International Registration of Marks.

Mobile Telecommunications Networks

Over the past several years, we have performed a number of technological improvements and upgrading to our core mobile telecommunications
network, which has evolved into an integrated network that is capable of supporting transmissions using both the 2G standard and the 3G standard. We have built an Internet Protocol based core network that is capable of supporting the GSM, TD-SCDMA,
WLAN and TD-LTE networks, which we believe could also evolve into a network that supports other future generations of mobile telecommunications technologies.

Prior to January 7, 2009, we offered mobile telecommunications services using the GSM standard, which is a pan-European mobile telecommunications system based on digital transmission and mobile
telecommunications network architecture with roaming capabilities. Each of our GSM networks consists of base stations, base station controllers, mobile switching centers, transmission lines and software applications.

Starting from January 7, 2009, in addition to offering mobile telecommunications services using the GSM standard, or the 2G
standard, we also offer mobile telecommunications services using the TD-SCDMA standard, or the 3G standard. The key network components for our 3G business include Node Bs, which contain radio transmitters and receivers that communicate directly with
mobile terminals, and radio network controllers, which carry out radio resources management and are responsible for controlling the Node Bs that are connected to them.

In addition, we provide our customers with access to broadband Internet connection through WLAN, which connects computers using wireless communication technology. Our customers may use mobile terminals
such as handsets, notebooks and personal digital assistants to gain wireless access to the Internet or corporate intranet.

In
January 2012, the TD-LTE Advanced technology, as a successor technology to the TD-LTE technology, was recognized as one of the international standards for 4G technology by the International Telecommunication Union. In addition, we obtained LTE TDD
spectrum bands in Hong Kong through a public auction in February 2012, which will be used in the construction of a TD-LTE network in Hong Kong. Together with the LTE FDD band we had previously obtained, we will be able to provide commercial services
and commence the integration of our TD-LTE and LTE FDD networks in Hong Kong in 2012.



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Network Capacity Expansion and Optimization Plans. Our customers currently
use our 2G services, our 3G services, our WLAN services, or all of them. We intend to continue our network expansion and optimization with an emphasis on improving network utilization and operating efficiency, facilitating a smooth transition
between, and integration of, our 2G and 3G services, and expanding the coverage and capacity of our integrated network. Our network expansion and optimization plans depend to a large extent upon the availability of sufficient spectrum.

Spectrum. A mobile telecommunications networks capacity is to a certain extent limited by the amount of frequency
spectrum available. For our GSM network, the MIIT has allocated a total of 45 MHz of spectrum to be used for transmission and reception, respectively, to our parent company, CMCC. Of the 45 MHz of spectrum allocated to us, 40 MHz of spectrum in the
900 MHz and 1800 MHz frequency bands is used nationwide, and 5 MHz of spectrum in the 1800 MHz frequency band, is used in the cities of Beijing, Shanghai and Chengdu and Guangdong Province. In connection with our 3G business, the MIIT has allocated
to CMCC a total of 35 MHz of spectrum to be used for nationwide coverage, and an additional 50 MHz of spectrum to be used for indoor coverage.

Transmission Infrastructure. The physical infrastructure linking our network components and interconnecting our networks to other networks consists of transmissions lines, which provide the
backbone infrastructure through which voice and data traffic is carried.

Leased Lines.Transmission lines
constructed by us reached a sizeable scale through the continuous optimization of our network structure in recent years. In addition to our own transmission lines, we also lease intra-provincial and local transmission lines from other operators and
pay them fees based on tariff schedules stipulated by the relevant regulatory authorities after adjusting for the discounts that we have negotiated. For the inter-provincial transmission lines we leased through CMCC from other providers, CMCC
collects leasing fees from us and pays fees to the relevant transmission line providers.

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 staffs are available for emergency repair work 24 hours a day and we employ specialist teams for central maintenance of the networks. Most technical difficulties relating to the networks are
resolved by our staff and the maintenance service providers with which we have business relationships, while our equipment suppliers also provide back-up maintenance and technical support.

Base Stations. In urban areas, our base stations are located mostly on existing structures, typically at the top of tall
buildings. In rural areas, masts are often constructed for locating base stations. Typically, base stations are of limited size, as base station equipment does not generally require significant space. As of the end of 2011, the number of our 2G base
stations exceeded 700,000, compared to 554,000 in 2010. We anticipate that we will need a significant number of new base stations in connection with the expansion of our mobile telecommunications networks. We cannot assure you that we will be able
to obtain the requisite number of base station sites on reasonable commercial terms.

In connection with the 3G wireless
network capacity that we lease from CMCC, the number of CMCCs 3G base stations in operation reached approximately 220,000 as of the end of 2011, compared to 135,000 as of the end of 2010.

Equipment Suppliers. We select our principal suppliers from leading international and domestic manufacturers of mobile
telecommunications equipment and in accordance with technical standards set by the MIIT. In 2011, we purchased our networks equipment primarily from Huawei Technologies, Ericsson, Nokia Siemens, ZTE and Alcatel-Lucent.

Strategic Cooperation with Vodafone

We entered into a strategic cooperation framework agreement, on a non-exclusive basis and non-binding basis, with Vodafone Group Plc, or Vodafone, in February 2011, which provides for a number of
cooperation arrangements between us and Vodafone, including:



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



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| |  |  | cooperation in certain areas, including enhanced roaming services, multinational customers, co-marketing, next-generation technology, green technology,
network roadmap management and joint innovation and 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.
| | - |  | ----------------------------------------------------------------------------------------------------

Strategic Alliance Agreement with PhoenixTV and Memorandum of Understanding with News Corporation and STAR Group Limited

On June 8, 2006, we entered into a strategic alliance agreement with Phoenix Satellite Television Holdings
Limited, or PhoenixTV, a leading satellite television operator broadcasting into Mainland China, pursuant to which we and PhoenixTV will cooperate in, among other areas, the joint development, marketing and delivery of innovative wireless content,
products, services and applications. We currently have a number of cooperation initiatives underway with PhoenixTV.

In
addition, we entered into a memorandum of understanding with News Corporation and STAR Group Limited on June 8, 2006 relating to a potential long-term wireless media strategic partnership as well as the exploring of various areas of
cooperation, which may include the aggregation, development and marketing of multimedia content and other wireless data services, by combining the strength and experience of one of the largest media companies in the world and one of the largest
mobile telecommunications companies in the world. We are currently working with News Corporation and STAR Group Limited on a number of cooperation initiatives.

Proposed Investment in, and Strategic Cooperation with, Far EasTone

On April 29, 2009, we entered into a share subscription agreement with Far EasTone Telecommunications Co., Ltd., or Far EasTone, one
of the major mobile telecommunications operators in Taiwan, pursuant to which we would acquire 12% of the enlarged issued share capital of Far EasTone for an aggregate amount of approximately 17,773.6 million New Taiwan dollars (approximately
RMB3,695.6 million or US$587.2 million, based on the respective exchange rate of 4.8094 New Taiwan dollars = RMB1.00 or 30.2700 New Taiwan dollars = US$1.00 as of December 30, 2011), subject to certain adjustments. Completion of the share
subscription is subject to certain conditions, including the obtaining of all necessary regulatory approvals.

Concurrent with
the share subscription agreement, we also entered into a strategic cooperation agreement with Far EasTone, which would become effective upon the completion of the share subscription. Pursuant to the strategic cooperation agreement, we and Far
EasTone would pursue long-term broad-based cooperation for the purpose of our mutual strategic development in a number of areas, including joint purchases, roaming and data businesses and network and technology advancement. We believe our strategic
cooperation with Far EasTone would facilitate the expansion of our business in Mainland China, Hong Kong and Taiwan and help us expand the range of our services to individuals that travel between, and businesses that operate in, Mainland China and
Taiwan. The strategic cooperation would also enable us to accumulate advanced technological and operational expertise in areas such as 3G and next generation technology.

Investment in, and Strategic Cooperation with, SPD Bank

In October
2010, Guangdong Mobile, our wholly-owned subsidiary, completed its acquisition of 20% of the enlarged issued share capital of SPD Bank for an aggregate amount of approximately RMB39.5 billion (approximately US$6.0 billion). SPD Bank is a joint-stock
commercial bank incorporated in the PRC, with its shares listed on the Shanghai Stock Exchange.

In connection with the
acquisition, we and SPD Bank also entered into a strategic cooperation agreement in November 2010, pursuant to which we and SPD Bank will cooperate in the areas of mobile finance and mobile e-Commerce businesses in Mainland China, such as mobile
payment, including on-site payment and remote payment, as well as in the sharing of customers services and channels resources. The term of cooperation is five years, which will be automatically renewed for successive one-year terms unless
terminated. The scope of cooperation will include, but will not be limited to, the joint development of mobile payments business, mobile bank cards business and other forms of mobile finance and mobile e-Commerce businesses, the joint research and
development of mobile finance software and mobile security technologies. The parties agree to jointly explore cooperation in mobile fund transfer business. The parties also agree to promote their cooperation in the areas of basic banking services
and basic telecommunications services, and leverage on their respective competitive advantages to bring synergies in terms of branding, customers, channels and network platform resources into full play.



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Competition

We compete with other telecommunications services providers. We are one of the three licensed mobile telecommunications services providers
in Mainland China. The PRC government encourages orderly and fair competition in the telecommunications industry in Mainland China. In particular, the PRC government has extended favorable regulatory policies to some of our competitors in order to
help them become more viable competitors to us. We may also face intense competition from existing operators from time to time. Our competitors launch, from time to time, promotional offers, such as handset subsidies and tariff packages, to attract
customers.

In May 2008, the MIIT, the NDRC and the MOF jointly announced a policy initiative to further reform the PRC
telecommunications industry by encouraging the formation of three telecommunications services providers of comparable scale and standing, each with nationwide network resources, full-service capabilities and competitive strength, by way of a series
of restructuring transactions. See Item 4. Information on the Company  The History and Development of the Company  Industry Restructuring and Changes in Our Shareholding Structure.

After completion of the industry restructuring in January 2009, China Telecom and China Unicom, each of which is now operating a mobile
telecommunications network, have been benefiting from, among other things, broader customer bases, more extensive networks, greater financial and other resources and more comprehensive technological capabilities, as compared to their customer bases,
networks, resources and technological capabilities prior to the industry restructuring. These factors have intensified, and could further intensify, competition. Our market share was approximately 66.5% as of December 31, 2011. In addition,
pursuant to the policy initiative announced in May 2008, China Telecom and China Unicom have each become full-service telecommunications services providers that operate both fixed-line telecommunications networks and mobile telecommunications
networks. We cannot predict at this point in time the precise impact that the formation of full-service telecommunications services providers may have on our business and prospects. Our competitors may also benefit from any asymmetrical regulatory
measures that may be adopted by the PRC government from time to time. See Risk Factors  Risks Relating to Our Business  Competition from other telecommunications services providers and competitors in other related industries may
further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any potential change in the competitive landscape of the telecommunications industry in Mainland China would not have a material
adverse effect on our business, financial condition and results of operations and Risk Factors  Risks Relating to the Telecommunications Industry in Mainland China  Current or future asymmetrical and other regulatory measures
adopted by the PRC regulatory authorities could materially harm our competitive position.

Nonetheless, given the
customer growth potential in the small and medium-sized cities and rural areas in Mainland China, we believe there is growth potential for our mobile telecommunications business. In particular, we believe that the industry restructuring in 2009 will
help optimize the allocation of telecommunications resources and help create a fair, orderly, transparent and healthy telecommunications market. Despite existing and future competition, we believe the following factors have contributed to our
customer quality compared to that of our existing competitors and we seek to continue developing our competitive advantages on the basis of these factors:



| |  |  | our economies of scale;
| | - |  | -----------------------



| |  |  | our high-quality mobile telecommunications networks;
| | - |  | ----------------------------------------------------



| |  |  | our advanced and flexible support systems;
| | - |  | ------------------------------------------



| |  |  | 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 data business;
| | - |  | -------------------------------------



| |  |  | our experienced management team and seasoned employees;
| | - |  | -------------------------------------------------------



| |  |  | our strong capabilities of execution and innovation; and
| | - |  | --------------------------------------------------------



| |  |  | our financial resources.
| | - |  | ------------------------



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Regulation

The mobile telecommunications industry in Mainland China is highly regulated. Regulations issued or implemented by the State Council, the
MIIT and other relevant government authorities including the NDRC and the Ministry of Commerce, 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 numbering resources allocation.

The MIIT, under the supervision of the State Council, is responsible for formulating policies and regulations for the telecommunications
industry, granting telecommunications licenses, allocating frequency spectrum and numbers, formulating interconnection and settlement arrangements between telecommunications operators, and enforcing industry regulations.

In order to provide a uniform regulatory framework to encourage the orderly development of the telecommunications industry, the MIIT,
under the direction of the State Council, has been 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 telecommunications regulations on September 25, 2000. These regulations 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 cannot predict what the ultimate nature
and scope of the telecommunications law will be.

Entry into the Industry. Under the current regulations,
operators of mobile telecommunications networks, providers of other basic telecommunications services such as local and long distance fixed-line telephone services, and data service providers whose telecommunications services cover two or more
provinces, directly-administered municipalities or autonomous regions in Mainland China must apply for specific permits from the MIIT in order to provide such services. Granting of permits for providing basic telecommunications services will be
through a tendering process. In addition to us, China Telecom and China Unicom are currently also authorized to provide mobile telecommunications services in all provinces, directly-administered municipalities and autonomous regions in China.

Pursuant to Chinas commitments under the WTO and the Provisions on the Administration of Foreign-Funded
Telecommunications Enterprises, which became effective on January 1, 2002, foreign investors may invest in joint ventures that provide telecommunications services in Mainland China. However, these 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 Provisions on the
Administration of Foreign-Funded Telecommunications Enterprises, as amended in September 2008, foreign ownership in a telecommunications enterprise may be gradually increased to 49% if such enterprise provides basic telecommunications services and
50% if such enterprise provides value-added telecommunications services (including radio paging services).

The MIIT has
promulgated the Administrative Measures for the Licensing of Telecommunication Business Operations, which became effective on April 10, 2009. Those regulations apply to the application for, and examination and approval of, telecommunications
business licenses in the PRC.

Spectrum Usage. In coordination with the relevant provincial authorities, the
MIIT regulates the allocation of radio frequency. The frequency assigned to an entity is not allowed to be leased or, without approval of the MIIT, transferred by the entity to any other third party. In accordance with a joint circular from the NDRC
and the MOF, CMCC has entered into an agreement with us that specifies the amount of fees to be paid to the MIIT for spectrum usage by each mobile telecommunications network operator based on the bandwidth of the frequency used and the number of
base stations within the relevant operators networks.

Spectrum usage fees for GSM networks are currently charged at the
annual rate of RMB17 million per MHz for the 900 MHz frequency band and RMB15 million per MHz for the 1800 MHz frequency band. Spectrum usage fees are charged on the basis that upward and downward frequencies are separately charged. The relevant
regulatory authorities in China may review these fee arrangements in the future.



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Numbering Resources. The MIIT is responsible for the administration of the
telecommunications numbering resources within Mainland China, including the telecommunications network numbers and customer numbers. The use of numbering resources by any telecommunications operator is subject to the approval by the MIIT. In January
2003, the former Ministry of Information Industry, or the MII, issued the Measures on Administration of Telecommunications Network Numbering Resources, pursuant to which a user of numbering resources is required to pay a usage fee to the state. In
December 2004, the MII, the MOF and the NDRC jointly issued the Provisional Administrative Measures with respect to the Collection of the Usage Fee of Telecommunications Network Numbering Resources, under which telecommunications companies are
required to pay a usage fee to the PRC government by the 10th day of the first month of each quarter. Moreover, under these provisional measures, mobile telecommunications companies are required to pay an annual usage fee of RMB12 million for each
network number.

Tariff Setting.Our tariffs are subject to regulation by various government authorities,
including the MIIT, the NDRC and the relevant price regulatory authorities in Mainland China. Under the current telecommunications regulations, telecommunications tariffs are categorized into market based tariffs, government guidance tariffs and
government standard tariffs. As a general matter, the actual price range in each service area is proposed by a network operator in that service area, and must be approved by the relevant price regulatory authorities in that service area. In
addition, local usage charges, monthly fees, maximum domestic roaming usage charges and maximum domestic long distance tariffs (other than tariffs for IP phone calls) are also determined generally by the MIIT in consultation with the NDRC. In August
2005, the MII amended its tariff regulations relating to certain telecommunications services, which gave network operators more flexibility in setting, among other things, their domestic and international long distance tariffs and domestic roaming
usage charges, provided that these tariffs and charges do not exceed the respective maximum tariffs it determined in consultation with the NDRC and that the tariff plans are filed with the MII (and, currently, with the MIIT) and the NDRC or, in some
cases, the relevant price regulatory authorities at the provincial level.

The MIIT has continued encouraging mobile
telecommunications operators in Mainland China to implement the caller-party-pays regime, and mobile telecommunications operators, including us, have been implementing the caller-party-pays regime. In particular, all of the new calling plan packages
that we have been offering in Mainland China since the beginning of 2007 are based on tariffs substantially equivalent to the caller-party-pays regime.

In March 2008, the MII reduced the maximum domestic roaming usage charges that a mobile telecommunications services provider may charge on roaming services. In December 2009, the PRC regulators further
promulgated policies to eliminate domestic roaming usage charges on outgoing international long distance calls when domestic roaming services are used, as well as eliminate local usage charges on outgoing domestic and international long distance
calls when roaming services are not used.

Our international roaming usage charges are set in accordance with agreements with
the relevant foreign mobile operators. Under the current 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 current telecommunications regulations, parties seeking
interconnection must enter into an interconnection agreement and file such agreement with the MIIT. In addition, 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. These telecommunications services providers must also establish interconnection rules and procedures based on the principles of non-discrimination and transparency and
submit such rules and procedures to the MIIT for approval. The termination of any interconnection arrangements will require prior approval by the MIIT.

The applicable regulations provide that interconnection related equipment must conform to the technical standards approved by the MIIT. See  Technical Standards below. The MIIT 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.

Technical Standards. Certain regulatory authorities in Mainland China, including the MIIT, 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.



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The establishment of base stations requires the approval of the relevant provincial
regulatory authorities. We have not experienced and do not expect to experience material difficulty in obtaining permission to establish additional sites.

Capital Investment. We may be required to obtain approvals from relevant regulatory authorities in Mainland China with respect to some of our investment projects.

Sharing of Telecommunications Infrastructure. In September 2008, the MIIT and the SASAC jointly issued a Notice on
Promoting Joint Construction and Sharing of Telecommunications Infrastructure, which stipulates that the telecommunications operators in Mainland China must share existing transmission towers and masts and jointly construct future transmission
towers and masts. The joint notice also requires the telecommunications operators to share and jointly construct base station facilities and transmission lines to the extent feasible, and prohibits exclusive arrangements in the leasing of
third-party sites and premises. CMCC, China Unicom and China Telecom have subsequently entered into an agreement to set out the framework under which they will jointly construct and share relevant telecommunications infrastructure.

Convergence of Telecom, Broadcasting and Internet Businesses. In January 2010, the PRC government announced a policy
decision, or the Three-Network-Convergence Policy, to accelerate the advancement of the convergence of television and radio broadcasting, telecommunications and Internet access businesses in order to realize interconnection and resource sharing
between the three networks and further develop the provision of voice, data, television and other services. Specifically, the Three-Network Convergence Policy will be initially carried out on a trial basis in selective geographic locations between
2010 and 2012 and further implemented on a larger scale in 2013 through 2015. The PRC government may amend the relevant regulations or promulgate new regulations in order to implement the Three-Network Convergence Policy. The new policy decision is
expected to enhance the development of information industries, satisfy consumers diverse demands, promote domestic consumption and form new areas for economic growth.

Employees

As of December 31, 2009, 2010 and 2011, we had
145,954, 164,336 and 175,336 employees, respectively. Substantially all of our employees are located in Mainland China. The employees as of December 31, 2011 were classified in the following table. Approximately 65.5% of our permanent employees
have college or graduate degrees. Set forth below is a breakdown of our employees by functions as of December 31, 2011.



|                |  |  |         | 
|--------------- |  |  | ------- | 
|Management      |  |  | 23,303  | 
|Technical       |  |  | 46,964  | 
|Marketing       |  |  | 69,451  | 
|General affairs |  |  | 29,333  | 
|Others          |  |  | 6,285   | 
|                |  |  |         | 
|Total           |  |  | 175,336 | 
|                |  |  |         | 

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.

The number of workers sourced by third parties that provided services to us reached
323,506 as of December 31, 2011.

Properties, 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 believe that all of our owned and leased properties are well maintained and are suitable and adequate for their present use.



|Item 4A. | Unresolved Staff Comments.
|-------- | --------------------------

None.



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|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 on Form 20-F.

Overview of Our Operations

The following table sets forth selected information about our operations for the periods indicated.



|                                                             |  |                         |         |  |      |  |         |      |  |  |         | 
|------------------------------------------------------------ |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                             |  | Year ended December 31, |        
|                                                             |  | 2009                    |         |  | 2010 |  |         | 2011 | 
|Total Voice Usage (in billions of minutes)                   |  |                         | 2,918.7 |  |      |  | 3,461.6 |      |  |  | 3,887.2 | 
|Total Operating Revenue (in RMB millions)                    |  |                         | 452,103 |  |      |  | 485,231 |      |  |  | 527,999 | 
|Total Operating Expenses (in RMB millions)                   |  |                         | 305,095 |  |      |  | 334,477 |      |  |  | 376,700 | 
|Profit Attributable to Equity Shareholders (in RMB millions) |  |                         | 115,166 |  |      |  | 119,640 |      |  |  | 125,870 | 

In 2009, 2010 and 2011, our customer base and voice usage volume continued to experience considerable
growth. Our total net increase in number of customers was approximately 65.6 million during 2011 and our total customer base reached approximately 649.6 million as of December 31, 2011. Our total voice usage increased by 18.6% from
2009 to 2010, and by 12.3% in 2011. As a result, our total operating revenue increased by 7.3% from 2009 to 2010, and by 8.8% in 2011. Our data business continued to grow, and our data services revenue accounted for 24.9% and 26.4% of our total
operating revenue in 2010 and 2011, respectively. Our total operating expenses increased by 9.6% from 2009 to 2010, and by 12.6% in 2011. Our profit attributable to equity shareholders increased by 3.9% from 2009 to 2010, and by 5.2% in 2011.

The PRC economy continued to grow in terms of GDP by 9.2% in 2011, which provided a favorable environment for our continued
business development. However, following the restructuring of the telecommunications industry and the issuance of the 3G licenses, market competition in the telecommunications industry in Mainland China has intensified. As the mobile penetration
rate in Mainland China reached 73.6% as of December 31, 2011, the mobile telecommunications markets in some economically developed regions of Mainland China also began to show signs of saturation. We intend to continue to cope with market and
industry challenges that may arise from time to time by leveraging our customer base, network quality, brand name and execution capabilities. Moreover, although the overall mobile penetration rate in Mainland China is increasing, the mobile
penetration rate in rural areas remains relatively low. We believe that there remains potential for continued growth in our customer base and our business.

We have been a mobile telecommunications services provider in China since our inception in 1997. We acquired all of the issued and outstanding shares of Hong Kong Mobile in 2006, which enabled us to
expand into the Hong Kong mobile telecommunications market. See Item 4. Information on the Company  The History and Development of the Company  Expansion Through Acquisitions.

We operate in an extensively regulated environment and our operations and financial performance are significantly affected by the PRC
governments regulation of the telecommunications industry. These regulations and policies may affect, among other things, our tariffs, technology and equipment standards and capital investment, as described in more detail under Item 4.
Information on the Company  Business Overview  Regulation. In addition, we believe that the industry restructuring that took place in 2008 has had, and will continue to have, a significant impact on the competitive landscape of the
telecommunications industry in Mainland China, and competition from other telecommunications services providers may intensify. See Risk Factors  Risks Relating to Our Business  Competition from other telecommunications services
providers and competitors in other related industries may further increase, which may reduce our market share and decrease our profit margin, and we cannot assure you that any potential change in the competitive landscape of the telecommunications
industry in Mainland China would not have a material adverse effect on our business, financial condition and results of operations and Risk Factors  Risks Relating to the Telecommunications Industry in Mainland China  Current
or future asymmetrical and other regulatory measures adopted by the PRC regulatory authorities could materially harm our competitive position. Our financial performance is also subject to the economic and social conditions in Mainland China.
See Risk Factors  Risks Relating to Mainland China  An economic slowdown in Mainland China may reduce the demand for our services and have a material adverse effect on our financial condition, results of operations and business
prospects.



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Our Operating Arrangements with CMCC Have Affected and May Continue to Affect Our
Financial Results

We have entered into agreements with CMCC with respect to, among other things, inter-provincial and
international transmission lines leasing. Pursuant to these agreements, for the inter-provincial transmission lines we leased from other providers through CMCC, CMCC maintains its existing inter-provincial transmission line leasing arrangements with
the relevant transmission line providers, and collects leasing fees from us and pays fees to the relevant transmission line providers.

We have an arrangement with CMCC under which CMCC maintains the existing settlement arrangements with respect to international interconnection and roaming with the relevant telecommunications services
providers in foreign countries and regions, and collects the relevant usage fees and other fees from us and pays the same to the relevant mobile telecommunications services providers in foreign countries and regions. In 2011, CMCC is in the process
of transferring its settlement arrangements with certain telecommunications services providers in foreign countries and regions to China Mobile International, our wholly-owned subsidiary. As a result, our arrangement with CMCC with respect to
international interconnection and roaming with certain telecommunications service providers will be gradually phased out.

We
have also entered into a telecommunications services cooperation agreement with CMCC, pursuant to which we and CMCC provide customer development services to each other by utilizing our respective sales channels and resources, and cooperate in the
provision of basic telecommunications services and value-added telecommunications services to customers of each other.

In
addition, we have entered into a network capacity leasing agreement with CMCC, pursuant to which we and our operating subsidiaries lease TD-SCDMA network capacity from CMCC and pay leasing fees to CMCC. We have also entered into a network assets
leasing agreement with CMCC, pursuant to which we and CMCC will lease our respective telecommunications network operation assets to each other for a leasing fee.

Tariff Adjustments

The tariffs charged by PRC telecommunications
operators are subject to adjustment by the PRC government. Recent adjustments include, among other things, the shortening of the billing unit for long distance charges (other than for Internet Protocol based long distance call services), the general
reduction in domestic and international long distance call rates, the elimination of various surcharges and connection fees charged to new customers, a general reduction in leased line tariffs and the elimination of certain domestic roaming
charges and local usage charges on long distance calls. See Item 4. Information on the Company  Business Overview  Regulation  Tariff Setting. Moreover, we are allowed to offer our customers a variety of tariff packages
which have different monthly charges, levels of basic usage and charges for usage exceeding the covered basic usage, voice value-added services, data services and other features. See Item 4. Information on the Company  Business Overview
 Tariffs.

Our average revenue per minute has generally decreased in recent years as tariffs have generally
decreased. However, the growth in voice usage volume that has resulted from the general decline in tariffs has helped partially offset the adverse effect of tariff decreases on our revenue.

Our ARPU Has Declined and May Further Decline in the Future

Our ARPU decreased from RMB73 in 2010 to RMB71 in 2011, primarily due to the fact that a significant number of our new customers are users
with relatively low usage of mobile telecommunications services. This decline was also due to the gradual implementation of the tariff adjustments that generally resulted in declines in tariffs. As we continue to expand our customer base, and with
the continued implementation of the tariff adjustments, we expect that our ARPU will further decline.

Critical Accounting Policies and
Estimates

The following discussion and analysis is based on our consolidated financial statements, which have been
prepared in accordance with IFRS for the years ended December 31, 2009, 2010 and 2011. The preparation of financial statements 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 dates of the financial statements and revenues and expenses during the years reported. Estimates are also used when accounting for certain items such as revenue recognition, provision for
customer point reward program, allowance for doubtful accounts, depreciation, amortization of other intangible assets, impairment of property, plant and equipment, goodwill and other intangible assets arising from acquisitions. Actual results may
differ from those estimates under different assumptions or conditions.



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We believe that the following critical accounting estimates and related assumptions and
uncertainties inherent in our 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.

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. If it is probable that the economic benefits will flow to us and the revenue and costs, if applicable, can be measured
reliably, revenue is recognized in our profit or loss as follows:

(i) revenue derived from voice and data services are
recognized as revenue when the service is rendered;

(ii) revenue from prepaid services is recognized as revenue when the
mobile telecommunications services are delivered based upon actual usage by customers;

(iii) sales of SIM cards and terminals
are recognized on delivery of goods to the customers and such amount, net of cost of goods sold, is included in other net income due to its insignificance;

(iv) interest income is recognized as it accrues using the effective interest method; and

(v) revenue from fixed price contracts is recognized using the percentage of completion method.

Provision for Customer Point Reward Program

We invite our customers
to participate in a customer point reward program, or the Reward Program, which provides customers the option of electing to receive free telecommunications services or other non-cash gifts. The level of bonus points earned under the Reward Program
varies depending on the customers service consumption, loyalty and payment history.

Starting from January 1, 2009,
as a result of the adoption of IFRIC Interpretation 13, we accounted for the reward points as a separately identifiable component of the sales transactions in which the points are granted. We allocate the consideration received with respect to a
sales transaction to reward points by reference to the estimated fair value of the points and defer the revenue recognition until such reward points are redeemed by the customer or the points expire.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts based upon evaluation of the recoverability of the accounts receivable and other receivables at each balance sheet date. We base our estimates on the aging of
our accounts receivable and other 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.

Depreciation

Depreciation is based on the estimated useful lives of items of property, plant and equipment, less their estimated residual value, if any, to write off the cost of these items using the straight-line
method over their estimated useful lives. We review the estimated useful lives and residual values of our assets annually. We determine the useful life and residual values of our assets based on our historical experience with similar assets,
expected usage of the assets and anticipated technological changes with respect to those assets. Estimates and assumptions used in setting depreciable lives require both judgment and estimation. Our policies regarding accounting for these assets are
set forth in note 1(h) to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Amortization of Other Intangible Assets

Amortization of other intangible assets is calculated to write off the cost of items of other intangible assets using the straight-line method over their estimated useful lives unless such lives are
indefinite. We review the estimated useful lives of other intangible assets annually in order to determine the amount of amortization expense to be recorded during any reporting period. The useful lives are based on the estimated period over which
future economic benefits will be received by us and taking into account any unexpected adverse changes in circumstances or events. The amortization expense for future periods is adjusted if there are significant changes from previous estimates.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the level of the cash-generating unit. Such intangible assets are not amortized. Our policies regarding accounting for these assets are set
forth in note 1(f) to our consolidated financial statements included elsewhere in this annual report on Form 20-F.



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Impairment of Property, Plant and Equipment, Goodwill and Other Intangible Assets

Our property, plant and equipment, consisting primarily of telecommunications transceivers, switching centers,
transmission 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. Property, plant and equipment
and other intangible assets subject to amortization, are reviewed at least annually to determine whether there is any indication of impairment. The recoverable amount is estimated whenever events or changes in circumstances have indicated that their
carrying amounts may not be recoverable. In addition, for goodwill and other intangible assets that have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.

The recoverable amount of an asset is the greater of its fair value less costs to sell and its 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 the time value of money and the risks specific to the asset, which requires significant judgment relating
to level of revenue and amount of operating costs. We use all readily available information in determining an amount that is a reasonable approximation of the recoverable amount, including estimates based on reasonable and supportable assumptions
and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying value of the assets and could result in additional impairment charges or reversal of impairment in future periods. No
impairment of property, plant and equipment, goodwill and other intangible assets was recorded in 2009, 2010 or 2011.

Estimates and assumptions used in testing for recoverability require both judgment and estimation. Our policies regarding accounting for
these assets and assessing their recoverability are set forth in note 1(j) to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Results of Operations

The following table sets forth selected consolidated
statements of comprehensive income data for the years indicated:



|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|------------------------------------------ |  | ----------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                           |  | Year Ended December 31, |        
|                                           |  | 2009                    |         |   | 2010 |  |         | 2011 | 
|                                           |  | (in millions of RMB)    |        
|Operating revenue(1):                      |  |                         |         |   |      |  |         |      |  |  |         |  
|Voice services                             |  |                         | 327,283 |   |      |  | 343,985 |      |  |  | 364,189 |  
|Data services                              |  |                         | 106,105 |   |      |  | 120,768 |      |  |  | 139,330 |  
|Others                                     |  |                         | 18,715  |   |      |  | 20,478  |      |  |  | 24,480  |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Total operating revenue                    |  |                         | 452,103 |   |      |  | 485,231 |      |  |  | 527,999 |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Operating expenses:                        |  |                         |         |   |      |  |         |      |  |  |         |  
|Leased lines                               |  |                         | 3,006   |   |      |  | 3,897   |      |  |  | 5,188   |  
|Interconnection                            |  |                         | 21,847  |   |      |  | 21,886  |      |  |  | 23,533  |  
|Depreciation                               |  |                         | 80,179  |   |      |  | 86,230  |      |  |  | 97,113  |  
|Personnel                                  |  |                         | 21,480  |   |      |  | 24,524  |      |  |  | 28,672  |  
|Selling expenses                           |  |                         | 80,043  |   |      |  | 90,590  |      |  |  | 96,830  |  
|Other operating expenses                   |  |                         | 98,540  |   |      |  | 107,350 |      |  |  | 125,364 |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Total operating expenses                   |  |                         | 305,095 |   |      |  | 334,477 |      |  |  | 376,700 |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Profit from operations                     |  |                         | 147,008 |   |      |  | 150,754 |      |  |  | 151,299 |  
|Other net income                           |  |                         | 1,780   |   |      |  | 2,336   |      |  |  | 2,559   |  
|Non-operating net income                   |  |                         | 359     |   |      |  | 685     |      |  |  | 571     |  
|Interest income                            |  |                         | 5,940   |   |      |  | 5,658   |      |  |  | 8,413   |  
|Finance costs                              |  |                         | (1,243  | ) |      |  | (902    | )    |  |  | (565    | )
|Share of profit of associates              |  |                         |        |   |      |  | 558     |      |  |  | 4,306   |  
|Share of loss of jointly controlled entity |  |                         | (8      | ) |      |  | (18     | )    |  |  | (1      | )
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Profit before taxation                     |  |                         | 153,836 |   |      |  | 159,071 |      |  |  | 166,582 |  
|Taxation                                   |  |                         | (38,413 | ) |      |  | (39,047 | )    |  |  | (40,603 | )
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Profit for the year                        |  |                         | 115,423 |   |      |  | 120,024 |      |  |  | 125,979 |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Attributable to:                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Equity shareholders                        |  |                         | 115,166 |   |      |  | 119,640 |      |  |  | 125,870 |  
|Non-controlling interests                  |  |                         | 257     |   |      |  | 384     |      |  |  | 109     |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  
|Profit for the year                        |  |                         | 115,423 |   |      |  | 120,024 |      |  |  | 125,979 |  
|                                           |  |                         |         |   |      |  |         |      |  |  |         |  



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|(1) | We re-categorized the presentation of our operating revenue components in 2011, and as a result also re-categorized the historical presentation of our operating revenue
components for 2009 and 2010. We categorized our operating revenue components to reflect the continuous development of our business and the way in which we drive economic benefits from different types of telecommunications services.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under the new categorization, our operating revenue components are voice services revenue, data services revenue
and other operating revenue. Voice services revenue includes revenue derived from voice usage services (including usage fees and monthly fee) and revenue derived from voice value-added services. Data services revenue includes revenue derived from
SMS and MMS, wireless data traffic, and applications and information services. Other operating revenue mainly includes interconnection revenue. Revenue derived from voice value-added services and certain voice-related services that had been included
in value-added services revenue in our consolidated financial statements under the prior years presentation was re-categorized as voice services revenue. In addition, revenue derived from certain voice-related services that had been included
in other operating revenue in our consolidated financial statements under the prior years presentation was also re-categorized as voice services revenue. Such re-categorization had no effect on our reported profit or loss, total income and
expense or net assets for any of the periods presented.

Year Ended December 31, 2011 Compared to Year Ended
December 31, 2010

Operating Revenue. Our operating revenue mainly consists of voice services revenue
and data services revenue. Voice services revenue mainly includes standard local usage fees for airtime and applicable domestic and international long distance charges receivable from customers for the use of our mobile telecommunications networks
and facilities, fees in respect of roaming out calls made by our customers outside their registered service areas and fees charged for voice value-added services. Data services revenue is mainly derived from SMS and MMS, wireless data traffic and
applications and information services. Other operating revenue mainly represents interconnection revenue. See note 1 to the table above.

Operating revenue increased by 8.8% from RMB485,231 million in 2010 to RMB527,999 million (US$83,891 million) in 2011. This increase was primarily due to the continued expansion in our customer base,
rapid growth of data business and the continued growth in voice usage volume. Our total number of customers was approximately 649.6 million as of December 31, 2011, compared to approximately 584.0 million as of December 31, 2010.

Voice services revenue increased by 5.9% from RMB343,985 million in 2010 to RMB364,189 million (US$57,864 million) in
2011. This increase principally resulted from the further increase in our voice usage and the continued expansion in our customer base during 2011. Although our average revenue per minute reflected a downward trend from RMB0.140 in 2010 to
RMB0.136 in 2011, this decline was partially offset by higher growth in our voice usage in 2011. With intensified market competition and with further declines in tariffs, our average revenue per minute may continue to decline in future periods.
However, we expect our voice usage to grow as tariffs decline, which we expect to help partially offset the impact of these developments on our operating revenue. As a percentage of operating revenue, voice services revenue decreased from 70.9%
in 2010 to 69.0% in 2011.



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Set forth below is a table summarizing certain results of our data business for the periods
indicated.



|                                                           |  |                               |         |   |      |  |         |  
|---------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- |  | ------- | -
|                                                           |  | Year Ended December 31,       |        
|                                                           |  | 2010                          |         |   | 2011 | 
|                                                           |  | (Revenue, in millions of RMB) |        
|SMS and MMS                                                |  |                               | 46,889  |   |      |  | 46,462  |  
|Wireless data traffic                                      |  |                               | 30,644  |   |      |  | 44,428  |  
|Applications and information services                      |  |                               | 43,235  |   |      |  | 48,440  |  
|                                                           |  |                               |         |   |      |  |         |  
|Data services revenue                                      |  |                               | 120,768 |   |      |  | 139,330 |  
|                                                           |  |                               |         |   |      |  |         |  
|Data services revenue as a percentage of operating revenue |  |                               | 24.9    | % |      |  | 26.4    | %

Data services revenue increased by 15.4% from RMB120,768 million in 2010 to RMB139,330 million (US$22,137
million) in 2011. This increase was mainly due to our continued efforts in product innovation and business development. Our data business include SMS and MMS, wireless data traffic and applications and information services. Revenue generated from
SMS and MMS decreased by 0.9% to RMB46,462 million in 2011 from RMB46,889 million in 2010 as SMS and MMS tariffs continue to decline and as competition from Internet instant messaging applications continued to intensify. Revenue generated from
wireless data traffic grew substantially by 45.0% to RMB44,428 million in 2011, as compared to RMB30,644 million in 2010. The rapid growth of our applications and information services, in particular Wireless Music, Mobile Reading, Mobile Video and
Mobile Mailbox, was an important driver for our data business. In particular, revenue generated from applications and information services grew by 12.0% to RMB48,440 million in 2011, as compared to RMB43,235 million in 2010. As a percentage of
operating revenue, data services revenue increased from 24.9% in 2010 to 26.4% in 2011. We expect our data business, in particular wireless data traffic and applications and information services, to continue to grow.

Other operating revenue increased by 19.5% from RMB20,478 million in 2010 to RMB24,480 million (US$3,889 million) in 2011. As a
percentage of operating revenue, other operating revenue increased from 4.2% in 2010 to 4.6% in 2011 largely due to the increase in interconnection revenue as a result of increasing volume of incoming calls from other telecommunications operators.

Operating Expenses. Operating expenses include leased line expenses, interconnection expenses, depreciation
expenses relating to our mobile telecommunications network and other property, plant and equipment, personnel expenses, selling expenses and other operating expenses. Other operating expenses primarily consist of network maintenance expenses,
impairment loss for doubtful accounts, impairment loss of inventories, amortization of other intangible assets, operating lease charges, write-off of property, plant and equipment that have been demolished and disconnected from our existing network,
labor service expenses, administration and other miscellaneous expenses.

Operating expenses increased by 12.6% from
RMB334,477 million in 2010 to RMB376,700 million (US$59,852 million) in 2011. This increase, notably in other operating expenses (particularly maintenance expenses and labor services expenses) and depreciation, was generally in line with the
continued growth in our customer base and usage volume and our ongoing efforts to deliver better quality services and to cope with intensified competition.

Leased line expenses increased by 33.1% from RMB3,897 million in 2010 to RMB5,188 million (US$824 million) in 2011. This increase reflected an increase in payment of RMB514 million to CMCC in connection
with the lease of its TD-SCDMA wireless network capacity and the increase in leasing fees of Internet ports paid to other telecommunications operators as a result of the rapid development of our Internet related businesses. As a percentage of
operating expenses, leased line expenses increased slightly from 1.2% in 2010 to 1.4% in 2011.

Interconnection expenses
increased by 7.5% from RMB21,886 million in 2010 to RMB23,533 million (US$3,739 million) in 2011, primarily due to an increase in interconnection voice usage volume. Our continuing marketing strategy to reorganize and re-route traffic volume has led
to a lower proportion of inter-network traffic volume. Interconnection expenses as a percentage of operating expenses decreased from 6.5% in 2010 to 6.2% in 2011.

Depreciation expense increased by 12.6% from RMB86,230 million in 2010 to RMB97,113 million (US$15,430 million) in 2011. This increase was mainly due to our continuous capital expenditures for the
construction of our mobile telecommunications networks, support systems, transmission and structural facilities and the development of new businesses to better support the growth of customer base and voice usage and to meet an unprecedented increase
in demand in wireless data traffic. As a percentage of operating expenses, depreciation expense remained stable at 25.8% in 2010 and 2011.



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Personnel expenses increased by 16.9% from RMB24,524 million in 2010 to RMB28,672 million
(US$4,556 million) in 2011. This increase was primarily due to an increase in headcount from 164,336 as of the end of 2010 to 175,336 as of the end of 2011 as we hired new staff members to cope with the demands of our business development,
especially in connection with our effort to achieve enhanced operational efficiency by operating certain aspects of our businesses under specialized subsidiaries such as China Mobile International and China Mobile Terminal. As a percentage of
operating expenses, personnel expenses increased from 7.3% in 2010 to 7.6% in 2011.

Selling expenses increased by 6.9% from
RMB90,590 million in 2010 to RMB96,830 million (US$15,385 million) in 2011. This increase was principally the result of an increase in expanding sales channels and improving customer service in response to intensified market competition. As a
percentage of operating expenses, selling expenses decreased from 27.1% in 2010 to 25.7% in 2011.

Other operating expenses
increased by 16.8% from RMB107,350 million in 2010 to RMB125,364 million (US$19,918 million) in 2011. This increase was primarily due to an increase in maintenance expenses from RMB31,390 million in 2010 to RMB35,096 million in 2011, an increase in
write-off of property, plant and equipment from RMB2,763 million in 2010 to RMB5,853 million in 2011, incurred principally as a result of retirement of obsolete or damaged network assets with a net book value of RMB5,853 million, and an increase in
operating lease charges from RMB9,839 million in 2010 to RMB11,235 million in 2011, incurred principally as a result of our continued investments in our network equipment and facilities. This increase was also due to an increase in labor service
expenses for services provided by third parties from RMB15,649 million in 2010 to RMB20,014 million in 2011, and an increase in the price of utilities, such as water, electricity and heating. Increase in other operating expenses were partially
offset by a decrease in impairment loss of doubtful accounts from RMB4,019 million in 2010 to RMB3,548 million in 2011. As a percentage of operating expenses, other operating expenses increased from 32.1% in 2010 to 33.3% in 2011. For more
information on our other operating expenses, see note 5 to our consolidated financial statements included elsewhere in this annual report on Form 20-F.

Profit from Operations. As a result of the foregoing, profit from operations increased by 0.4% from RMB150,754 million in 2010 to RMB151,299 million (US$24,039 million) in 2011, and
operating margin (profit from operations as a percentage of operating revenue) decreased from 31.1% in 2010 to 28.7% in 2011.

Other Net Income. Other net income represents primarily net sales from SIM cards and terminals and revenue from
construction contracts. These items are included in other net income due to their insignificance. Other net income increased by 9.5% from RMB2,336 million in 2010 to RMB2,559 million (US$407 million) in 2011. This increase was principally due
to an increase in revenue from construction contracts and an increase in net sales from sales of SIM cards and terminals.

Non-Operating Net Income. Non-operating net income decreased by 16.6% from RMB685 million in 2010 to RMB571 million (US$91
million) in 2011. The higher non-operating net increase in 2010 was attributable to a write back of accounts payable while there was no such a write back in 2011. Non-operating net income is mainly comprised of penalty income and other miscellaneous
non-operating income.

Interest Income. Interest income increased by 48.7% from RMB5,658 million in 2010 to
RMB8,413 million (US$1,337 million) in 2011, mainly due to the higher interest rate in 2011 and an increase in our bank deposits.

Finance Costs. Finance costs decreased by 37.4% from RMB902 million in 2010 to RMB565 million (US$90 million) in 2011. This decrease was primarily due to the redemption of guaranteed bonds
due in 2011 with an aggregate principal amount of RMB5,000 million and a lower interest rate in 2011 in respect of the deferred consideration payable in connection with the acquisition of our subsidiaries in 2002 and 2004 respectively. In 2011, the
average interest rate that we paid on our outstanding borrowings was approximately 1.81%, compared to 2.68% in 2010.

Share of Profit of Associates.We had a share of profit of associates of RMB4,306 million (US$684 million) in 2011, which
was attributable to our shareholding of 20% of the enlarged issued share capital of SPD Bank, compared to a share of profit of associates of RMB558 million in 2010. Our share of profit of associates has been adjusted to reflect the amortization of
the proportionate fair value of SPD Banks identifiable net assets as of the date of our investment in excess of our cost of investment.



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Profit before Taxation. As a result of the foregoing, profit before tax
increased by 4.7% from RMB159,071 million in 2010 to RMB166,582 million (US$26,467 million) in 2011.

Taxation.
Our income tax expense increased by 4.0% from RMB39,047 million in 2010 to RMB40,603 million (US$6,451 million) in 2011. This increase was mainly due to an increase in our profit before taxation. Our effective tax rate was 24.5% in 2010 and 24.4% in
2011, respectively.

Profit Attributable to Equity Shareholders. As a result of the foregoing and after taking
into account non-controlling interests, profit attributable to equity shareholders increased by 5.2% from RMB119,640 million in 2010 to RMB125,870 million (US$19,999 million) in 2011. Net profit margin (profit attributable to equity shareholders as
a percentage of operating revenue) decreased from 24.7% in 2010 to 23.8% in 2011.

Year Ended December 31, 2010
Compared to Year Ended December 31, 2009

Operating Revenue. Our operating revenue mainly consists of
voice services revenue and data services revenue. Voice services revenue mainly includes standard local usage fees for airtime and applicable domestic and international long distance charges receivable from customers for the use of our mobile
telecommunications networks and facilities, fees in respect of roaming out calls made by our customers outside their registered service areas and fees charged for voice value-added services. Data services revenue is mainly derived from SMS and MMS,
wireless data traffic and applications and information services. Other operating revenue mainly represents interconnection revenue. See note 1 to the table above.

Operating revenue increased by 7.3% from RMB452,103 million in 2009 to RMB485,231 million in 2010. This increase was primarily due to the continued expansion in our customer base, the continued growth in
voice usage volume and rapid growth of data businesses. Our total number of customers was approximately 584.0 million as of December 31, 2010, compared to approximately 522.3 million as of December 31, 2009.

Voice services revenue increased by 5.1% from RMB327,283 million in 2009 to RMB343,985 million in 2010. This increase principally
resulted from the continued expansion in our customer base and the further increase in our voice usage volume during 2010. Although our average revenue per minute reflected a downward trend from RMB0.155 in 2009 to RMB0.140 in 2010, this decline was
partially offset by higher growth in our voice usage volume in 2010. With the intensified market competition following the restructuring of the telecommunications industry and with further declines in tariffs, our average revenue per minute may
continue to decline in future periods. However, we expect our voice usage volume to grow as the tariff declines, which we expect to help partially offset the impact of these developments on our operating revenue. As a percentage of operating
revenue, voice services revenue decreased from 72.4% in 2009 to 70.9% in 2010.

Set forth below is a table summarizing certain
results of our data business for the periods indicated.



|                                                           |  |                               |         |   |      |  |         |  
|---------------------------------------------------------- |  | ----------------------------- | ------- | - | ---- |  | ------- | -
|                                                           |  | Year Ended December 31,       |        
|                                                           |  | 2009                          |         |   | 2010 | 
|                                                           |  | (Revenue, in millions of RMB) |        
|SMS and MMS                                                |  |                               | 47,671  |   |      |  | 46,889  |  
|Wireless data traffic                                      |  |                               | 20,456  |   |      |  | 30,644  |  
|Applications and information services                      |  |                               | 37,978  |   |      |  | 43,235  |  
|                                                           |  |                               |         |   |      |  |         |  
|Data services revenue                                      |  |                               | 106,105 |   |      |  | 120,768 |  
|                                                           |  |                               |         |   |      |  |         |  
|Data services revenue as a percentage of operating revenue |  |                               | 23.5    | % |      |  | 24.9    | %

Data services revenue increased by 13.8% from RMB106,105 million in 2009 to RMB120,768 million in 2010.
This increase was mainly due to our continued efforts in product innovation and business development. Our data business includes SMS and MMS, wireless data traffic and applications and information services. Revenue generated from SMS and MMS was
RMB46,889 million in 2010, compared to RMB47,671 million in 2009, representing a decrease of 1.6%, primarily due to both the development of Internet instant messaging applications and declines in voice usage tariffs, which caused our customers to
choose Internet instant messaging applications or voice services over SMS and MMS, and the high penetration rate of our SMS and MMS after years of continued growth. In addition, revenue generated from wireless data traffic grew substantially by
49.8% to RMB30,644 million in 2010, as compared to RMB20,456 million in 2009. The rapid growth of our applications and information service, including Wireless Music, Fetion, Mobile Mailbox and 12580 Integrated Information Service
Line, was an additional growth driver for our data business. As a percentage of operating revenue, data services revenue increased from 23.5% in 2009 to 24.9% in 2010. We expect our data business, in particular wireless data traffic and
applications and information services, to continue to grow.



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Other operating revenue increased by 9.4% from RMB18,715 million in 2009 to RMB20,478
million in 2010. As a percentage of operating revenue, other operating revenue increased slightly from 4.1% in 2009 to 4.2% in 2010.

Operating Expenses. Operating expenses include leased line expenses, interconnection expenses, depreciation expenses relating to our mobile telecommunications network and other property,
plant and equipment, personnel expenses, selling expenses and other operating expenses. Other operating expenses primarily consist of operating lease charges, network maintenance expenses, impairment loss for doubtful accounts, write-off of
property, plant and equipment that have been demolished and disconnected from our existing network, labor service expenses, administration and other miscellaneous expenses.

Operating expenses increased by 9.6% from RMB305,095 million in 2009 to RMB334,477 million in 2010. This increase, notably in selling expenses and other operating expenses (particularly maintenance
expenses) was generally in line with the continued growth in our customer base and usage volume and our ongoing efforts to deliver better quality services and to cope with intensified competition. Our operating expenses increased at a lower rate in
2010 as compared to 2009, reflecting our increased economies of scale and our continued efforts to control our operating expenses in 2010.

Leased line expenses increased by 29.6% from RMB3,006 million in 2009 to RMB3,897 million in 2010. This increase reflected an increase in payment of RMB356 million to CMCC in connection with the lease of
its TD-SCDMA network capacity and the increase in leasing fees of Internet ports paid to other telecommunications operators as a result of the rapid development of our Internet related businesses. As a percentage of operating expenses, leased line
expenses increased slightly from 1.0% in 2009 to 1.2% in 2010.

Interconnection expenses increased slightly by 0.2% from
RMB21,847 million in 2009 to RMB21,886 million in 2010. Our continuing marketing strategy to reorganize and re-route traffic volume has led to a lower proportion of inter-network traffic volume. Interconnection expenses as a percentage of operating
expenses decreased from 7.2% in 2009 to 6.5% in 2010.

Depreciation expense increased by 7.5% from RMB80,179 million in 2009
to RMB86,230 million in 2010. This increase was mainly due to our continuous capital expenditures for the construction of our mobile telecommunications networks, support systems, transmission and structural facilities and the development of new
technologies and new businesses to better support the growth of customer base and voice usage and to meet an unprecedented increase in demand in mobile Internet access. As a percentage of operating expenses, depreciation expense decreased from 26.3%
in 2009 to 25.8% in 2010.

Personnel expenses increased by 14.2% from RMB21,480 million in 2009 to RMB24,524 million in 2010.
This increase was primarily due to an increase in headcount from 145,954 at the end of 2009 to 164,336 at the end of 2010. As a percentage of operating expenses, personnel expenses increased from 7.0% in 2009 to 7.3% in 2010.

Selling expenses increased by 13.2% from RMB80,043 million in 2009 to RMB90,590 million in 2010. This increase was primarily due to our
efforts in responding to market competition, developing new customers and retaining our existing customers, in particular customers with high usage of mobile telecommunications services. Our selling expenses may further increase if industry
competition continues to intensify and adversely affects our customer growth and retention, and leads to higher customer acquisition and retention costs. As a percentage of operating expenses, selling expenses increased from 26.2% in 2009 to 27.1%
in 2010.

Other operating expenses increased by 8.9% from RMB98,540 million in 2009 to RMB107,350 million in 2010. The
increase was primarily due to an increase in maintenance expenses from RMB28,109 million in 2009 to RMB31,390 million in 2010, and an increase in operating lease charges from RMB8,751 million in 2009 to RMB9,839 million in 2010, incurred principally
as a result of our continued investments in our network equipment and facilities, and an increase in labor service expenses for services provided by third parties from RMB13,577 million in 2009 to RMB15,649 million in 2010. In addition, other
operating expenses were partially offset by a decrease in impairment loss for doubtful accounts from RMB4,503 million in 2009 to RMB4,019 million in 2010 and a decrease in write-off of property, plant and equipment from RMB4,493 million in 2009 to
RMB2,763 million in 2010. As a percentage of operating expenses, other operating expenses decreased from 32.3% in 2009 to 32.1% in 2010. For more information on our other operating expenses, see note 5 to our consolidated financial statements
included elsewhere in this annual report on Form 20-F.



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Profit from Operations. As a result of the foregoing, profit from operations
increased by 2.5% from RMB147,008 million in 2009 to RMB150,754 million in 2010, and operating margin (profit from operations as a percentage of operating revenue) decreased from 32.5% in 2009 to 31.1% in 2010.

Other Net Income. Other net income represents primarily net sales from SIM cards and terminals and revenue from
construction contracts. These items are included in other net income due to their insignificance. Other net income increased by 31.2% from RMB1,780 million in 2009 to RMB2,336 million in 2010. This increase was principally due to an increase in
revenue from construction contracts, which was partially offset by the decrease in net sales from sales of SIM cards and terminals.

Non-Operating Net Income. Non-operating net income increased by 90.8% from RMB359 million in 2009 to RMB685 million in 2010, mainly due to a write back of accounts payable. Non-operating net
income is mainly comprised of penalty income and other miscellaneous non-operating income.

Interest Income.
Interest income decreased by 4.7% from RMB5,940 million in 2009 to RMB5,658 million in 2010. The lower interest income in 2010 was primarily due to the lower interest rate in 2010 and the decrease in our bank deposits as a result of the cash
consideration paid in connection with our acquisition of an equity interest in SPD Bank.

Finance Costs. Finance
costs decreased by 27.4% from RMB1,243 million in 2009 to RMB902 million in 2010. This decrease was primarily due to the lower interest rate in 2010. In 2010, the average interest rate that we paid on our outstanding borrowings was approximately
2.68%, compared to 3.70% in 2009.

Share of Profit of Associates. We had a share of profit of associates of
RMB558 million in 2010, which was attributable to our shareholding of 20% of the enlarged issued share capital of SPD Bank, compared to nil in 2009. Our share of profit of associates has been adjusted to reflect the amortization of the proportionate
fair value of SPD Banks identifiable net assets as of the date of our investment in excess of our cost of investment.

Profit before Taxation. As a result of the foregoing, profit before tax increased by 3.4% from RMB153,836 million in 2009
to RMB159,071 million in 2010.

Taxation. Our income tax expense increased by 1.7% from RMB38,413 million in
2009 to RMB39,047 million in 2010. This increase was mainly due to an increase in our profit before taxation. Our effective tax rate was 25.0% in 2009 and 24.5% in 2010, respectively.

Profit Attributable to Equity Shareholders. As a result of the foregoing and after taking into account non-controlling
interests, profit attributable to equity shareholders increased by 3.9% from RMB115,166 million in 2009 to RMB119,640 million in 2010. Net profit margin (profit attributable to equity shareholders as a percentage of operating revenue) decreased from
25.5% in 2009 to 24.7% in 2010.

Liquidity and Capital Resources

Liquidity

Our principal source of liquidity is cash generated from our operations. As of December 31, 2011, we had a working capital (current assets minus current liabilities) of RMB109,441 million
(US$17,388 million), compared to a working capital of RMB66,202 million as of December 31, 2010 and a working capital of RMB77,500 million as of December 31, 2009. The increase in our working capital as of December 31, 2011
from December 31, 2010 was primarily due to an increase in our deposits with banks and other receivables. As of December 31, 2009, 2010 and 2011, accounts receivable totaled RMB6,405 million, RMB7,632 million and
RMB9,165 million (US$1,456 million), respectively. The current portion of our finance lease obligations as of December 31, 2009, 2010 and 2011 were RMB68 million, RMB68 million and RMB68 million (US$11 million), respectively.



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



|                                                       |  |                         |          |   |      |  |          |      |  |  |          |  
|------------------------------------------------------ |  | ----------------------- | -------- | - | ---- |  | -------- | ---- |  |  | -------- | -
|                                                       |  | Year ended December 31, |         
|                                                       |  | 2009                    |          |   | 2010 |  |          | 2011 | 
|                                                       |  | (in millions of RMB)    |         
|Net cash from operating activities                     |  |                         | 207,123  |   |      |  | 231,379  |      |  |  | 226,756  |  
|Net cash used in investing activities                  |  |                         | (165,927 | ) |      |  | (171,572 | )    |  |  | (169,356 | )
|Net cash used in financing activities                  |  |                         | (49,774  | ) |      |  | (51,051  | )    |  |  | (58,420  | )
|                                                       |  |                         |          |   |      |  |          |      |  |  |          |  
|Net (decrease) / increase in cash and cash equivalents |  |                         | (8,578   | ) |      |  | 8,756    |      |  |  | (1,020   | )
|                                                       |  |                         |          |   |      |  |          |      |  |  |          |  

Net cash from operating activities decreased by 2.0% from RMB231,379 million in 2010 to RMB226,756
million (US$36,028 million) in 2011, primarily reflecting a lower overall increase in accrued expenses and other payables and a smaller increase in accounts payable, which was partially offset by an increase in our profit as a result of the
continued expansion of our customers base and growth in our voice and data business. Net cash from operating activities increased 11.7% from RMB207,123 million in 2009 to RMB231,379 million in 2010, primarily reflecting the increase in our profit
resulting from the continued expansion of our customer base and the continued growth in voice usage and our data business.

Net cash used in investing activities decreased by 1.3% from RMB171,572 million in 2010 to RMB169,356 million (US$26,908 million) in
2011. This decrease was primarily due to the fact that we did not have a large acquisition in 2011 while we acquired 20% of the enlarged share capital of SPD Bank in 2010. This decrease was partially offset by an increase in our bank deposits of
RMB41,884 million and a net increase in trust loans of RMB11,300 million that we granted to large state-owned enterprises through commercial banks. Net cash used in investing activities increased 3.4% from RMB165,927 million in 2009 to RMB171,572
million in 2010. This increase was primarily due to our acquisition of 20% of the enlarged share capital of SPD Bank, which was partially offset by a decrease in our bank deposit of RMB35,590 million.

Net cash used in financing activities increased by 14.4% from RMB51,051 million in 2010 to RMB58,420 million (US$9,282 million) in 2011.
This increase was largely due to the redemption of guaranteed bonds due in 2011 with the aggregate principal amount of RMB5,000 million. Net cash used in financing activities increased 2.6% from RMB49,774 million in 2009 to RMB51,051 million in
2010. This increase was primarily due to an increase in dividend payment from RMB48,614 million in 2009 to RMB50,201 million in 2010.

Capital Expenditures

Capital expenditures incurred in 2009, 2010
and 2011 were RMB129,367 million, RMB124,347 million and RMB128,548 million (US$20,424 million), respectively. We incurred capital expenditures principally for the construction of our mobile telecommunications networks, transmission facilities,
support system and buildings and infrastructure and development of business. The level of our capital expenditures increased in 2011 principally as a result of our efforts to meet increased demand on our network services arising from the continued
expansion of our customer base and fast growth of our data business. The level of our capital expenditures decreased in 2010 primarily due to the lower investment cost per traffic unit as a result of our efforts to implement management with a higher
level of centralization, standardization and informatization, as well as reflecting the needs of our business growth.

We
estimate that we will incur capital expenditures of approximately RMB131.9 billion (US$21.0 billion) in 2012, RMB130 billion (US$20.7 billion) in 2013 and RMB125 billion (US$19.9 billion) in 2014. We expect that approximately 41% of our capital
expenditures in 2012 will be used in the construction of mobile telecommunications networks, approximately 26% will be used in the construction of transmission facilities, approximately 16% will be used in construction of buildings and
infrastructure, approximately 8% will be used in building support systems, and approximately 6% will be used in business development.

We have generally funded our capital requirements primarily with cash generated from operations. We believe our available cash and cash generated from future operations will be sufficient to fund the
capital expenditures and working capital necessary for the planned network expansion and continued growth of our mobile telecommunications operations through the end of 2012.

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



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Contractual Obligations and Commitments

Indebtedness

As of December 31, 2010 and 2011, we did not have any long-term or short-term bank and other loans, excluding the current portion of our finance lease obligations of RMB68 million and RMB68 million
(US$11 million), respectively.

On October 28, 2002 our wholly-owned subsidiary, Guangdong Mobile, issued RMB5,000
million guaranteed bonds due 2017. These bonds commenced trading on the Shanghai Stock Exchange on January 22, 2003. The guaranteed bonds bear fixed interest of 4.5% , payable annually. We have issued a joint and irrevocable guarantee for the
performance of these bonds, and CMCC has issued a further guarantee in relation to the performance by us of our guarantee obligation. These bonds received a consolidated credit rating of AAA by China Chengxin International Credit Rating
Company Limited and a consolidated credit rating of AAA by Dagong Global Credit Rating Co. Ltd, a PRC credit rating agency. 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.

The deferred consideration of US$2,800 million for our acquisition of the eight regional mobile telecommunications companies in 2002 and
the deferred consideration of US$1,650 million for our acquisition of the ten regional mobile telecommunications companies and other telecommunications assets in 2004 are subordinated to other senior debt owed by us from time to time. In addition,
these deferred considerations are payable by the 15th anniversary of the date of the completion of the respective acquisitions, and we may make an early payment of all or part of these deferred considerations at any time without penalty. We are
required to pay interest semi-annually on the actual amount of these deferred considerations unpaid from the date of completion of the respective acquisitions. Interest is calculated at the two-year U.S. dollar London Inter-Bank Offered Rate, or
LIBOR, swap rate at 11:00 a.m. (New York City time) on the second business day next preceding the date of the respective acquisition agreements for the first two years after completion of the respective acquisitions. Thereafter, the interest rate
will be adjusted every two years to equal the two-year U.S. dollar LIBOR swap rate prevailing at 11:00 a.m. (New York City time) on the relevant interest determination dates. The payment of the deferred considerations and the interest payments can
be made in Hong Kong dollars (HK$7.7993=US$1.00 and HK7.7995=US$1.00 for our acquisitions of the regional mobile telecommunications companies in 2002 and 2004, respectively), RMB (RMB8.2770=US$1.00 and RMB8.2768=US$1.00 for our acquisitions of the
regional mobile telecommunications companies in 2002 and 2004, respectively) or U.S. dollars (or other agreed currencies), with the relevant exchange rates set forth in the respective acquisition agreements. Any payment made in currencies other than
U.S. dollars will be accounted for based on the exchange rates between U.S. 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 respective acquisition
agreements.

We currently have a corporate credit rating of AA-/Outlook Stable from Standard & Poors and
Aa3/Outlook Positive from Moodys Investors Service, each of which is consistent with Chinas sovereign credit rating. Any downgrade in our credit rating will not trigger any events of default on our outstanding bonds or loans or our
existing credit facilities.

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

Other Contractual Obligations and Commitments

As of December 31, 2011, 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 described under  Indebtedness above), which includes finance leases;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | operating leases; and
| | - |  | ---------------------



| |  |  | capital commitments.
| | - |  | --------------------



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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 38 to our consolidated financial statements included
elsewhere in this annual report on Form 20-F.

The following table sets forth certain information regarding our contractual
obligations to make future payments (including relevant estimated interest payment) as of December 31, 2011:



|                                    |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |     |  |  |  |        | 
|----------------------------------- |  | ---------------------- | ------- |  | --------------- |  | ------- | ---------- |  |  | ---------- |  |  | ---------------- | --- |  |  |  | ------ | 
|                                    |  | Payments Due by Period |        
|Contractual Obligations             |  | Total                  |         |  | Less than1 year |  |         | 1  3years |  |  | 3  5years |  |  | More than5 years |    
|                                    |  | (in millions of RMB)   |        
|Accounts Payable                    |  |                        | 116,266 |  |                 |  | 116,266 |            |  |  |           |  |  |                  |    |  |  |  |       | 
|Bills Payable                       |  |                        | 1,616   |  |                 |  | 1,616   |            |  |  |           |  |  |                  |    |  |  |  |       | 
|Accrued expenses and other payables |  |                        | 92,362  |  |                 |  | 92,362  |            |  |  |           |  |  |                  |    |  |  |  |       | 
|Deferred Consideration Payable      |  |                        | 24,563  |  |                 |  | 204     |            |  |  | 257        |  |  |                  | 257 |  |  |  | 23,845 | 
|Bonds                               |  |                        | 6,310   |  |                 |  | 225     |            |  |  | 450        |  |  |                  | 450 |  |  |  | 5,185  | 
|Finance Lease Obligations           |  |                        | 71      |  |                 |  | 71      |            |  |  |           |  |  |                  |    |  |  |  |       | 
|                                    |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |     |  |  |  |        | 
|Total Contractual Obligations       |  |                        | 241,188 |  |                 |  | 210,744 |            |  |  | 707        |  |  |                  | 707 |  |  |  | 29,030 | 
|                                    |  |                        |         |  |                 |  |         |            |  |  |            |  |  |                  |     |  |  |  |        | 

The following table sets forth certain information regarding our other commercial commitments as of
December 31, 2011:



|                             |  |                                           |         |  |                 |  |         |            |  |  |            |  |  |                  |       |  |  |  |       | 
|---------------------------- |  | ----------------------------------------- | ------- |  | --------------- |  | ------- | ---------- |  |  | ---------- |  |  | ---------------- | ----- |  |  |  | ----- | 
|                             |  | Amount of CommitmentExpiration Per Period |        
|Other Commercial Commitments |  | TotalAmountCommitted                      |         |  | Less than1 year |  |         | 1  3years |  |  | 3  5years |  |  | More than5 years |      
|                             |  | (in millions of RMB)                      |        
|Operating Lease Commitments  |  |                                           | 29,283  |  |                 |  | 8,646   |            |  |  | 10,090     |  |  |                  | 5,831 |  |  |  | 4,716 | 
|Capital Commitments          |  |                                           | 141,723 |  |                 |  | 141,723 |            |  |  |           |  |  |                  |      |  |  |  |      | 
|                             |  |                                           |         |  |                 |  |         |            |  |  |            |  |  |                  |       |  |  |  |       | 
|Total Commercial Commitments |  |                                           | 171,006 |  |                 |  | 150,369 |            |  |  | 10,090     |  |  |                  | 5,831 |  |  |  | 4,716 | 
|                             |  |                                           |         |  |                 |  |         |            |  |  |            |  |  |                  |       |  |  |  |       | 

Off-Balance Sheet Arrangements

As of December 31, 2011, 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. All of our current operating subsidiaries are incorporated in Mainland China, except for Hong Kong Mobile. Under the current foreign exchange system in Mainland China, our subsidiaries in
Mainland China may not be able to hedge effectively against currency risk, including any possible future Renminbi devaluation. See Item 10. Additional Information  Exchange Controls.

Each of our operating subsidiaries in Mainland China 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.



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|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 April 25, 2012.



|                     |  |     |    |  |          |                                                               
|-------------------- |  | --- | -- |  | -------- | --------------------------------------------------------------
|Name                 |  | Age |    |  | Position
|Mr. XI Guohua        |  |     | 60 |  |          | Executive Director and Chairman                               
|Mr. LI Yue           |  |     | 53 |  |          | Executive Director and Chief Executive Officer                
|Mr. XUE Taohai       |  |     | 56 |  |          | Executive Director, Vice President and Chief Financial Officer
|Mdm. HUANG Wenlin    |  |     | 57 |  |          | Executive Director and Vice President                         
|Mr. SHA Yuejia       |  |     | 54 |  |          | Executive Director and Vice President                         
|Mr. LIU Aili         |  |     | 48 |  |          | Executive Director and Vice President                         
|Mr. XU Long          |  |     | 55 |  |          | Executive Director                                            
|Dr. LO Ka Shui       |  |     | 65 |  |          | Independent Non-Executive Director                            
|Mr. Frank K.S. WONG  |  |     | 64 |  |          | Independent Non-Executive Director                            
|Dr. Moses M.C. CHENG |  |     | 62 |  |          | Independent Non-Executive Director                            



|* | Mr. WANG Jianzhou resigned as an Executive Director and Chairman of our company on March 22, 2012. Mr. LU Xiangdong resigned as an Executive Director and
Vice President of our company on March 15, 2012. Mdm. XIN Fanfei resigned as an Executive Director and Vice President of our company on March 22, 2012.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Mr. XI Guohua has served as our Executive Director and Chairman and is in charge of our overall management since March 2012. Mr. Xi served as our Vice Chairman from July 2011 to March 2012.
Mr. Xi is also the Vice Chairman of CMCC and a director and Vice Chairman of CMC. Mr. Xi previously held positions at the Post and Telecommunications Administration of Shanghai as Deputy Director General of the Telegraph Bureau, Deputy
Director of the Telecommunications Division, Deputy Director General and Director General of the Long-Distance Telecommunications Bureau, Deputy Chief Engineer and Deputy Director General, respectively. Mr. Xi also served as Deputy Director
General of the Directorate General of Telecommunications of the Ministry of Posts and Telecommunications, Chairman and Executive Vice President of Shanghai Bell Company Limited, the Vice Minister of the MII, the President of China Network
Communications Group Corporation and the Vice Minister of the MIIT. Mr. Xi graduated in 1977 from the Department of Electrical Engineering of Hefei University of Technology, and holds a Master of Management degree in Economics and Management
from Shanghai Jiaotong University and a Doctor of Management degree from the School of Economics and Management of Tongji University. Mr. Xi is a professor-level senior engineer and has extensive experience in telecommunications management,
operations and technology.

Mr. LI Yue has served as our Executive Director since March 2003 and our Chief Executive
Officer since August 2010. He is in charge of our operation and management. Mr. Li is also the President and director of CMCC and CMC. Mr. Li previously served as Deputy Director General and Chief Engineer of Tianjin Long-Distance
Telecommunications Bureau, Deputy Director General of Tianjin Posts and Telecommunications Administration, President of Tianjin Mobile Communications Company, Deputy Head of the Preparatory Team of CMCC, Vice President of CMCC, Chairman of Aspire
Holdings Limited, a non-executive director of Phoenix Satellite Television Holdings Ltd and Chairman of Union Mobile Pay Limited. Mr. Li graduated from the Correspondence College of Beijing University of Posts and Telecommunications with a
Bachelors Degree in telephone exchange, holds a Masters Degree in business administration from Tianjin University and a doctoral degree in business administration from Hong Kong Polytechnic University. He is a professor-level senior
engineer and has won multiple national, provincial and ministerial level Science and Technology Advancement Awards. Mr. Li has many years of experience in the telecommunications industry, including experience in telecommunications network
operations and maintenance, planning and construction, operational management and development strategies.

Mr. XUE Taohai
has served as our Executive Director, Vice President and Chief Financial Officer since July 2002. Mr. Xue is principally in charge of our corporate affairs, finance and internal audit. Mr. Xue is also a Vice President of CMCC and a
director of CMC. 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
MII and Deputy Director General of the former Directorate General of Telecommunications. He graduated from Henan University and received an EMBA degree from Peking University. He is a senior accountant with over 32 years of experience in the
telecommunications industry and financial management.



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Mdm. HUANG Wenlin has served as our Executive Director and Vice President since September
2007. Mdm. Huang is principally in charge of human resources and inspection matters. Mdm. Huang is also a director of CMCC and CMC. Mdm. Huang previously served as a Vice President of CMCC, the Director of Domestic Communications Division and
Director of Communications Organization Division of the Directorate General of Telecommunications of the former Ministry of Posts and Telecommunications, Vice President of China Telecommunications Corporation and Executive Director and Executive
Vice President of China Telecom Corporation Limited. Mdm. Huang graduated in 1984 from Beijing University of Posts and Telecommunications with a major in management engineering and received an EMBA degree from Peking University. Mdm. Huang is a
senior economist with 36 years of operational and managerial experience in the telecommunications industry.

Mr. SHA
Yuejia has served as our Executive Director and Vice President since March 2006. Mr. Sha is principally in charge of marketing, data business and corporate customers management. He is also a Vice President of CMCC, a director of CMC, Chairman
of Union Mobile Pay Limited and a non-executive director of PhoenixTV and SPD Bank. He previously served as Director of the Engineering Construction Department IV Division of Beijing Telecommunications Administration, President of Beijing
Telecommunications Planning Design Institute, Deputy Director General of Beijing Telecommunications Administration, Vice President of Beijing Mobile Communications Company, and Director and Vice President, Chairman and President of Beijing Mobile.
Mr. Sha graduated from Beijing University of Posts and Telecommunications, and received a Masters Degree from the Academy of Posts and Telecommunications of the former Ministry of Posts and Telecommunications and a doctoral degree in
business administration from Hong Kong Polytechnic University. He is a professor-level senior engineer with over 29 years of experience in the telecommunications industry.

Mr. LIU Aili has served as our Executive Director and Vice President since March 2006. Mr. Liu is principally in charge of network operation, business support, information management,
information security and planning and construction. He is also a Vice President of CMCC, a director of CMC and a non-executive director of China Communications Services Corporation Limited. He previously served as Deputy Director General of Shandong
Mobile Telecommunications Administration, Director General of Shandong Mobile Telecommunications Administration and General Manager of Shandong Mobile Communications Enterprises, Vice President of Shandong Mobile Communications Company,
Director-General of Network Department of CMCC, and Chairman and President of Shandong Mobile and Zhejiang Mobile and Chairman of CMPak Limited. Mr. Liu graduated from Heilongjiang Posts and Telecommunications School with an associate degree
and completed a post-graduate program in economics at Shandong University. Mr. Liu also received a Master of Management degree from Norwegian School of Management BI and a doctoral degree in business administration from Hong Kong Polytechnic
University. He is a professor-level senior engineer with over 29 years of experience in the telecommunications industry.

Mr. XU Long has served as our Executive Director since August 1999. He is also the Chairman and President of Guangdong Mobile,
responsible for our business operations in Guangdong Province. He previously served as Deputy Director of Shaoxing Posts and Telecommunications Bureau, President of Zhejiang Nantian Posts and Telecommunications Group Company, Director of the General
Office and Deputy Director General of the Zhejiang Posts and Telecommunications Administration, and Chairman and President of Zhejiang Mobile. He graduated from Zhejiang Radio and Television University in 1985, and holds a doctoral degree in
business administration from Hong Kong Polytechnic University. Mr. Xu is a senior economist with 34 years of experience in the telecommunications industry.

Dr. LO Ka Shui has served as our independent Non-Executive Director since April 2001. Dr. Lo is the Chairman and Managing Director of Great Eagle Holdings Limited, and is the non-executive
director and chairman of Eagle Asset Management (CP) Limited (manager of the publicly listed Champion Real Estate Investment Trust). He is also a non-executive director of The Hongkong and Shanghai Banking Corporation Limited and an independent
non-executive director of Shanghai Industrial Holdings Limited, Phoenix Satellite Television Holdings Limited, Winsor Properties Holdings Limited and City-e-Solutions Limited. He is also a Vice President of the Real Estate Developers Association of
Hong Kong, a Trustee of the Hong Kong Centre for Economic Research, the Chairman of The Chamber of Hong Kong Listed Companies and a member of the Exchange Fund Advisory Committee of the Hong Kong Monetary Authority. Dr. Lo previously served as
an independent non-executive director of Melco International Development Limited. Dr. Lo graduated from McGill University with a Bachelor of Science Degree and from Cornell University with a Doctor of Medicine (M.D.) Degree. He was certified in
internal medicine and cardiology. He has more than 30 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 currently serves as an independent non-executive director of Industrial and Commercial
Bank of China Limited, China and Mapletree Investments Pte Ltd, Singapore, and a non-executive director of PSA International Pte Ltd, Singapore. Mr. Wong previously served as Vice Chairman of DBS Bank, a member of the boards of DBS Bank and DBS
Group Holdings and Chairman of DBS Bank (Hong Kong) and DBS Bank (China). He held a series of progressively senior positions with regional responsibility at Citibank, JP Morgan and NatWest from 1967 to 1999, and served as non-executive director of
National Healthcare Group Pte Ltd. Mr. Wong has also served in various positions with Hong Kongs government bodies including the Chairman of the Hong Kong Futures Exchange between 1993 and 1998. Mr. Wong has many years of finance and
commercial management experience.



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Dr. Moses M.C. CHENG has served as our independent Non-Executive Director since March
2003. Dr. Cheng is a practising solicitor and the senior partner of Messrs. P.C. Woo & Co. Dr. Cheng was a member of the Legislative Council of Hong Kong. He is the founder chairman of the Hong Kong Institute of Directors of which
he currently is the Honorary President and Chairman Emeritus. Dr. Cheng is also the Chairman of the Advisory Committee on Post-service Employment of Civil Servants and currently holds directorships in City Telecom (H.K.) Limited, China COSCO
Holdings Company Limited, Liu Chong Hing Investment Limited, China Resources Enterprise, Limited, Towngas China Company Limited, Hong Kong Exchanges and Clearing Limited, Kader Holdings Company Limited, K. Wah International Holdings Limited,
Guangdong Investment Limited and Tian An China Investments Company Limited, all of which are public listed companies in Hong Kong. He is also an independent non-executive director of ARA Asset Management Limited, a company with shares listed on the
Singapore Exchange Limited. His other directorships in public listed companies in the last 3 years include Beijing Capital International Airport Company Limited, Galaxy Entertainment Group Limited (formerly known as K. Wah Construction Materials
Limited), Shui On Construction and Materials Limited and ARA Asset Management (Singapore) Limited, a company with shares listed on the Singapore Exchange Limited.

Compensation

The aggregate amount of compensation that we paid to our
directors and executive officers in 2011 for services performed as directors, officers or employees was approximately HK$20 million (US$2.5 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 Current Scheme, was adopted. The Current
Scheme is valid and effective for a term of 10 years commencing on June 24, 2002. The Current Scheme will cease to be effective from June 24, 2012 and no further options will be granted under the Current Scheme thereafter. The Current
Scheme will remain in full force and effect to the extent necessary to give effect to the exercise of any options granted prior to June 24, 2012 and which at that time or thereafter become capable of exercise under the Current Scheme or
otherwise to the extent as may be required in accordance with the Current Scheme.

The purpose of the Current Scheme is to
provide us with a flexible and effective means of remunerating and providing benefits to the employees, the executive directors and the non-executive directors of our company, any of our holding companies and their respective subsidiaries and any
entity in which we or any of our subsidiaries holds any equity interest, thereby providing incentives to these participants. Under the Current Scheme, our board of directors may, at its discretion, invite the plan participants to take up options to
subscribe for the ordinary shares of our 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 our company as of the date of adoption of the Current Scheme. Options lapsed or cancelled in accordance with the terms of the
Old Scheme or the Current 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 were granted under the Old Scheme thereafter. Under the Old Scheme, all options not exercised on or before October 7, 2007 have lapsed. Accordingly, as of December 31, 2011,
there were no outstanding options granted under the Old Scheme. As of 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 Current Scheme is
1,470,125,273. No share options were granted under the Current Scheme during the year ended December 31, 2011.

The
consideration payable for the grant of option under the Current Scheme is HK$1.00.



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The exercise price of the options granted under the Current Scheme is determined by our
board of directors at its 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.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under the Current Scheme, the term of the option is determined by the board of directors at its
discretion, provided that all options shall be exercised within 10 years after the date on which the option is granted.

As of
December 31, 2011, the directors and employees of our company had options to subscribe for the ordinary shares of our company granted under the Current Scheme. In 2011, 6,642,325 of these options had been exercised. See  Share
Ownership below for details on options granted to our directors.

Board Practices

To enhance our corporate governance, we have three principal board committees, the audit committee, the remuneration committee and the
nomination committee. The audit committee, the remuneration committee and the nomination committee are all comprised solely 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 Dr. Moses M.C. Cheng. The audit committees major responsibilities include:



| |  |  | to review the financial reports, the related report of independent registered public accounting firm and managements responses to the reports;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to discuss the audit procedures with the independent registered public accounting firm as well as any issues arising out of such procedures;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | to review the appointment of the independent registered public accounting firm, the audit and non-audit fees and any matters relating to the
termination or resignation of the independent registered public accounting firm; 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.

Remuneration Committee

The members of our remuneration committee are Dr. Lo Ka Shui, as chairman of the committee, Mr. Frank K.S. Wong and Dr. 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 at least once a year.

Nomination Committee

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



| |  |  | to review, advise and make recommendations to the board on the matters in relation to the appointment and re-appointment of board members; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | to ensure the proper and transparent procedures for the appointment and re-appointment of directors.
| | - |  | ----------------------------------------------------------------------------------------------------

Meetings of the nomination committee are held at least once a year.

Employees

See Item 4. Information on the Company  Business
Overview  Employees.

Share Ownership

As of December 31, 2011, our directors who own shares in our company are listed as follows:



|                |  |                       |         |  |                              |  |        |  
|--------------- |  | --------------------- | ------- |  | ---------------------------- |  | ------ | -
|Director        |  | Number ofshares 
held |         |  | Percentage ofordinary shares | 
|Lo Ka Shui      |  |                       | 400,000 |  |                              |  | 0.0020 | %
|Frank K.S. Wong |  |                       | 400,000 |  |                              |  | 0.0020 | %

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, 2011, options
exercisable for an aggregate of 6,111,675 shares had been granted to the following directors and members of our senior management under our share option scheme and were outstanding. As of the same date, none of these options had been exercised.

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



|           |  |                                     |       | 
|---------- |  | ----------------------------------- | ----- | 
|Director   |  | Number of sharescovered 
by options |      
|Sha Yuejia |  |                                     | 7,000 | 

The following options are exercisable at a price of HK$22.75 per share through October 27, 2014:



|                                          |  |                                     |         | 
|----------------------------------------- |  | ----------------------------------- | ------- | 
|Director                                  |  | Number of sharescovered 
by options |        
|Li Yue                                    |  |                                     | 154,000 | 
|Lu Xiangdong (resigned on March 15, 2012) |  |                                     | 154,000 | 
|Xue Taohai                                |  |                                     | 154,000 | 
|Sha Yuejia                                |  |                                     | 82,575  | 
|Liu Aili                                  |  |                                     | 82,600  | 
|Xu Long                                   |  |                                     | 117,000 | 

The following options are exercisable at a price of HK$26.75 per share through December 20, 2014:



|                                           |  |                                    |         | 
|------------------------------------------ |  | ---------------------------------- | ------- | 
|Director                                   |  | Number of sharescovered by options |        
|Wang Jianzhou (resigned on March 22, 2012) |  |                                    | 475,000 | 

The following options are exercisable at a price of HK$34.87 per share through November 7, 2015:



|                                           |  |                                    |         | 
|------------------------------------------ |  | ---------------------------------- | ------- | 
|Director                                   |  | Number of sharescovered by options |        
|Wang Jianzhou (resigned on March 22, 2012) |  |                                    | 970,000 | 
|Li Yue                                     |  |                                    | 780,000 | 
|Lu Xiangdong (resigned on March 15, 2012)  |  |                                    | 780,000 | 
|Xue Taohai                                 |  |                                    | 780,000 | 
|Sha Yuejia                                 |  |                                    | 780,000 | 
|Liu Aili                                   |  |                                    | 141,500 | 
|Xu Long                                    |  |                                    | 254,000 | 
|Moses M.C. Cheng                           |  |                                    | 400,000 | 



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|Item 7. | Major Shareholders and Related Party Transactions.
|------- | --------------------------------------------------

Major Shareholders

As of March 31, 2012, approximately 74.14% of our
outstanding shares were held by China Mobile Hong Kong (BVI) Limited, a wholly-owned subsidiary of China Mobile (Hong Kong) Group Limited. CMCC, 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 March 31, 2012, our majority shareholders held, directly or indirectly, between approximately 74.14% and 76.50% 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  The History and Development of 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 March 31, 2012, CMCC indirectly owned an aggregate of approximately 74.14% 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 PRC regulatory authorities. Those transactions
where the charges are not set by PRC regulatory authorities are based on commercial negotiation between the parties, in each case on an arms length basis.

International Roaming Arrangements

Following the completion of our
acquisition of the telecommunications assets from our parent company in July 2004, we no longer have inter-provincial roaming and interconnection arrangement with CMCC (except for the interconnection arrangement with China Tietong described under
 Interconnection Settlement Arrangements below) and the handling charge with respect to roaming and international long distance calling charges are no longer shared between CMCC and us. In addition, pursuant to an agreement we
entered into with CMCC on July 1, 2004 (the International Roaming Settlement Agreement), CMCC maintains the existing settlement arrangements with respect to international interconnection and roaming with the relevant
telecommunications services providers in foreign countries and regions, and collects the relevant usage fees and other fees from us and pays the same to the relevant mobile telecommunications services providers in foreign countries and regions. In
2011, CMCC is in the process of transferring its settlement arrangements with certain telecommunications services providers in foreign countries and regions to China Mobile International, our wholly-owned subsidiary. As a result, our arrangement
with CMCC with respect to international interconnection and roaming with those telecommunications services providers will be gradually phased out.

Licensing of Trademark

CMCC is the owner of the CHINA
MOBILE name and logo, a registered trademark in Mainland China, Australia, Brunei, Canada, Hong Kong, India, Indonesia, Macau, New Zealand, South Korea, Taiwan, Thailand, the United States, Vietnam, South Africa and Yemen. In addition, it has
filed applications to register the CHINA MOBILE name and logo as a trademark in Malaysia and Pakistan for certain goods and services. CMCC has also registered the CHINA MOBILE name and logo as a trademark under the Protocol
Relating to the Madrid Agreement Concerning the International Registration of Marks.

On January 1, 2008, we entered into
a trademark license agreement (the 2008 Trademark License Agreement) with CMCC to replace the then existing trademark license agreements with CMCC. Under the 2008 Trademark License Agreement, we and our operating subsidiaries are granted
the right to use the CHINA MOBILE name and logo. No license fee is payable by us to CMCC under the 2008 Trademark License Agreement until December 31, 2012.



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Spectrum Fees and Numbering Resources

The MIIT (and prior to April 2008, the MII) and the MOF jointly determine the standardized spectrum fees payable to the MIIT by all mobile
telecommunications operators in Mainland China, including us. In accordance with a joint circular from the NDRC and the MOF, CMCC entered into an agreement with us that specifies the amount of fees to be paid to the MIIT for spectrum usage by each
mobile telecommunications network operator based on the bandwidth of the frequency used and the number of base stations within the relevant operators networks.

Following the completion of our acquisition of the telecommunications assets from our parent company in July 2004, we entered into an agreement with CMCC on July 1, 2004 (the Spectrum and
Numbering Resources Agreement), pursuant to which CMCC will collect usage fees from us relating to spectrum frequency and numbering resources and make payment to the MIIT (and prior to April 2008, to the MII). In addition to transferring to us
all existing frequency spectrum and numbering resources allocated to it by the MIIT, CMCC has also agreed to apply for new frequency spectrum and numbering resources upon our request or notice from time to time and transfer the relevant new
frequency spectrum and numbering resources to us.

Sharing of Inter-Provincial Transmission Line Leasing Fees

Following the completion of our acquisition of the telecommunications assets from our direct parent company in July
2004, we entered into an agreement with CMCC on July 1, 2004 (the Inter-Provincial Transmission Line Leasing Settlement Agreement), pursuant to which CMCC maintains the existing settlement arrangements with respect to
inter-provincial transmission line leasing with the relevant transmission line providers in Mainland China, and collects inter-provincial transmission line leasing fees from us and pay the same to the transmission line providers in respect of the
inter-provincial transmission lines we lease from such providers.

Platform Development

Aspire is 66.41% owned by us, and is our joint venture with Vodafone and Hewlett-Packard Company. Aspire entered into a platform
development master agreement (the Platform Development Agreement) with CMCC on January 10, 2001. Under the Platform Development Agreement, Aspire (or its subsidiaries) will provide technology platform development and maintenance
services to CMCC and its subsidiaries. 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 Agreement, CMCC will 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.

Leasing of TD-SCDMA Network Capacity

In preparation for our 3G business, we and CMCC entered into a network capacity leasing agreement on December 29, 2008 (the
Network Capacity Leasing Agreement), pursuant to which we and our operating subsidiaries lease TD-SCDMA network capacity from CMCC and pay leasing fees to CMCC. The Network Capacity Leasing Agreement had a term of one year with effect
from January 1, 2009 and would be automatically renewed for successive one-year periods unless otherwise notified by one party to the other party. We may terminate the Network Capacity Leasing Agreement by providing 60 days advance notice
to CMCC. As the ongoing deployment and improvements to the TD-SCDMA network and in order to actively develop and promote the TD-SCDMA business, CMCC and we agreed to renew the Network Capacity Leasing Agreement on November 6, 2009 and
December 21, 2010 for a term of one year commencing on January 1, 2010 and 2011, respectively. In view of the expiry of the Network Capacity Leasing Agreement on December 31, 2011, CMCC and we have agreed to further renew the Network
Capacity Leasing Agreement on December 6, 2011 for a one year term of one year commencing on January 1, 2012.

The
leasing fees will be determined on a basis that reflects our actual usage of CMCCs TD-SCDMA network capacity and compensates CMCC for the costs of such network capacity. The amount of leasing fees payable by us to CMCC under the Network
Capacity Leasing Agreement did not exceed RMB3,000 million in 2011, and it is expected that the amount of leasing fees payable by us to CMCC under the Network Capacity Leasing Agreement (as renewed) will not exceed RMB3,500 million in 2012. The
transactions contemplated under the Network Capacity Leasing Agreement constitute our continuing connected transactions under Rule 14A.34 of the Hong Kong Listing Rules and are subject to the reporting, annual review and announcement requirements,
but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.



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Interconnection Settlement Arrangements

As part of the industry restructuring that commenced in 2008, China Tietong became a wholly-owned subsidiary of CMCC and, as a result, our
connected person.

China Tietong is a fixed-line telecommunications operator in Mainland China. From January 2002 to December
2007, CMCC entered into a series of interconnection settlement agreements (collectively, the Interconnection Settlement Agreements) with China Tietong to govern the interconnection of the networks of CMCC and China Tietong and the
settlement of charges for various telecommunications services, including IP phone calls, long distance calls, international telephone service and dial-up service. On November 13, 2008, we, CMCC and China Tietong entered into an agreement (the
Tripartite Agreement), pursuant to which the rights and obligations of CMCC under the Interconnection Settlement Agreements were transferred to us. Pursuant to the Tripartite Agreement, we and China Tietong will make settlement payments
to each other in respect of calls made or received by their respective customers. The Tripartite Agreement expired on December 31, 2009, and pursuant to the terms thereof, unless the parties agree otherwise, upon the expiry of the term, the
Tripartite Agreement would be automatically renewed for further terms of one year. We, CMCC and China Tietong had agreed to renew Tripartite Agreement on November 6, 2009 and December 21, 2010 for a term of one year commencing on
January 1, 2010 and 2011, respectively. In view of its expiration on December 31, 2011, the parties further renewed the Tripartite Agreement on December 6, 2011 for a one year term commencing on January 1, 2012.

The settlement charges receivable by us from China Tietong under the Tripartite Agreement in 2011 did not exceed the de minimis threshold
under Rule 14A.33 of the Hong Kong Listing Rules. The settlement charges payable by us under the Tripartite Agreement did not exceed RMB500 million in 2011. It is expected that, in 2012, the aggregate amount of settlement charges payable by us to
China Tietong under the Tripartite Agreement (as renewed) will not exceed RMB700 million while the aggregate amount of settlement charges receivable by us from China Tietong will not exceed the de minimis threshold under Rule 14A.33 of the Hong Kong
Listing Rules. The transactions contemplated under the Tripartite Agreement constitute our continuing connected transactions under Rule 14A.34 of the Hong Kong Listing Rules and are subject to the reporting, annual review and announcement
requirements, but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.

Telecommunications Services Cooperation Agreement

In order to meet the customers demand for one-stop shop telecommunications services, CMCC and we entered into a telecommunications services cooperation agreement on November 6, 2009 (the
Telecommunications Services Cooperation Agreement), pursuant to which CMCC and we will provide customer development services to each other by utilizing our respective existing sales channels and resources, such as sales outlets, Internet
sales network, sales personnel and local sales units, and cooperate in the provision of basic telecommunications services and value-added telecommunications services to customers of the other party. The Telecommunications Services Cooperation
Agreement had a term of one year with effect from January 1, 2010 and would be renewed automatically for successive one-year periods if the parties so wish. In view of the expiry of the Telecommunications Services Cooperation Agreement on
December 31, 2010, the parties have agreed to renew the Telecommunications Services Cooperation Agreement on December 21, 2010 for a term of one year commencing on January 1, 2011. In view of the expiry of the Telecommunications
Services Cooperation Agreement on December 31, 2011, the parties have agreed to further renew the Telecommunications Services Cooperation Agreement on December 6, 2011 for a one year term commencing on January 1, 2012.

The amount of charges receivable by us in 2011 under the Telecommunications Services Cooperation Agreement was below the de minimis
threshold under Rule 14A.33 of the Hong Kong Listing Rules. The amounts of charges payable by us in 2011 under the Telecommunications Services Cooperation Agreement did not exceed RMB1,700 million. It is expected that the aggregate amount of charges
payable by us to CMCC under the Telecommunications Services Cooperation Agreement (as renewed) will not exceed RMB2,500 million while the aggregate amount of charges receivable by us from CMCC will not exceed the de minimis threshold under Rule
14A.33 of the Hong Kong Listing Rules in 2012. The transactions contemplated under the Telecommunications Services Cooperation Agreement constitute our continuing connected transactions under Rule 14A.34 of Hong Kong Listing Rules and are subject to
the reporting, annual review and announcement requirements, but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.



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Network Assets Leasing Agreement

In order for us to better position in the changing landscape of the telecommunications industry in China and to enable us to meet the
customers demand for one-stop shop telecommunications services, we entered into the Network Assets Leasing Agreement with CMCC on August 18, 2011 (the Network Assets Leasing Agreement), pursuant to which we and CMCC will lease our
respective telecommunications network operation assets to each other in return for a leasing fee. The Network Assets Leasing Agreement expired on December 31, 2011, and pursuant to the terms thereof, unless the parties agree otherwise, upon the
expiry of the term, the Network Assets Leasing Agreement would be automatically renewed for further terms of one year. In view of the expiry of the Network Assets Leasing Agreement on December 31, 2011, CMCC and we have agreed to further renew
the Network Assets Leasing Agreement on December 6, 2011 for a one year term commencing on January 1, 2012.

The
leasing fees will be determined with reference to the prevailing market rates but in any event shall not be more than the leasing fees charged to any independent third party for same kinds of network assets. The amount of leasing fees receivable by
us from CMCC did not exceed the de minimis threshold under Rule 14A.33 of the Hong Kong Listing Rules. The amount of leasing fess payable by us to CMCC under the Network Assets Leasing Agreement did not exceed RMB1,200 million in 2011, and it is
expected that the amount of leasing fees payable by us to CMCC under the Network Assets Leasing Agreement (as renewed) will not exceed RMB3, 500 million, while the aggregate amount of the leasing fees receivable by us from CMCC will not exceed
the de minimis threshold under Rule 14A.33 of the Hong Kong Listing Rules. The transactions contemplated under the Network Assets Leasing Agreement constitute our continuing connected transactions under Rule 14A.34 of the Hong Kong Listing Rules and
are subject to the reporting, annual review and announcement requirements, but are exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.

Miscellaneous

Following the completion of our acquisition of the telecommunications assets from CMCC in July 2004, the transactions previously entered into between our subsidiaries and prior subsidiaries of CMCC which
have been acquired by us no longer constitute connected transactions under the Hong Kong Listing Rules beginning on July 1, 2004 since such prior subsidiaries of CMCC became part of us on July 1, 2004. Only those transactions between us
and CMCC or its subsidiaries (which have not been acquired by us) remain as connected transactions under the Hong Kong Listing Rules. In December 2004, in order to streamline the management of the connected transactions, we consolidated the
agreements between us and CMCC into two agreements:



| | (i) | the Property Leasing and Management Services Agreement pursuant to which we rent from CMCC various properties for use as business premises and offices, retail outlets
and machining rooms and CMCC and its subsidiaries provide to us property management services. Under this agreement, for properties owned by CMCC or its subsidiaries, the charges are determined with reference to market rates. For properties leased by
CMCC or its subsidiaries from third parties and sublet to us, the charges are determined according to the actual rent payable by CMCC or its subsidiaries together with any tax payable; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the Telecommunications Services Agreement pursuant to which our subsidiaries obtain telecommunications project planning, design and construction services,
telecommunications line and pipeline construction services and telecommunications line maintenance services from CMCC and its subsidiaries. Pursuant to the Telecommunications Services Agreement, subsidiaries of CMCC sell transmission towers and
spare parts and provide related installation and maintenance services to our subsidiaries. Under this agreement, the charges and prices 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 and prices are determined with reference to market rates.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Property Leasing and Management Services Agreement and the Telecommunications Services Agreement (together the 2004 Continuing
Connected Transaction Agreements) expired on December 31, 2007. On December 13, 2007, we entered into the 2008-2010 property leasing and management services agreement (the 2008-2010 Property Leasing Agreement) and the
2008-2010 telecommunications services agreement (the 2008-2010 Telecommunications Services Agreement) with CMCC, with a view to extending the continuing connected transactions under the 2004 Continuing Connected Transaction Agreements on
the same terms. Each of the 2008-2010 Property Leasing Agreement and the 2008-2010 Telecommunications Services Agreement has a fixed term of three years and is effective from January 1, 2008 to December 31, 2010. The payments payable by us
to CMCC and its subsidiaries under the 2008-2010 Property Leasing Agreement did not exceed RMB1,400 million, RMB1,500 million and RMB1,600 million in 2008, 2009 and 2010, respectively, while the payments payable by us to CMCC and its subsidiaries
under the 2008-2010 Telecommunications Services Agreement for the same periods did not exceed RMB4,350 million, RMB4,500 million and RMB4,400 million, respectively. The 2008-2010 Property Leasing Agreement and the 2008-2010 Telecommunications
Services Agreement expired on December 31, 2010.



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On December 21, 2010, we entered into the 2011-2013 property leasing and management
agreement (the 2011-2013 Property Leasing Agreement) with CMCC to extend the existing continuing connected transactions under the 2008-2010 Property Leasing Agreement. On the same date, we entered into the 2011-2013 telecommunications
services agreement (the 2011-2013 Telecommunications Services Agreement) with CMCC to govern the continuing connected transactions between the parties in relation to the provision of telecommunications services, which were previously
governed by the 2008-2010 Telecommunications Services Agreement. The 2011-2013 Property Leasing Agreement and the 2011-2013 Telecommunications Services Agreement are for a term of three years commencing on January 1, 2011.

The amount of the aggregate annual rental and property management service charges payable by us to CMCC and its subsidiaries under the
2011-2013 Property Leasing Agreement in 2011, 2012 and 2013 is not expected to exceed RMB1,000 million. The rental and property management service charges paid by us to CMCC and its subsidiaries in 2011 did not exceed RMB1,000 million. For the
2011-2013 Telecommunications Services Agreement, the charges payable by us to CMCC and its subsidiaries under the 20112013 Telecommunications Services Agreement are expected not to exceed RMB2,000 million, RMB2,500 million and RMB3,000 million
in 2011, 2012 and 2013, respectively, while the aggregate annual amount payable by CMCC and its subsidiaries to us in 2011, 2012 and 2013 is not expected to exceed RMB2,400 million. The charges paid by us to CMCC and its subsidiaries in 2011 under
the 2011-2013 Telecommunications Services Agreement did not exceed RMB2,000 million. The charges payable by CMCC and its subsidiaries to us in 2011 under the 2011-2013 Telecommunications Services Agreement did not exceed RMB2,400 million. The
transactions contemplated under the 2011-2013 Property Leasing Agreement and the 20112013 Telecommunications Services Agreement constitute our continuing connected transactions under Rule 14A.34 of the Hong Kong Listing Rules and are subject
to the reporting, annual review and announcement requirements, but exempt from the independent shareholders approval requirements under the Hong Kong Listing Rules.

In 2011, no consideration was paid from us to CMCC or from CMCC to us under the 2008 Trademark License Agreement, the Spectrum and Numbering Resources Agreement, the Inter-Provincial Transmission Line
Leasing Settlement Agreement and the Platform Development Agreement.



|Item 8. | Financial Information.
|------- | ----------------------

Consolidated
Financial Statements

Our audited consolidated financial statements are set forth beginning on page F-1. Other than as
disclosed elsewhere in this annual report on Form 20-F, no significant change has occurred since the date of the annual financial statements.

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 condition and results of operations.

Policy on Dividend Distributions

We hold in the highest regard the interests of our shareholders and the returns achieved for them, especially our minority shareholders.
In consideration of our level of profitability in 2011 and having taken into account our long-term development, our board of directors recommended payment of a final dividend of HK$1.747 per share for the financial year ended December 31, 2011
in accordance with our dividend payout ratio of 43% planned for the full financial year of 2011. This, together with the interim dividend of HK$1.580 per share paid in 2011, amounted to an aggregate dividend payment of HK$3.327 per share for the
full financial year of 2011.



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In 2012, having taken into account various relevant factors, such as our overall financial
condition, our cash flow generating capabilities and the need of our future sustainable development, we plan that our dividend payout ratio for the full year of 2012 will be 43%.

Our board of directors believes that our good profitability and strong cash flow generating capabilities will continue to support our
future sustainable development, while providing our shareholders with a favorable return.



|Item 9. | The Offer and Listing.
|------- | ----------------------

In connection with our initial public offering, our 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, 2011 and March 31, 2012,
there were 20,072,065,571 and 20,082,756,201, respectively, of our ordinary shares issued and outstanding. As of December 31, 2011 and March 31, 2012, there were, respectively, 501 and 506 registered holders of American depositary receipts
evidencing 95,096,893 and 104,677,909 of our 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 Mellon.

The high and low closing sale prices of the shares on
the Hong Kong Stock Exchange and of the ADSs on the New York Stock Exchange for the periods indicated are as follows.



|                         |  |                       |        |  |                     |  |       |      |  |  |        |  |  |  |       | 
|------------------------ |  | --------------------- | ------ |  | ------------------- |  | ----- | ---- |  |  | ------ |  |  |  | ----- | 
|                         |  | Price per Share (HK$) |        |  | Price per ADS (US$) | 
|                         |  | High                  |        |  | Low                 |  |       | High |  |  | Low    | 
|                         |  |                       |        | 
|2007                     |  |                       | 158.90 |  |                     |  | 64.70 |      |  |  | 103.69 |  |  |  | 41.85 | 
|2008                     |  |                       | 136.60 |  |                     |  | 53.80 |      |  |  | 89.30  |  |  |  | 34.83 | 
|2009                     |  |                       | 91.55  |  |                     |  | 63.00 |      |  |  | 58.54  |  |  |  | 40.75 | 
|                         |  |                       |        | 
|2010                     |  |                       |        |  |                     |  |       |      |  |  |        |  |  |  |       | 
|First Quarter            |  |                       | 79.40  |  |                     |  | 72.35 |      |  |  | 50.54  |  |  |  | 46.87 | 
|Second Quarter           |  |                       | 80.65  |  |                     |  | 71.95 |      |  |  | 52.07  |  |  |  | 46.27 | 
|Third Quarter            |  |                       | 84.30  |  |                     |  | 76.50 |      |  |  | 54.40  |  |  |  | 48.57 | 
|Fourth Quarter           |  |                       | 83.45  |  |                     |  | 76.05 |      |  |  | 53.71  |  |  |  | 49.06 | 
|                         |  |                       |        | 
|2011                     |  |                       |        |  |                     |  |       |      |  |  |        |  |  |  |       | 
|First Quarter            |  |                       | 78.85  |  |                     |  | 69.20 |      |  |  | 50.44  |  |  |  | 44.83 | 
|Second Quarter           |  |                       | 73.95  |  |                     |  | 68.15 |      |  |  | 47.65  |  |  |  | 43.77 | 
|Third Quarter            |  |                       | 80.90  |  |                     |  | 69.20 |      |  |  | 51.70  |  |  |  | 44.82 | 
|Fourth Quarter           |  |                       | 76.60  |  |                     |  | 72.60 |      |  |  | 49.80  |  |  |  | 46.36 | 
|October                  |  |                       | 76.30  |  |                     |  | 73.05 |      |  |  | 49.80  |  |  |  | 46.70 | 
|November                 |  |                       | 76.60  |  |                     |  | 74.00 |      |  |  | 49.67  |  |  |  | 47.46 | 
|December                 |  |                       | 76.05  |  |                     |  | 72.60 |      |  |  | 49.30  |  |  |  | 46.36 | 
|                         |  |                       |        | 
|2012                     |  |                       |        |  |                     |  |       |      |  |  |        |  |  |  |       | 
|January                  |  |                       | 79.30  |  |                     |  | 75.05 |      |  |  | 51.08  |  |  |  | 48.62 | 
|February                 |  |                       | 82.85  |  |                     |  | 77.65 |      |  |  | 53.01  |  |  |  | 50.43 | 
|March                    |  |                       | 87.45  |  |                     |  | 79.70 |      |  |  | 56.08  |  |  |  | 51.64 | 
|First Quarter            |  |                       | 87.45  |  |                     |  | 75.05 |      |  |  | 56.08  |  |  |  | 48.62 | 
|April (through April 24) |  |                       | 87.45  |  |                     |  | 83.35 |      |  |  | 56.00  |  |  |  | 53.39 | 



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We may conduct in the future a public offering and listing of our shares in Mainland China.
We have not set a specific timetable or decided on any specific form for an offering in Mainland China. We believe that an offering and listing of our shares in Mainland China would provide us with better access to the capital markets in Mainland
China and enable our customers in Mainland China to have an opportunity to become our shareholders. A decision to proceed with such an offering, as well as the precise timing of such an offering, would depend on a number of factors, including
relevant regulatory developments and market conditions.



|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 that we are 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 or any of his Associates (as such term is defined in the Listing Rules of the Hong Kong Stock
Exchange), 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 or his Associates in respect of money lent or obligations incurred or undertaken by
him or any of them 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 or
his Associates has himself or themselves 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 or his Associates are, or are to be, interested as a participant in the underwriting or sub-underwriting of the offer;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in which the director or his Associates are interested in the same manner as other holders of our shares or debentures or other securities by virtue
only of his or their interest in our shares or debentures or other securities;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | concerning any other company in which the director or his Associates are interested, directly or indirectly, as an officer or a shareholder or in which
the director or his Associates are beneficially interested in shares of that company other than a company in which the director and any of his Associates, are beneficially interested in five percent or more of the issued shares of any class of the
equity share capital of such company (or of any third company through which his interest or that of his Associates is derived) or of the voting rights (excluding for the purpose of calculating such five percent interest any indirect interest of such
director or his Associates by virtue of our interest in such company);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 such directors Associates and does not give the director or his Associates 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 or his Associates may benefit.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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.

Each director is subject to retirement by rotation at least once every three years. 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 SEC on October 30, 2000, is incorporated by
reference into this annual report on Form 20-F.

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 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, Shops 1712-1716, 17th 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.



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Material Contracts

See Item 7. Major Shareholders and Related Party Transactions  Related Party Transactions for certain arrangements we have entered into with CMCC.

Exchange Controls

The
Renminbi currently is not a freely convertible currency. Under the capital account, which includes, among others, foreign direct investment, the prior approval of the State Administration of Foreign Exchange should be obtained prior to
conversion of Renminbi into foreign currency. However, under the current account, which includes dividends, trade and service-related foreign currency transactions, the Renminbi is currently freely convertible.

The value of the Renminbi is subject to changes in PRC government policies and to international economic and political developments.
Since 1994, the conversion of the Renminbi into foreign currencies, including U.S. dollars, has been based on rates set by the Peoples Bank of China, which are set daily based on the previous business days inter-bank foreign exchange
market rates and current exchange rates on the world financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of the Renminbi to foreign currencies was generally stable. On July 21, 2005, the PRC
government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. The PRC government has since made and
in the future may make further adjustments to the exchange rate system.

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  PRC

This section describes certain PRC tax consequences relating to the ownership and disposition of our ordinary shares and ADSs. This
section does not address all possible PRC tax considerations that may be relevant to an investment in our ordinary shares or ADSs in light of an investors specific circumstances, and is based on PRC tax laws and relevant interpretations as in
effect as of the date of this annual report on Form 20-F, which are subject to change, including the possibility of having retroactive effect. Accordingly, you should consult your own tax advisor regarding the PRC and other tax consequences of an
investment in our ordinary shares or ADSs under your particular circumstances.

Under the PRC Enterprise Income Tax Law
and its implementing rules, which took effect on January 1, 2008, or the PRC income tax law, a non-resident enterprise is generally subject to PRC enterprise income tax with respect to PRC-sourced income. Moreover, the PRC tax authorities have
been issuing further interpretations and notices to enhance the application of the new PRC income tax law.

Taxation of
Dividends

On April 22, 2009, the PRC State Administration of Taxation, or the SAT, issued the Notice Regarding
the Determination of Tax Residence Status of Chinese-Controlled Offshore-Incorporated Enterprises on the Basis of De Facto Management Bodies, or the 2009 Notice, which had retroactive effect as of January 1, 2008. We are considered a PRC
resident enterprise for purposes of the 2009 Notice. In accordance with the 2009 Notice and the PRC income tax law, we are required to withhold enterprise income tax equal to 10% of any dividend when it is distributed to non-resident enterprise
shareholders whose names appeared on our register of members, as of the record date for such dividend, and who were not individuals.

Taxation of Capital Gains

Under the PRC income tax law, a
non-resident enterprise is generally subject to PRC enterprise income tax with respect to PRC-sourced income, but there remain substantial uncertainties as to their interpretation and application by the relevant PRC tax authorities. We intend to
comply with any interpretation or notice in relation to the taxation of capital gains issued by the PRC tax authorities in the future.

Additional PRC Tax Considerations

Stamp duty.Under the
Provisional Regulations of the PRC Concerning Stamp Duty and its implementing rules, both of which became effective on October 1, 1988, PRC stamp duty should not apply to acquisitions or dispositions of our ordinary shares or ADSs outside of
the PRC, as the PRC stamp duty is imposed only on documents executed or received within the PRC that are legally binding in the PRC and protected under the PRC law.



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Estate tax. The PRC does not currently levy estate tax.

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 on Form 20-F, 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.

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 16.5% 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 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 Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an
application for a grant of representation in respect of holders of ordinary shares whose death occurs on or after February 11, 2006.

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 are a U.S. holder, as
defined below, and you hold your shares or ADSs as capital assets for United States federal income tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:



| |  |  | a dealer in securities;
| | - |  | -----------------------



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| |  |  | 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;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | a person that purchases or sells shares or ADSs as part of a wash sale for tax purposes; 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 Bank of New York Mellon, as depositary, and the assumption that each obligation in the Deposit Agreement among
us, The Bank of New York Mellon, as depositary, and owners and beneficial owners of ADRs issued thereunder, and any related agreement will be performed in accordance with its terms.

If a partnership holds the shares or ADSs, the United States federal income tax treatment of a partner will generally depend on the
status of the partner and the tax treatment of the partnership. A partner in a partnership holding the shares or ADSs should consult its tax advisor with regard to the United States federal income tax treatment of an investment in the shares or
ADSs.

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;
| | - |  | -----------------------



| |  |  | 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 in taxable years beginning before January 1, 2013 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 121-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 generally 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.



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You must include any PRC tax withheld from the dividend payment in this gross amount even
though you do not in fact receive it. The dividend is taxable to you when you, in the case of shares, or The Bank of New York Mellon, as 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.

Subject to certain limitations, the PRC tax withheld and paid over to the PRC will be creditable or deductible against your
United States federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 15% tax rate.

For foreign tax credit purposes, dividends will generally be income from sources outside the United States and will, depending on your
circumstances, generally be either passive or general 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 is generally taxed at preferential rates where the property is held for 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 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;
| | - |  | ----------------------------------------------------------------------------------------------------------



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| |  |  | 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

Special rules apply for calculating the amount of the foreign tax credit with respect to excess
distributions by a PFIC.

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 or 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.

Your shares or ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your shares or ADSs, even if we are not currently a PFIC. For purposes of this rule, if
you make a mark-to-market election with respect to your shares or ADSs, you will be treated as having a new holding period in your shares or ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which
the mark-to-market election applies.

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 taxable year. Dividends that you receive that do not constitute qualified
dividend income 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
United 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 may be required to file Internal Revenue Service 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 SEC at the SECs public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room and its copy charges. The SEC also maintains a website at 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 loans with original maturities ranging up 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 2011.

We are also exposed to foreign currency risk relating to cash and cash
equivalents denominated in foreign currencies. We may enter into foreign exchange forward contracts designed to mitigate our exposure to foreign currency risks. As of December 31, 2011, we had no foreign exchange forward contracts outstanding.
We expect our foreign currency hedging activity to be generally limited to the hedging of specific future commitments in foreign currencies.



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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 the dates indicated.



|                                 |  |                                                     |      |   |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |   |  |                     |        |   |           |  |        |  |  |  |        |   |  |  |        | 
|-------------------------------- |  | --------------------------------------------------- | ---- | - | ---------------------- |  | - | ---------------------- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ------------------- |  |  | --------- | - |  | ------------------- | ------ | - | --------- |  | ------ |  |  |  | ------ | - |  |  | ------ | 
|                                 |  | Expected Maturity Date                              |      |   | As of December 31,2011 |  |   | As of December 31,2010 | 
|                                 |  | 2012                                                |      |   | 2013                   |  |   | 2014                   |  |  | 2015 |  |  | 2016 |   |  | Thereafter |  |   | TotalRecordedAmount |  |  | FairValue |   |  | TotalRecordedAmount |        |   | FairValue | 
|                                 |  | (RMB equivalent in millions, except interest rates) |     
|Debt:                            |  |                                                     |      |   |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |   |  |                     |        |   |           |  |        |  |  |  |        |   |  |  |        | 
|Obligations under finance leases |  |                                                     | 68   |   |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |   |  |                     | 68     |   |           |  | 68     |  |  |  | 68     |   |  |  | 68     | 
|Average interest rate            |  |                                                     | 4.96 | % |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |   |  |                     | 4.96   | % |           |  |       |  |  |  | 4.96   | % |  |  |       | 
|Bonds                            |  |                                                     |     |   |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  | 4,984     |   |  |                     | 4,984  |   |           |  | 4,845  |  |  |  | 9,963  |   |  |  | 10,038 | 
|Average interest rate            |  |                                                     |     |   |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  | 4.50      | % |  |                     | 4.50   | % |           |  |       |  |  |  | 4.25   | % |  |  |       | 
|Deferred consideration payable   |  |                                                     |     |   |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  | 23,633    |   |  |                     | 23,633 |   |           |  | 23,633 |  |  |  | 23,633 |   |  |  | 23,633 | 
|Average interest rate            |  |                                                     |     |   |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  | 0.61      | % |  |                     | 1.19   | % |           |  |       |  |  |  | 2.22   | % |  |  |       | 

The following table provides information regarding our foreign currency-sensitive financial instruments
and transactions, which consist of pledged bank deposits, deposits with banks and cash and cash equivalents as of the dates indicated.



|                                       |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|-------------------------------------- |  | ---------------------------- | ----- |  | ---------------------- |  | - | ---------------------- |  |  | ---- |  |  | ---- | - |  | ---------- |  | - | ------------------- |  |  | --------- |  |  | ------------------- | ----- |  | --------- |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                       |  | Expected Maturity Date       |       |  | As of December 31,2011 |  |   | As of December 31,2010 | 
|                                       |  | 2012                         |       |  | 2013                   |  |   | 2014                   |  |  | 2015 |  |  | 2016 |   |  | Thereafter |  |   | TotalRecordedAmount |  |  | FairValue |  |  | TotalRecordedAmount |       |  | FairValue | 
|                                       |  | (RMB equivalent in millions) |      
|On-balance sheet financial instruments |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|Pledged bank deposits:                 |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in Hong Kong dollars                   |  |                              | 32    |  |                        |  |  |                        |  |  | 122  |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 154   |  |           |  | 154   |  |  |  | 162   |  |  |  | 162   | 
|Deposits with banks:                   |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in U.S. dollars                        |  |                              | 327   |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 327   |  |           |  | 327   |  |  |  | 269   |  |  |  | 269   | 
|in Hong Kong dollars                   |  |                              | 1,558 |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 1,558 |  |           |  | 1,558 |  |  |  | 225   |  |  |  | 225   | 
|Cash and cash equivalents:             |  |                              |       |  |                        |  |   |                        |  |  |      |  |  |      |   |  |            |  |   |                     |  |  |           |  |  |                     |       |  |           |  |       |  |  |  |       |  |  |  |       | 
|in U.S. dollars                        |  |                              | 424   |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 424   |  |           |  | 424   |  |  |  | 369   |  |  |  | 369   | 
|in Hong Kong dollars                   |  |                              | 1,467 |  |                        |  |  |                        |  |  |     |  |  |      |  |  |            |  |  |                     |  |  |          |  |  |                     | 1,467 |  |           |  | 1,467 |  |  |  | 2,987 |  |  |  | 2,987 | 



|Item 12. | Description of Securities Other than Equity Securities.
|-------- | -------------------------------------------------------

The Bank of New York Mellon, located at One Wall Street, New York, New York 10286, as the depositary of our ADSs, collects its fees for delivery and surrender of ADSs directly from investors depositing
shares or surrendering ADSs for the purpose of withdrawal. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The
depositary may refuse to provide delivery of ADSs or deposited shares or to provide any distributions until its fees for those services are paid.



|  |  |                                                  |  |   |  |                                                                                                       
|- |  | ------------------------------------------------ |  | - |  | ------------------------------------------------------------------------------------------------------
|  |  | ADR holders must pay:                            |  |   |  | For:                                                                                                  
| |  | US$5 (or less) per 100 ADSs (or portion thereof) |  |  |  | Each issuance of an ADR, including as a result of a distribution of shares or rights or other property
|  |  |                                                  |  |  |  | Each cancellation of an ADR, including if the deposit agreement terminates                            



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|  |  |                                                                                                                                                                                           |  |   |  |                                                                                                                                                                                                                                   
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  | ADR holders must pay:                                                                                                                                                                     |  |   |  | For:                                                                                                                                                                                                                              
|  |  |                                                                                                                                                                                           | 
|  |  |                                                                                                                                                                                           |  |  |  | Each distribution of securities, other than shares or ADSs, treating the securities as if they were shares for purpose of calculating fees                                                                                        
| |  | US$0.02 (or less) per ADS                                                                                                                                                                 |  |  |  | Any cash distribution (not including cash dividend distribution)                                                                                                                                                                  
| |  | Registration or transfer fees                                                                                                                                                             |  |  |  | Transfer and registration of shares on the share register of our transfer agent and the registrar in Hong Kong from an ADR holders name to the name of the depositary or its
agent when the ADR holder deposit or withdraw shares
| |  | Expenses of the depositary                                                                                                                                                                |  |  |  | Conversion of Hong Kong dollars to U.S. dollars                                                                                                                                                                                   
|  |  |                                                                                                                                                                                           | 
|  |  |                                                                                                                                                                                           |  |  |  | Cable, telex and facsimile transmission expenses                                                                                                                                                                                  
|  |  |                                                                                                                                                                                           | 
| |  | Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or
withholding taxes |  |  |  | As necessary                                                                                                                                                                                                                      

The Bank of New York Mellon, as the depositary, has agreed to pay for certain expenses incurred in
connection with our shareholders meetings. The amount of such expenses paid by the Bank of New York Mellon in 2011 was US$161,756.59, net of withholding tax. The Bank of New York Mellon has also agreed to waive certain fees for standard costs
associated with the administration of the ADR program, and the amount of such fees waived for the year ended December 31, 2011 was US$135,026.17.



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PART II



|Item 13. | Defaults, Dividend Arrearages and Delinquencies.
|-------- | ------------------------------------------------

None.



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds.
|-------- | -----------------------------------------------------------------------------

None.



|Item 15. | Controls and Procedures.
|-------- | ------------------------

Disclosure Controls and Procedures.Our disclosure controls and procedures are designed to provide reasonable assurance that
information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and
forms, including, without limitation, that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As of December 31, 2011, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that, as of December 31, 2011, our disclosure controls and procedures were effective at a reasonable assurance level.

Managements Annual Report on Internal Control Over Financial Reporting.Managements Report on Internal Control Over Financial Reporting is set forth below.

Managements Report on Internal Control Over Financial Reporting

Management of China Mobile Limited (together with its consolidated subsidiaries, the Company) is responsible for establishing
and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The Companys internal control over financial reporting is a process designed under the
supervision of the Companys Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Companys financial statements for external
reporting purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

As of December 31, 2011, the Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, conducted an assessment of the effectiveness
of the Companys internal control over financial reporting using criteria set forth in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment,
the Companys management has concluded that the Companys internal control over financial reporting was effective as of December 31, 2011.

The effectiveness of the Companys internal control over financial reporting as of December 31, 2011 has been audited by KPMG, an independent registered public accounting firm, as stated in
their report dated March 15, 2012.





|           |  |                                                |  |                |  |        |  |                                                               
|---------- |  | ---------------------------------------------- |  | -------------- |  | ------ |  | --------------------------------------------------------------
|/s/ LI Yue |  |                                                |  | /s/ XUE Taohai
|Name:      |  | LI Yue                                         |  |                |  | Name:  |  | XUE Taohai                                                    
|Title:     |  | Executive Director and Chief Executive Officer |  |                |  | Title: |  | Executive Director, Vice President and Chief Financial Officer



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LOGO

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

China Mobile Limited:

We have audited China
Mobile Limited and its subsidiaries internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). The management of China Mobile Limited and its subsidiaries is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the internal control over financial reporting of China Mobile Limited and its
subsidiaries based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, China Mobile Limited and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria
established in Internal Control  Integrated Framework issued by the COSO.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the consolidated balance sheets of China Mobile Limited and its subsidiaries as of December 31, 2010 and 2011, and the related consolidated statements of comprehensive income, the
consolidated statements of changes in equity and the consolidated cash flow statements for each of the years in the three-year period ended December 31, 2011 and our report dated March 15, 2012 expressed an unqualified opinion on those
consolidated financial statements.

/s/ KPMG

Hong Kong, China

March 15, 2012



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Changes in Internal Control Over Financial Reporting. During 2011, no
change to our internal control over financial reporting occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



|Item 16A. | Audit Committee Financial Expert.
|--------- | ---------------------------------

All members of our audit committee have extensive management experience. In particular, one of the members has many years of finance and commercial management experience and expertise. However, members of
our audit committee do not possess direct experience or expertise in respect of the evaluation of reports filed with the SEC by SEC-reporting issuers. Our board of directors has determined that we do not currently have an audit committee financial
expert, as defined in Item 16A(b) of Form 20-F, serving on our audit committee. Our audit committee may consider appointing, from time to time, an external financial expert as a consultant.



|Item 16B. | Code of Ethics.
|--------- | ---------------

We have
adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Deputy Chief Financial Officer, Assistant Chief Financial Officer and our other designated senior officers. A copy of our Code of Ethics for Covered
Officers was filed as Exhibit 11.1 to our annual report on Form 20-F for the fiscal year ended December 31, 2003, and may also be downloaded from our website at www.chinamobileltd.com/images/pdf/terms/CodeofEthics_eng.pdf. Information contained
on that website is not a part of this annual report on Form 20-F. Copies of our Code of Ethics for Covered Officers may also be obtained at no charge by writing to our investor relations department at 60/F, The Center, 99 Queens Road Central,
Hong Kong.



|Item 16C. | Principal Accountant Fees and Services.
|--------- | ---------------------------------------

The following table sets forth the aggregate audit fees, audit-related fees, tax fees of our principal accountants and all other fees billed for products and services provided by our principal accountants
other than the audit fees, audit-related fees and tax fees in 2010 and 2011:



|     |  |               |            |  |                    |  |   |          |  |  |                    |  |  |  |            | 
|---- |  | ------------- | ---------- |  | ------------------ |  | - | -------- |  |  | ------------------ |  |  |  | ---------- | 
|     |  | Audit Fees(1) |            |  | Audit-Related Fees |  |   | Tax Fees |  |  | All Other 
Fees(2) | 
|     |  | RMB           |            |  | RMB                |  |   | RMB      |  |  | RMB                | 
|2010 |  |               | 83,000,000 |  |                    |  |  |          |  |  | 1,000,000          |  |  |  | 11,000,000 | 
|2011 |  |               | 84,000,000 |  |                    |  |  |          |  |  | 600,000            |  |  |  | 11,000,000 | 



|(1) | Includes the fees for services rendered in connection with the audit of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley
Act of 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes the fees for advisory service rendered in connection with the Sarbanes-Oxley Act of 2002, risk assessment and other information technology-related advisory
services provided to us.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Before our principal accountants were engaged by us or our subsidiaries to render
audit or non-audit services, the engagement was approved by our audit committee as required by applicable rules and regulations of the SEC.



|Item 16D. | Exemptions from the Listing Standards for Audit Committees.
|--------- | -----------------------------------------------------------

Not applicable.



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
|--------- | -----------------------------------------------------------------------

None.



|Item 16F. | Change in Registrants Certifying Accountant.
|--------- | ---------------------------------------------

Not applicable.



|Item 16G. | Corporate Governance.
|--------- | ---------------------

As
a foreign private issuer (as defined in Rule 3b-4 under the Securities Exchange Act of 1934, as amended), we are permitted to follow home country practices in lieu of some of the corporate governance practices required to be followed by U.S.
companies listed on the New York Stock Exchange. As a result, our corporate governance practices differ in some respects from those required to be followed by U.S. companies listed on the New York Stock Exchange.



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The significant differences between our corporate governance practices and those required to
be followed by U.S. companies under the New York Stock Exchanges listing standards include:

Section 303A.01 of the
New York Stock Exchange Listed Company Manual provides that listed companies must have a majority of independent directors. As a listed company in Hong Kong, we are subject to the requirement under the Hong Kong Listing Rules that at least three
members of our board of directors be independent as determined under the Hong Kong Listing Rules. We currently have three independent directors out of a total of ten directors. The Hong Kong Listing Rules set forth standards for establishing
independence, which differ from those set forth in the New York Stock Exchange Listed Company Manual.

Section 303A.03 of
the New York Stock Exchange Listed Company Manual provides that listed companies must schedule regular executive sessions in which non-management directors meet without management participation. We are not required, under the applicable Hong Kong
law, to hold such executive sessions.

Section 303A.04 of the New York Stock Exchange Listed Company Manual provides that
the nominating/corporate governance committee of a listed company must have a written charter that addresses the committees purpose and responsibilities, which include, among others, the development and recommendation of corporate governance
guidelines to the listed companys board of directors. Our board of directors is directly in charge of developing our corporate governance guidelines.

Section 303A.07 of the New York Stock Exchange Listed Company Manual provides that if an audit committee member simultaneously serves on the audit committee of more than three public companies, and
the listed company does not limit the number of audit committees on which its audit committee members serve to three or less, then in each case, the board of directors must determine that such simultaneous service would not impair the ability of
such member to effectively serve on the listed companys audit committee and disclose such determination. We are not required, under the applicable Hong Kong law, to make such determination.

Section 303A.10 of the New York Stock Exchange Listed Company Manual provides that listed companies must adopt and disclose a code
of business conduct and ethics for directors, officers and employees. While we are not required, under the Hong Kong Listing Rules, to adopt such similar code, as required under the Sarbanes-Oxley Act of 2002, we have adopted a code of ethics that
is applicable to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions.

Section 303A.12(a) of the New York Stock Exchange Listed Company Manual provides that each listed companys chief executive officer must certify to the New York Stock Exchange each year that he
or she is not aware of any violation by the company of New York Stock Exchange corporate governance listing standards. Our Chief Executive Officer is not required, under the applicable Hong Kong law, to make similar certifications.



|Item 16H. | Mine Safety Disclosure.
|--------- | -----------------------

Not applicable.



-65-



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##### Table of Contents

PART III



|Item 17. | Financial Statements.
|-------- | ---------------------

Not applicable.



|Item 18. | Financial Statements.
|-------- | ---------------------

The following financial statements are filed as part of this annual report on Form 20-F.



|                                                        |  |  |      | 
|------------------------------------------------------- |  |  | ---- | 
|China Mobile Limited:                                   |  |  |      | 
|Index to Consolidated Financial Statements              |  |  | F-1  | 
|Report of Independent Registered Public Accounting Firm |  |  | F-2  | 
|Consolidated statements of comprehensive income         |  |  | F-3  | 
|Consolidated balance sheets                             |  |  | F-5  | 
|Consolidated statements of changes in equity            |  |  | F-8  | 
|Consolidated cash flow statements                       |  |  | F-11 | 
|Notes to consolidated financial statements              |  |  | F-13 | 



|Item 19. | Exhibits.
|-------- | ---------



| | (a) | See Item 18 for a list of the financial statements filed as part of this annual report on Form 20-F.
| | --- | ----------------------------------------------------------------------------------------------------



| | (b) | Exhibits to this annual report on Form 20-F:
| | --- | --------------------------------------------



|              |  |                                                                                                                                                                                                                                                                                       
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                
|              | 
|1.1           |  | Memorandum and Articles of Association (as
amended).(1)                                                                                                                                                                                                                               
|              | 
|2.1           |  | We agree to provide the SEC, 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 RMB5,000 million guaranteed bonds due 2011 issued by Guangdong Mobile.(2)                                                                                                                                              
|              | 
|2.3           |  | Letter of Guarantee from China Mobile Communications Corporation for the RMB3,000 million guaranteed bonds due 2007 and RMB5,000 million guaranteed bonds due 2017, both issued by
Guangdong Mobile in 2002 (with English
translation).(3)                                            
|              | 
|4.1           |  | Agreement regarding Settlement of Interconnection and Roaming, Transmission Line Leasing, Usage of Spectrum Frequency and Numbering Resources, dated July 1, 2004, between China
Mobile (Hong Kong) Limited and China Mobile Communications Corporation (with English translation).(4)
|              | 
|4.2           |  | Tax Indemnity, dated July 1, 2004, among China Mobile Hong Kong (BVI) Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(4)                                                                                                                       
|              | 
|4.3           |  | Conditional Sale and Purchase Agreement, dated April 28, 2004 between China Mobile (Hong Kong) Limited, China Mobile Hong Kong (BVI) Limited and China Mobile Communications
Corporation.(5)                                                                                          
|              | 
|4.4           |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation, Neimenggu Mobile and Neimenggu Communication Service Company (with English
translation and schedule).(5)                                                                             
|              | 
|4.5           |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation, China Mobile Group Design Institute Co., Ltd. and Beijing P&T Consulting &
Design Institute (with English
translation).(5)                                                           
|              | 
|4.6           |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation and China Mobile Communication Company Limited (with English translation).(5)                                                                                                         
|              | 
|4.7           |  | Agreement on the Confirmation of Rights and Obligations, dated April 9, 2004, between China Mobile Communications Corporation, Neimenggu Mobile and Neimenggu Communication Service
Company (with English translation and
schedule).(5)                                               



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##### Table of Contents

|     |  |                                                                                                                                                                                                                                                                                                                                               
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.8  |  | Agreement on the Confirmation of Rights and Obligations, dated April 9, 2004, between China Mobile Communications Corporation, China Mobile Group Design Institute Co., Ltd. and
Beijing P&T Consulting & Design Institute (with English translation).(5)                                                                                     
|     | 
|4.9  |  | Consent Letter to the Substitution of Borrowers under the Consigned Loan Agreement, dated February 13, 2004, between China Mobile Communications Corporation, Neimenggu Mobile,
Neimenggu Communication Service Company and Beijing Changan Sub-branch of Industrial and Commercial Bank of China (with English translation and schedule).(5)
|     | 
|4.10 |  | Agreement on Sharing of Administrative Services and Administrative Costs, dated April 27, 2004, between China Mobile Communication Co., Ltd. and China Mobile Communications
Corporation (with English
translation).(5)                                                                                                                       
|     | 
|4.11 |  | Tax Indemnity dated July 1, 2002 between China Mobile Hong Kong (BVI) Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(3)                                                                                                                                                                               
|     | 
|4.12 |  | 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).(3)                                                                                                                                           
|     | 
|4.13 |  | 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.(6)                                                                                                                  
|     | 
|4.14 |  | Trademark License Agreement, dated January 1, 2008, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(7)                                                                                                                                                                                   
|     | 
|4.15 |  | Tripartite Agreement on the Transfer of Rights and Obligations Relating to the Interconnection and Settlement Arrangements, dated November 13, 2008, among China Mobile
Communications Corporation, China Tietong Telecommunications Corporation and China Mobile Limited (with English
translation).(8)                                      
|     | 
|4.16 |  | TD-SCDMA Network Capacity Leasing Agreement, dated December 29, 2008, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(8)                                                                                                                                                                 
|     | 
|4.17 |  | Telecommunications Services Cooperation Agreement, dated November 6, 2009, between China Mobile Communications Corporation and China Mobile Limited (with English
translation).(9)                                                                                                                                                            
|     | 
|4.18 |  | Share Subscription Agreement, dated March 10, 2010, between China Mobile Group Guangdong Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. (with English summary).(9)                                                                                                                                                                  
|     | 
|4.19 |  | Property Leasing and Management Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation
(with English translation).(10)                                                                                                                         
|     | 
|4.20 |  | Telecommunications Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation (with
English translation).(10)                                                                                                                                      
|     | 
|4.21 |  | Network Assets Leasing Agreement, dated August 18, 2011, between China Mobile Communications Corporation and China Mobile Limited (with English translation).                                                                                                                                                                                 
|     | 
|8.1  |  | List of Major Subsidiaries.                                                                                                                                                                                                                                                                                                                   
|     | 
|11.1 |  | Code of Ethics.(5)                                                                                                                                                                                                                                                                                                                            
|     | 
|12.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                                                          
|     | 
|12.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                                                          
|     | 
|13.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(b).                                                                                                                                                                                                                                                                          
|     | 
|13.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(b).                                                                                                                                                                                                                                                                          



-67-



---

##### Table of Contents



|(1) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2005 (File No. 1-14696), filed with the SEC on June 9,
2006.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | 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 SEC on
June 26, 2001.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 (File No. 1-14696), filed with the SEC on
June 17, 2003.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2004 (File No. 1-14696), filed with the SEC on
June 13, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2003 (File No. 1-14696), filed with the SEC on
June 17, 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to our Registration Statement on Form F-3 (File No. 333-47256), filed with the SEC on October 30, 2000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2007 (File No. 1-14696), filed with the SEC on
June 11, 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2008 (File No. 1-14696), filed with the SEC on
June 23, 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2009 (File No. 1-14696), filed with the SEC on June 7,
2010.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2010 (File No. 1-14696), filed with the SEC on
April 27, 2011.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



-68-



---

##### Table of Contents

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 Form 20-F on its
behalf.



CHINA MOBILE LIMITEDBy:

/s/ LI YueName:

LI YueTitle:

Executive Director and Chief Executive Officer


Date: April 25, 2012



---

##### Table of Contents

Index to Consolidated Financial Statements



|                                                        |  |          |      | 
|------------------------------------------------------- |  | -------- | ---- | 
|                                                        |  | Page No. |     
|                                                        | 
|Report of Independent Registered Public Accounting Firm |  |          | F-2  | 
|Consolidated statements of comprehensive income         |  |          | F-3  | 
|Consolidated balance sheets                             |  |          | F-5  | 
|Consolidated statements of changes in equity            |  |          | F-8  | 
|Consolidated cash flow statements                       |  |          | F-11 | 
|Notes to consolidated financial statements              |  |          | F-13 | 



F-1



---

##### Table of Contents

LOGO

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

China Mobile Limited:

We have audited the accompanying consolidated balance sheets of China Mobile Limited and its subsidiaries as of December 31, 2010 and 2011, and the
related consolidated statements of comprehensive income, the consolidated statements of changes in equity and the consolidated cash flow statements for each of the years in the three-year period ended December 31, 2011. These consolidated
financial statements are the responsibility of the management of China Mobile Limited and its subsidiaries. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Limited and its subsidiaries as of December 31, 2010 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the internal control over financial reporting of China Mobile Limited and its subsidiaries as of December 31, 2011, based on criteria established in
Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2012 expressed an unqualified opinion on the effectiveness of the internal
control over financial reporting of China Mobile Limited and its subsidiaries.

/s/ KPMG

Hong Kong, China

March 15, 2012



F-2



---

##### Table of Contents

Consolidated statements of comprehensive income

For the years ended December 31

(Expressed in Renminbi)



|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|-------------------------------------------------------------------------------- |  | ----- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                                                 |  | Note  |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                                                                 |  |       |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                                                                 |  |       |  |            
|Operating revenue (Turnover)                                                     |  | 3     |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Voice services                                                                   |  |       |  |             | 364,189 |   |             |  | 343,985 |             |  |  | 327,283 |  
|Data services                                                                    |  |       |  |             | 139,330 |   |             |  | 120,768 |             |  |  | 106,105 |  
|Others                                                                           |  |       |  |             | 24,480  |   |             |  | 20,478  |             |  |  | 18,715  |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|                                                                                 |  |       |  |             | 527,999 |   |             |  | 485,231 |             |  |  | 452,103 |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Operating expenses                                                               |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Leased lines                                                                     |  |       |  |             | 5,188   |   |             |  | 3,897   |             |  |  | 3,006   |  
|Interconnection                                                                  |  |       |  |             | 23,533  |   |             |  | 21,886  |             |  |  | 21,847  |  
|Depreciation                                                                     |  | 13    |  |             | 97,113  |   |             |  | 86,230  |             |  |  | 80,179  |  
|Personnel                                                                        |  | 4     |  |             | 28,672  |   |             |  | 24,524  |             |  |  | 21,480  |  
|Selling expenses                                                                 |  |       |  |             | 96,830  |   |             |  | 90,590  |             |  |  | 80,043  |  
|Other operating expenses                                                         |  | 5     |  |             | 125,364 |   |             |  | 107,350 |             |  |  | 98,540  |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|                                                                                 |  |       |  |             | 376,700 |   |             |  | 334,477 |             |  |  | 305,095 |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Profit from operations                                                           |  |       |  |             | 151,299 |   |             |  | 150,754 |             |  |  | 147,008 |  
|                                                                                 |  |       |  |            
|Other net income                                                                 |  | 6     |  |             | 2,559   |   |             |  | 2,336   |             |  |  | 1,780   |  
|                                                                                 |  |       |  |            
|Non-operating net income                                                         |  | 7     |  |             | 571     |   |             |  | 685     |             |  |  | 359     |  
|                                                                                 |  |       |  |            
|Interest income                                                                  |  |       |  |             | 8,413   |   |             |  | 5,658   |             |  |  | 5,940   |  
|                                                                                 |  |       |  |            
|Finance costs                                                                    |  | 8     |  |             | (565    | ) |             |  | (902    | )           |  |  | (1,243  | )
|                                                                                 |  |       |  |            
|Share of profit of associates                                                    |  |       |  |             | 4,306   |   |             |  | 558     |             |  |  |        |  
|                                                                                 |  |       |  |            
|Share of loss of jointly controlled entity                                       |  | 19    |  |             | (1      | ) |             |  | (18     | )           |  |  | (8      | )
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Profit before taxation                                                           |  |       |  |             | 166,582 |   |             |  | 159,071 |             |  |  | 153,836 |  
|                                                                                 |  |       |  |            
|Taxation                                                                         |  | 11(a) |  |             | (40,603 | ) |             |  | (39,047 | )           |  |  | (38,413 | )
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|PROFIT FOR THE YEAR                                                              |  |       |  |             | 125,979 |   |             |  | 120,024 |             |  |  | 115,423 |  
|                                                                                 |  |       |  |            
|Other comprehensive income for the year                                          |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|Exchange differences on translation of financial statements of overseas entities |  |       |  |             | (311    | ) |             |  | (135    | )           |  |  | 42      |  
|Share of other comprehensive income of associates                                |  |       |  |             | (229    | ) |             |  |        |             |  |  |        |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                 |  |       |  |            
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                          |  |       |  |             | 125,439 |   |             |  | 119,889 |             |  |  | 115,465 |  
|                                                                                 |  |       |  |             |         |   |             |  |         |             |  |  |         |  



F-3



---

##### Table of Contents

Consolidated statements of comprehensive income

For the years ended December 31 (continued)

(Expressed in Renminbi)



|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|------------------------------------------- |  | ----- |  | ----------- | ------- |  | ----------- | --- | ------- | ----------- |  | --- | ------- | 
|                                            |  | Note  |  | 2011        |         |  | 2010        |     |         | 2009        | 
|                                            |  |       |  | RMB million |         |  | RMB million |     |         | RMB million | 
|                                            |  |       |  |            
|Profit attributable to:                     |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|Equity shareholders of the Company          |  |       |  |             | 125,870 |  |             |     | 119,640 |             |  |     | 115,166 | 
|Non-controlling interests                   |  |       |  |             | 109     |  |             |     | 384     |             |  |     | 257     | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|PROFIT FOR THE YEAR                         |  |       |  |             | 125,979 |  |             |     | 120,024 |             |  |     | 115,423 | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|Total comprehensive income attributable to: |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|Equity shareholders of the Company          |  |       |  |             | 125,332 |  |             |     | 119,505 |             |  |     | 115,208 | 
|Non-controlling interests                   |  |       |  |             | 107     |  |             |     | 384     |             |  |     | 257     | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR     |  |       |  |             | 125,439 |  |             |     | 119,889 |             |  |     | 115,465 | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|Earnings per share  Basic                  |  | 12(a) |  | RMB         | 6.27    |  |             | RMB | 5.96    |             |  | RMB | 5.74    | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 
|                                            |  |       |  |            
|Earnings per share  Diluted                |  | 12(b) |  | RMB         | 6.20    |  |             | RMB | 5.89    |             |  | RMB | 5.67    | 
|                                            |  |       |  |             |         |  |             |     |         |             |  |     |         | 

The notes on pages F-13 to F-71 form part of these consolidated financial statements.



F-4



---

##### Table of Contents

Consolidated balance sheets

As at December 31

(Expressed in
Renminbi)



|                                         |  |       |  |                        |         |  |                        |  |         | 
|---------------------------------------- |  | ----- |  | ---------------------- | ------- |  | ---------------------- |  | ------- | 
|                                         |  | Note  |  | As atDecember 
31,2011 |         |  | As atDecember 
31,2010 | 
|                                         |  |       |  | RMB million            |         |  | RMB million            | 
|                                         |  |       | 
|Non-current assets                       |  |       |  |                        |         |  |                        |  |         | 
|                                         |  |       | 
|Property, plant and equipment            |  | 13    |  |                        | 408,165 |  |                        |  | 385,296 | 
|Construction in progress                 |  | 14    |  |                        | 56,235  |  |                        |  | 54,868  | 
|Land lease prepayments                   |  |       |  |                        | 12,798  |  |                        |  | 12,040  | 
|Goodwill                                 |  | 15    |  |                        | 36,894  |  |                        |  | 36,894  | 
|Other intangible assets                  |  | 16    |  |                        | 818     |  |                        |  | 813     | 
|Interest in associates                   |  | 18    |  |                        | 43,794  |  |                        |  | 40,175  | 
|Interest in jointly controlled entity    |  | 19    |  |                        | 7       |  |                        |  | 8       | 
|Deferred tax assets                      |  | 20    |  |                        | 10,913  |  |                        |  | 9,720   | 
|Pledged bank deposits                    |  | 21    |  |                        | 122     |  |                        |  | 162     | 
|Other financial assets                   |  | 22    |  |                        | 127     |  |                        |  | 127     | 
|                                         |  |       |  |                        |         |  |                        |  |         | 
|                                         |  |       | 
|                                         |  |       |  |                        | 569,873 |  |                        |  | 540,103 | 
|                                         |  |       |  |                        |         |  |                        |  |         | 
|                                         |  |       | 
|Current assets                           |  |       |  |                        |         |  |                        |  |         | 
|                                         |  |       | 
|Inventories                              |  | 23    |  |                        | 7,944   |  |                        |  | 4,249   | 
|Accounts receivable                      |  | 24    |  |                        | 9,165   |  |                        |  | 7,632   | 
|Other receivables                        |  | 25    |  |                        | 19,483  |  |                        |  | 7,026   | 
|Prepayments and other current assets     |  | 25    |  |                        | 12,854  |  |                        |  | 10,151  | 
|Amount due from ultimate holding company |  | 26    |  |                        | 170     |  |                        |  | 293     | 
|Tax recoverable                          |  | 11(c) |  |                        | 91      |  |                        |  | 135     | 
|Pledged bank deposits                    |  | 21    |  |                        | 32      |  |                        |  |        | 
|Deposits with banks                      |  |       |  |                        | 246,687 |  |                        |  | 204,803 | 
|Cash and cash equivalents                |  | 27    |  |                        | 86,259  |  |                        |  | 87,543  | 
|                                         |  |       |  |                        |         |  |                        |  |         | 
|                                         |  |       | 
|                                         |  |       |  |                        | 382,685 |  |                        |  | 321,832 | 
|                                         |  |       |  |                        |         |  |                        |  |         | 



F-5



---

##### Table of Contents

Consolidated balance sheets

As at December 31 (continued)

(Expressed in Renminbi)



|                                                      |  |       |  |                       |         |  |                       |  |         | 
|----------------------------------------------------- |  | ----- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                                                      |  | Note  |  | As atDecember 31,2011 |         |  | As atDecember 31,2010 | 
|                                                      |  |       |  | RMB million           |         |  | RMB million           | 
|                                                      |  |       | 
|Current liabilities                                   |  |       |  |                       |         |  |                       |  |         | 
|                                                      |  |       | 
|Accounts payable                                      |  | 28    |  |                       | 116,266 |  |                       |  | 111,646 | 
|Bills payable                                         |  |       |  |                       | 1,616   |  |                       |  | 502     | 
|Deferred revenue                                      |  | 29    |  |                       | 51,753  |  |                       |  | 43,489  | 
|Accrued expenses and other payables                   |  | 31    |  |                       | 92,362  |  |                       |  | 85,716  | 
|Amount due to ultimate holding company                |  | 26    |  |                       | 285     |  |                       |  | 15      | 
|Amount due to immediate holding company               |  | 26    |  |                       | 33      |  |                       |  | 35      | 
|Interest-bearing borrowings                           |  | 30(a) |  |                       |        |  |                       |  | 4,981   | 
|Obligations under finance leases                      |  | 32    |  |                       | 68      |  |                       |  | 68      | 
|Current taxation                                      |  | 11(c) |  |                       | 10,861  |  |                       |  | 9,178   | 
|                                                      |  |       |  |                       |         |  |                       |  |         | 
|                                                      |  |       | 
|                                                      |  |       |  |                       | 273,244 |  |                       |  | 255,630 | 
|                                                      |  |       |  |                       |         |  |                       |  |         | 
|                                                      |  |       | 
|Net current assets                                    |  |       |  |                       | 109,441 |  |                       |  | 66,202  | 
|                                                      |  |       |  |                       |         |  |                       |  |         | 
|                                                      |  |       | 
|Total assets less current liabilities carried forward |  |       |  |                       | 679,314 |  |                       |  | 606,305 | 
|                                                      |  |       |  |                       |         |  |                       |  |         | 



F-6



---

##### Table of Contents

Consolidated balance sheets

As at December 31 (continued)

(Expressed in Renminbi)



|                                                                |  |      |  |                       |         |   |                       |  |         |  
|--------------------------------------------------------------- |  | ---- |  | --------------------- | ------- | - | --------------------- |  | ------- | -
|                                                                |  | Note |  | As atDecember 31,2011 |         |   | As atDecember 31,2010 | 
|                                                                |  |      |  | RMB million           |         |   | RMB million           | 
|                                                                |  |      | 
|Total assets less current liabilities brought forward           |  |      |  |                       | 679,314 |   |                       |  | 606,305 |  
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|Non-current liabilities                                         |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|Interest-bearing borrowings                                     |  | 30   |  |                       | (28,617 | ) |                       |  | (28,615 | )
|Deferred revenue, excluding current portion                     |  | 29   |  |                       | (261    | ) |                       |  | (248    | )
|Deferred tax liabilities                                        |  | 20   |  |                       | (17     | ) |                       |  | (39     | )
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|                                                                |  |      |  |                       | (28,895 | ) |                       |  | (28,902 | )
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|NET ASSETS                                                      |  |      |  |                       | 650,419 |   |                       |  | 577,403 |  
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|CAPITAL AND RESERVES                                            |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|Share capital                                                   |  |      |  |                       | 2,140   |   |                       |  | 2,139   |  
|Reserves                                                        |  |      |  |                       | 646,924 |   |                       |  | 574,018 |  
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|Total equity attributable to equity shareholders of the Company |  |      |  |                       | 649,064 |   |                       |  | 576,157 |  
|                                                                |  |      | 
|Non-controlling interests                                       |  |      |  |                       | 1,355   |   |                       |  | 1,246   |  
|                                                                |  |      |  |                       |         |   |                       |  |         |  
|                                                                |  |      | 
|TOTAL EQUITY                                                    |  |      |  |                       | 650,419 |   |                       |  | 577,403 |  
|                                                                |  |      |  |                       |         |   |                       |  |         |  

Approved and authorized for issue by the Board of Directors on March 15, 2012.

Li Yue

Director

Xue Taohai

Director

The notes on pages F-13 to F-71 form part of these consolidated financial statements.



F-7



---

##### Table of Contents

Consolidated statements of changes in equity

For the years ended December 31

(Expressed in Renminbi)



|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |     |  |  |  |         |  
|------------------------------------------------------------------- |  | -------------------------------------------------- | ----- |  | ------------ |  | ------- | -------------- |  |  | -------------- | - |  | --------------- | -- |  | -------------------- |  | ------ | --------------- |  |  | ---------- |  |  | ------------------------ | ------- | - | ----------- |  | ------- | - |  |  | --- |  |  |  | ------- | -
|                                                                    |  | Attributable to equity shareholders of the Company |       |  |              |  |         |                | 
|                                                                    |  | ShareCapital                                       |       |  | Sharepremium |  |         | Capitalreserve |  |  | Generalreserve |   |  | Exchangereserve |    |  | PRCstatutoryreserves |  |        | Retainedprofits |  |  | Total      |  |  | Non-controllinginterests |         |   | Totalequity | 
|                                                                    |  | RMBmillion                                         |       |  | RMBmillion   |  |         | RMBmillion     |  |  | RMBmillion     |   |  | RMBmillion      |    |  | RMBmillion           |  |        | RMBmillion      |  |  | RMBmillion |  |  | RMBmillion               |         |   | RMBmillion  | 
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at January 1, 2009                                               |  |                                                    | 2,138 |  |              |  | 386,237 |                |  |  | (291,965       | ) |  |                 | 72 |  |                      |  | (1,081 | )               |  |  | 106,841    |  |  |                          | 237,780 |   |             |  | 440,022 |   |  |  | 629 |  |  |  | 440,651 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Changes in equity for 2009:                                         |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |     |  |  |  |         |  
|Profit for the year                                                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | 115,166 |   |             |  | 115,166 |   |  |  | 257 |  |  |  | 115,423 |  
|Other comprehensive income                                          |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  | 42     |                 |  |  |           |  |  |                          |        |   |             |  | 42      |   |  |  |    |  |  |  | 42      |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |     |  |  |  |         |  
|Total comprehensive income for the year                             |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  | 42     |                 |  |  |           |  |  |                          | 115,166 |   |             |  | 115,208 |   |  |  | 257 |  |  |  | 115,465 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Dividends approved in respect of the previous year (note 35(a)(ii)) |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (24,823 | ) |             |  | (24,823 | ) |  |  |    |  |  |  | (24,823 | )
|Dividends declared in respect of the current year (note 35(a)(i))   |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (23,791 | ) |             |  | (23,791 | ) |  |  |    |  |  |  | (23,791 | )
|Shares issued under share option scheme                             |  |                                                    | 1     |  |              |  | 138     |                |  |  | (7             | ) |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          |        |   |             |  | 132     |   |  |  |    |  |  |  | 132     |  
|Transfer to PRC statutory reserves (note 35(c)(ii))                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  | 23,077     |  |  |                          | (23,077 | ) |             |  |        |   |  |  |    |  |  |  |        |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |     |  |  |  |         |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at December 31, 2009                                             |  |                                                    | 2,139 |  |              |  | 386,375 |                |  |  | (291,972       | ) |  |                 | 72 |  |                      |  | (1,039 | )               |  |  | 129,918    |  |  |                          | 281,255 |   |             |  | 506,748 |   |  |  | 886 |  |  |  | 507,634 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |     |  |  |  |         |  

The notes on pages F-13 to F-71 form part of these consolidated financial statements.



F-8



---

##### Table of Contents

Consolidated statements of changes in equity

For the years ended December 31 (continued)

(Expressed in Renminbi)



|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|------------------------------------------------------------------- |  | -------------------------------------------------- | ----- |  | ------------ |  | ------- | -------------- |  |  | -------------- | - |  | --------------- | -- |  | -------------------- |  | ------ | --------------- |  |  | ---------- |  |  | ------------------------ | ------- | - | ----------- |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                                    |  | Attributable to equity shareholders of the Company |       |  |              |  |         |                | 
|                                                                    |  | ShareCapital                                       |       |  | Sharepremium |  |         | Capitalreserve |  |  | Generalreserve |   |  | Exchangereserve |    |  | PRCstatutoryreserves |  |        | Retainedprofits |  |  | Total      |  |  | Non-controllinginterests |         |   | Totalequity | 
|                                                                    |  | RMBmillion                                         |       |  | RMBmillion   |  |         | RMBmillion     |  |  | RMBmillion     |   |  | RMBmillion      |    |  | RMBmillion           |  |        | RMBmillion      |  |  | RMBmillion |  |  | RMBmillion               |         |   | RMBmillion  | 
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at January 1, 2010                                               |  |                                                    | 2,139 |  |              |  | 386,375 |                |  |  | (291,972       | ) |  |                 | 72 |  |                      |  | (1,039 | )               |  |  | 129,918    |  |  |                          | 281,255 |   |             |  | 506,748 |   |  |  | 886   |   |  |  | 507,634 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Changes in equity for 2010:                                         |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|Profit for the year                                                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | 119,640 |   |             |  | 119,640 |   |  |  | 384   |   |  |  | 120,024 |  
|Other comprehensive income                                          |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  | (135   | )               |  |  |           |  |  |                          |        |   |             |  | (135    | ) |  |  |      |   |  |  | (135    | )
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|Total comprehensive income for the year                             |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  | (135   | )               |  |  |           |  |  |                          | 119,640 |   |             |  | 119,505 |   |  |  | 384   |   |  |  | 119,889 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Dividends approved in respect of the previous year (note 35(a)(ii)) |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (25,651 | ) |             |  | (25,651 | ) |  |  |      |   |  |  | (25,651 | )
|Dividends declared in respect of the current year (note 35(a)(i))   |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (24,550 | ) |             |  | (24,550 | ) |  |  | (24   | ) |  |  | (24,574 | )
|Shares issued under share option scheme                             |  |                                                    |      |  |              |  | 101     |                |  |  | (8             | ) |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          |        |   |             |  | 93      |   |  |  |      |   |  |  | 93      |  
|Transfer to PRC statutory reserves (note 35(c)(ii))                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  | 24,260     |  |  |                          | (24,248 | ) |             |  | 12      |   |  |  |      |   |  |  | 12      |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at December 31, 2010                                             |  |                                                    | 2,139 |  |              |  | 386,476 |                |  |  | (291,980       | ) |  |                 | 72 |  |                      |  | (1,174 | )               |  |  | 154,178    |  |  |                          | 326,446 |   |             |  | 576,157 |   |  |  | 1,246 |   |  |  | 577,403 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  

The notes on pages F-13 to F-71 form part of these consolidated financial statements.



F-9



---

##### Table of Contents

Consolidated statements of changes in equity

For the years ended December 31 (continued)

(Expressed in Renminbi)



|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|------------------------------------------------------------------- |  | -------------------------------------------------- | ----- |  | ------------ |  | ------- | -------------- |  |  | -------------- | - |  | --------------- | -- |  | -------------------- |  | ------ | --------------- |  |  | ---------- |  |  | ------------------------ | ------- | - | ----------- |  | ------- | - |  |  | ----- | - |  |  | ------- | -
|                                                                    |  | Attributable to equity shareholders of the Company |       |  |              |  |         |                | 
|                                                                    |  | Sharecapital                                       |       |  | Sharepremium |  |         | Capitalreserve |  |  | Generalreserve |   |  | Exchangereserve |    |  | PRCstatutoryreserves |  |        | Retainedprofits |  |  | Total      |  |  | Non-controllinginterests |         |   | Totalequity | 
|                                                                    |  | RMBmillion                                         |       |  | RMBmillion   |  |         | RMBmillion     |  |  | RMBmillion     |   |  | RMBmillion      |    |  | RMBmillion           |  |        | RMBmillion      |  |  | RMBmillion |  |  | RMBmillion               |         |   | RMBmillion  | 
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at January 1, 2011                                               |  |                                                    | 2,139 |  |              |  | 386,476 |                |  |  | (291,980       | ) |  |                 | 72 |  |                      |  | (1,174 | )               |  |  | 154,178    |  |  |                          | 326,446 |   |             |  | 576,157 |   |  |  | 1,246 |   |  |  | 577,403 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Changes in equity for 2011:                                         |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|Profit for the year                                                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | 125,870 |   |             |  | 125,870 |   |  |  | 109   |   |  |  | 125,979 |  
|Other comprehensive income                                          |  |                                                    |      |  |              |  |        |                |  |  | (229           | ) |  |                 |   |  |                      |  | (309   | )               |  |  |           |  |  |                          |        |   |             |  | (538    | ) |  |  | (2    | ) |  |  | (540    | )
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|Total comprehensive income for the year                             |  |                                                    |      |  |              |  |        |                |  |  | (229           | ) |  |                 |   |  |                      |  | (309   | )               |  |  |           |  |  |                          | 125,870 |   |             |  | 125,332 |   |  |  | 107   |   |  |  | 125,439 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|Dividends approved in respect of the previous year (note 35(a)(ii)) |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (26,718 | ) |             |  | (26,718 | ) |  |  |      |   |  |  | (26,718 | )
|Dividends declared in respect of the current year (note 35(a)(i))   |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          | (25,857 | ) |             |  | (25,857 | ) |  |  |      |   |  |  | (25,857 | )
|Shares issued under share option scheme (note 35(b)(ii))            |  |                                                    | 1     |  |              |  | 153     |                |  |  | (18            | ) |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          |        |   |             |  | 136     |   |  |  |      |   |  |  | 136     |  
|Transfer to PRC statutory reserves (note 35(c)(ii))                 |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  | 25,058     |  |  |                          | (25,044 | ) |             |  | 14      |   |  |  |      |   |  |  | 14      |  
|Partial disposal of a subsidiary                                    |  |                                                    |      |  |              |  |        |                |  |  |               |   |  |                 |   |  |                      |  |       |                 |  |  |           |  |  |                          |        |   |             |  |        |   |  |  | 2     |   |  |  | 2       |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  | 
|As at December 31, 2011                                             |  |                                                    | 2,140 |  |              |  | 386,629 |                |  |  | (292,227       | ) |  |                 | 72 |  |                      |  | (1,483 | )               |  |  | 179,236    |  |  |                          | 374,697 |   |             |  | 649,064 |   |  |  | 1,355 |   |  |  | 650,419 |  
|                                                                    |  |                                                    |       |  |              |  |         |                |  |  |                |   |  |                 |    |  |                      |  |        |                 |  |  |            |  |  |                          |         |   |             |  |         |   |  |  |       |   |  |  |         |  

The notes on pages F-13 to F-71 form part of these consolidated financial statements.



F-10



---

##### Table of Contents

Consolidated cash flow statements

For the years ended December 31

(Expressed in Renminbi)



|                                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|--------------------------------------------------------------- |  | ---- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                                |  | Note |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                                                |  |      |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                                                |  |      |  |            
|Operating activities                                            |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                |  |      |  |            
|Profit before taxation                                          |  |      |  |             | 166,582 |   |             |  | 159,071 |             |  |  | 153,836 |  
|Adjustments for:                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|- Depreciation of property, plant and equipment                 |  | 13   |  |             | 97,113  |   |             |  | 86,230  |             |  |  | 80,179  |  
|- Amortization of other intangible assets                       |  | 5    |  |             | 54      |   |             |  | 62      |             |  |  | 56      |  
|- Amortization of land lease prepayments                        |  |      |  |             | 325     |   |             |  | 298     |             |  |  | 261     |  
|- Loss on disposal of property, plant and equipment             |  | 5    |  |             | 3       |   |             |  |        |             |  |  | 11      |  
|- Write-off of property, plant and equipment                    |  | 5    |  |             | 5,853   |   |             |  | 2,763   |             |  |  | 4,493   |  
|- Impairment loss of doubtful accounts                          |  | 5    |  |             | 3,548   |   |             |  | 4,019   |             |  |  | 4,503   |  
|- Impairment loss of inventories                                |  | 5    |  |             | 87      |   |             |  | 55      |             |  |  | 16      |  
|- Interest income                                               |  |      |  |             | (8,413  | ) |             |  | (5,658  | )           |  |  | (5,940  | )
|- Finance costs                                                 |  | 8    |  |             | 565     |   |             |  | 902     |             |  |  | 1,243   |  
|- Dividend income from unlisted securities                      |  | 7    |  |             | (13     | ) |             |  | (17     | )           |  |  | (18     | )
|- Share of profit of associates                                 |  |      |  |             | (4,306  | ) |             |  | (558    | )           |  |  |        |  
|- Share of loss of jointly controlled entity                    |  | 19   |  |             | 1       |   |             |  | 18      |             |  |  | 8       |  
|- Unrealized exchange loss/(gain), net                          |  | 7    |  |             | 9       |   |             |  | 6       |             |  |  | (3      | )
|                                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                |  |      |  |            
|Operating cashflow before changes in working capital            |  |      |  |             | 261,408 |   |             |  | 247,191 |             |  |  | 238,645 |  
|Increase in inventories                                         |  |      |  |             | (3,492  | ) |             |  | (457    | )           |  |  | (369    | )
|Increase in accounts receivable                                 |  |      |  |             | (4,865  | ) |             |  | (5,232  | )           |  |  | (3,945  | )
|(Increase)/decrease in other receivables                        |  |      |  |             | (258    | ) |             |  | 170     |             |  |  | 127     |  
|Increase in prepayments and other current assets                |  |      |  |             | (2,613  | ) |             |  | (1,087  | )           |  |  | (1,423  | )
|Decrease/(increase) in amount due from ultimate holding company |  |      |  |             | 123     |   |             |  | (268    | )           |  |  | 84      |  
|Increase in accounts payable                                    |  |      |  |             | 651     |   |             |  | 5,704   |             |  |  | 2,598   |  
|Increase/(decrease) in bills payable                            |  |      |  |             | 614     |   |             |  | (1      | )           |  |  | 25      |  
|Increase in deferred revenue                                    |  |      |  |             | 8,277   |   |             |  | 7,847   |             |  |  | 2,376   |  
|Increase in accrued expenses and other payables                 |  |      |  |             | 6,719   |   |             |  | 16,369  |             |  |  | 11,946  |  
|Increase/(decrease) in amount due to ultimate holding company   |  |      |  |             | 270     |   |             |  | 11      |             |  |  | (2      | )
|                                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                |  |      |  |            
|Cash generated from operations                                  |  |      |  |             | 266,834 |   |             |  | 270,247 |             |  |  | 250,062 |  
|                                                                |  |      |  |            
|Tax paid                                                        |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|- Hong Kong profits tax paid                                    |  |      |  |             | (134    | ) |             |  | (99     | )           |  |  | (80     | )
|- PRC enterprise income tax paid                                |  |      |  |             | (39,944 | ) |             |  | (38,769 | )           |  |  | (42,859 | )
|                                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                |  |      |  |            
|Net cash generated from operating activities carried forward    |  |      |  |             | 226,756 |   |             |  | 231,379 |             |  |  | 207,123 |  
|                                                                |  |      |  |             |         |   |             |  |         |             |  |  |         |  



F-11



---

##### Table of Contents

Consolidated cash flow statements

For the years ended December 31 (continued)

(Expressed in Renminbi)



|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|------------------------------------------------------------------------------------- |  | --------- |  | ----------- | -------- | - | ----------- |  | -------- | ----------- |  |  | -------- | -
|                                                                                      |  | Note      |  | 2011        |          |   | 2010        |  |          | 2009        | 
|                                                                                      |  |           |  | RMB million |          |   | RMB million |  |          | RMB million | 
|                                                                                      |  |           |  |            
|Net cash generated from operating activities brought forward                          |  |           |  |             | 226,756  |   |             |  | 231,379  |             |  |  | 207,123  |  
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Investing activities                                                                  |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Capital expenditure                                                                   |  |           |  |             | (123,331 | ) |             |  | (113,203 | )           |  |  | (115,314 | )
|Land lease prepayments                                                                |  |           |  |             | (1,083   | ) |             |  | (1,135   | )           |  |  | (1,361   | )
|Acquisition of other intangible assets                                                |  |           |  |             | (85      | ) |             |  | (162     | )           |  |  | (484     | )
|Proceeds from disposal of property, plant and equipment                               |  |           |  |             | 123      |   |             |  | 12       |             |  |  | 13       |  
|Increase in deposits with banks                                                       |  |           |  |             | (41,884  | ) |             |  | (19,190  | )           |  |  | (54,780  | )
|Increase in pledged bank deposits                                                     |  |           |  |             |         |   |             |  | (162     | )           |  |  |         |  
|Trust loan granted                                                                    |  |           |  |             | (14,000  | ) |             |  | (2,700   | )           |  |  |         |  
|Cash receipt from repayment of trust loan                                             |  |           |  |             | 2,700    |   |             |  |         |             |  |  |         |  
|Interest received                                                                     |  |           |  |             | 7,593    |   |             |  | 4,588    |             |  |  | 5,988    |  
|Acquisition of investment in an associate                                             |  |           |  |             |         |   |             |  | (39,617  | )           |  |  |         |  
|Acquisition of investment in a jointly controlled entity                              |  |           |  |             |         |   |             |  | (20      | )           |  |  | (7       | )
|Proceeds from acquisition of a subsidiary (net of cash and cash equivalents acquired) |  |           |  |             | 140      |   |             |  |         |             |  |  |         |  
|Dividends received from an associate                                                  |  |           |  |             | 458      |   |             |  |         |             |  |  |         |  
|Dividends received from unlisted securities                                           |  |           |  |             | 13       |   |             |  | 17       |             |  |  | 18       |  
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Net cash used in investing activities                                                 |  |           |  |             | (169,356 | ) |             |  | (171,572 | )           |  |  | (165,927 | )
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Financing activities                                                                  |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Proceeds from issuance of shares under share option scheme                            |  | 35(b)(ii) |  |             | 136      |   |             |  | 93       |             |  |  | 132      |  
|Interest paid                                                                         |  |           |  |             | (651     | ) |             |  | (919     | )           |  |  | (1,292   | )
|Dividends paid to the Companys equity shareholders                                   |  | 35(a)     |  |             | (52,575  | ) |             |  | (50,201  | )           |  |  | (48,614  | )
|Dividends paid to non-controlling interests                                           |  |           |  |             |         |   |             |  | (24      | )           |  |  |         |  
|Repayments of bonds and other loans                                                   |  |           |  |             | (5,330   | ) |             |  |         |             |  |  |         |  
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Net cash used in financing activities                                                 |  |           |  |             | (58,420  | ) |             |  | (51,051  | )           |  |  | (49,774  | )
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Net (decrease)/increase in cash and cash equivalents                                  |  |           |  |             | (1,020   | ) |             |  | 8,756    |             |  |  | (8,578   | )
|                                                                                      |  |           |  |            
|Cash and cash equivalents at beginning of year                                        |  |           |  |             | 87,543   |   |             |  | 78,894   |             |  |  | 87,426   |  
|                                                                                      |  |           |  |            
|Effect of changes in foreign exchange rate                                            |  |           |  |             | (264     | ) |             |  | (107     | )           |  |  | 46       |  
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  
|                                                                                      |  |           |  |            
|Cash and cash equivalents at end of year                                              |  | 27        |  |             | 86,259   |   |             |  | 87,543   |             |  |  | 78,894   |  
|                                                                                      |  |           |  |             |          |   |             |  |          |             |  |  |          |  

Significant non-cash transactions

The Group recorded payables of RMB60,357,000,000 (2010: RMB61,457,000,000; 2009: RMB52,427,000,000) and RMB835,000,000 (2010: RMB451,000,000; 2009: RMB591,000,000) to equipment suppliers and banks
respectively as at December 31, 2011 for additions of construction in progress during the year then ended.

The notes on pages F-13 to
F-71 form part of these consolidated financial statements.



F-12



---

##### Table of Contents

Notes to consolidated financial statements

(Expressed in Renminbi unless otherwise indicated)



|1 | Significant accounting policies
|- | -------------------------------



|(a) | Statement of compliance
|--- | -----------------------

These financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board
(IASB), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards (IASs) and Interpretations issued by the IASB. These consolidated financial
statements were authorized for issuance on March 15, 2012. A summary of the significant accounting policies adopted by the Company and its subsidiaries (together referred to as the Group) is set out below.



|(b) | Basis of preparation of the financial statements
|--- | ------------------------------------------------

The consolidated financial statements comprise the Group, the Groups interest in associates and a jointly controlled entity.

The measurement basis used in the preparation of the financial statements is the historical cost basis.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRSs that have significant effect on the financial statements and major sources of
estimation uncertainty are discussed in note 42.



|(c) | Subsidiaries and non-controlling interests
|--- | ------------------------------------------

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In
assessing control, potential voting rights that presently are exercisable are taken into account.



F-13



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(c) | Subsidiaries and non-controlling interests (continued)
|--- | ------------------------------------------------------



An investment in a subsidiary is consolidated into the consolidated financial statements
from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealized profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial
statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment.

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to the Company, and in respect of
which the Group has not agreed any additional terms with the holders of those interests which would result in the Group as a whole having a contractual obligation in respect of those interests that meets the definition of a financial liability. For
each business combination, the Group can elect to measure any non-controlling interests either at fair value or at their proportionate share of the subsidiarys net identifiable assets.

Non-controlling interests are presented in the consolidated balance sheets within equity, separately from equity attributable to the
equity shareholders of the Company. Non-controlling interests in the results of the Group are presented on the face of the consolidated statements of comprehensive income as an allocation of the total profit or loss and total comprehensive income
for the year between non-controlling interests and the equity shareholders of the Company.

Changes in the Groups
interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated equity to reflect the change in
relative interests, but no adjustments are made to goodwill and no gain or loss is recognized.

When the Group loses control of
a subsidiary, it is accounted for as a disposal of the entire interest in that subsidiary, with a resulting gain or loss being recognized in profit or loss. Any interest retained in that former subsidiary at the date when control is lost is
recognized at fair value and this amount is regarded as the fair value on initial recognition of a financial asset (see note 1(g)) or, when appropriate, the cost on initial recognition of an investment in an associate or jointly controlled entity
(see note 1(d)).



|(d) | Associates and jointly controlled entities
|--- | ------------------------------------------

An associate is an entity 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.

A jointly controlled entity is an entity which operates under a contractual arrangement between the Group and other parties,
where the contractual arrangement establishes that the Group and one or more of the other parties share joint control over the economic activity of the entity.

An investment in an associate or a jointly controlled entity is accounted for in the consolidated financial statements under the equity method.



F-14



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(d) | Associates and jointly controlled entities (continued)
|--- | ------------------------------------------------------



Under the equity method, the investment is initially recorded at cost, adjusted for any
excess of the Groups share of the acquisition-date fair values of the investees identifiable net assets over the cost of the investment (if any). Thereafter, the investment is adjusted for the post-acquisition change in the Groups
share of the investees net assets and any impairment loss relating to the investment (see notes 1(j)). The Groups share of the post-acquisition, post-tax results of the investee and any impairment losses for the year are recognized as
share of profit or loss in the consolidated statements of comprehensive income, whereas the Groups share of the post-acquisition post-tax items of the investees other comprehensive income is recognized as other comprehensive income in
the consolidated statements of comprehensive income.

When the Groups share of losses exceeds its interest in the
associate or the jointly controlled entity, the Groups interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the investee. For this purpose, the Groups interest in the investee is the carrying amount of the investment under the equity method together with the Groups long-term interests that in substance form part of the Groups net
investment in the associate or the jointly controlled entity.

Unrealized profits and losses resulting from transactions
between the Group and its associates and a jointly controlled entity are eliminated to the extent of the Groups interest in the investee, except where unrealized losses provide evidence of an impairment of the asset transferred, in which case
they are recognized immediately in profit or loss.



|(e) | Goodwill
|--- | --------

Goodwill
represents the excess of



| | (i) | the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the Groups
previously held equity interest in the acquiree; over
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | the net fair value of the acquirees identifiable assets and liabilities measured as at the acquisition date.
| | ---- | -------------------------------------------------------------------------------------------------------------

When (ii) is greater than (i), then this excess is recognised immediately in profit or loss as a gain on a bargain purchase.

Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each
cash-generating units, or groups of cash-generating units, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 1(j)).

On disposal of a cash-generating unit during the year, any attributable amount of purchased goodwill is included in the calculation of the
gain or loss on disposal.



F-15



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(f) | Other intangible assets
|--- | -----------------------

Other intangible assets that are acquired by the Group are stated in the balance sheets at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses (see note
1(j)). Amortization of intangible assets with finite useful lives is recorded in other operating expenses on a straight-line basis over the assets estimated useful lives, from the date they are available for use. Both the period and method of
amortization are reviewed annually.

Intangible assets are not amortized while their useful lives are assessed to be
indefinite. Any conclusion that the useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. If they do not, the
change in useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite lives as set out above.



|(g) | Other investments in equity securities
|--- | --------------------------------------

The Groups accounting policies for investments in equity securities, other than investments in subsidiaries, associates and a jointly controlled entity, are as follows:

Investments in equity securities that do not have a quoted market price in an active market and whose fair value cannot be reliably
measured are recognized in the balance sheets at cost less impairment losses (see note 1(j)).

Investments are
recognized/derecognized on the date the Group commits to purchase/sell the investments.



|(h) | Property, plant and equipment
|--- | -----------------------------

Property, plant and equipment are stated in the balance sheets at cost less accumulated depreciation and impairment losses (see note 1(j)).

The cost of property, plant and equipment comprises the purchase price and any directly attributable costs of bringing the asset to its
working location and condition for its intended use. Subsequent expenditure relating to an item of property, plant and equipment that has already been recognized is added to the carrying amount of the asset when it is probable that future economic
benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the enterprise. All other subsequent expenditure is recognized as an expense in the period in which it is incurred.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference
between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal.



F-16



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(h) | Property, plant and equipment (continued)
|--- | -----------------------------------------



Depreciation is calculated to write off the cost of items of property, plant and
equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:



|                                                                                             |  |  |              | 
|-------------------------------------------------------------------------------------------- |  |  | ------------ | 
|Buildings                                                                                    |  |  | 8 - 30 years | 
|Telecommunications transceivers, switching centers, transmission and other network equipment |  |  | 5 - 10 years | 
|Office equipment, furniture and fixtures and others                                          |  |  | 3 - 10 years | 

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item
is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.



|(i) | Leased assets
|--- | -------------

An
arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series
of payments. Such a determination is made on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.



| | (i) | Classification of assets leased to the Group
| | --- | --------------------------------------------

Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not
transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.



| | (ii) | Assets acquired under finance leases
| | ---- | ------------------------------------

Where the Group acquires the use of assets under finance 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 property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as obligations under finance leases. Depreciation is provided for at rates, which write off the cost of the assets 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 1(h). Impairment losses are accounted for in accordance with the accounting policy as set out in note 1(j). Finance
charges implicit in the lease payments are charged to profit or loss 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 period. Contingent
rentals are charged to profit or loss in the accounting period in which they are incurred. There were no contingent rentals recognized by the Group during the years presented.



F-17



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(i) | Leased assets (continued)
|--- | -------------------------



| | (iii) | Operating lease charges
| | ----- | -----------------------

Where
the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss 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 profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss
in the accounting period in which they are incurred. There were no contingent rentals recognized by the Group during the years presented.

The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the period of the lease term.



|(j) | Impairment of assets
|--- | --------------------



| | (i) | Impairment of investments in equity securities and receivables
| | --- | --------------------------------------------------------------

Investments in equity securities and receivables that are stated at cost or amortized cost are reviewed at the end of each reporting date to determine whether there is objective evidence of impairment.
Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events:



| |  |  | significant financial difficulty of the debtor;
| | - |  | -----------------------------------------------



| |  |  | a breach of contract, such as a default or delinquency in interest or principal payments;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | it becoming probable that the debtor will enter bankruptcy or other financial reorganization;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | a significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
| | - |  | -------------------------------------------------------------------------------------------------------------

If any such evidence exists, impairment loss is determined and recognized as follows:



| |  |  | For investments in associates and jointly controlled entities recognized using the equity method (see note 1(d)), the impairment loss is measured by
comparing the recoverable amount of the investment with its carrying amount in accordance with note 1(j)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount in
accordance with note 1(j)(ii).
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-18



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(j) | Impairment of assets (continued)
|--- | --------------------------------



| | (i) | Impairment of investments in equity securities and receivables (continued)
| | --- | --------------------------------------------------------------------------



| |  |  | For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset
and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities are not reversed (see note 1(j)(ii)).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For trade and other current receivables and other financial assets carried at amortized cost, the impairment loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets),
where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash
flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If in a subsequent period the amount of impairment loss decreases and the decrease can be linked objectively to an event occurring after
the impairment loss was recognized, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the assets carrying amount exceeding that which would have been determined had no impairment loss
been recognized in prior years.

Impairment losses are written off against the corresponding assets directly, except for
impairment losses recognized in respect of debtors included within trade and other receivables, whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account.
When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts
previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.



F-19



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(j) | Impairment of assets (continued)
|--- | --------------------------------



| | (ii) | Impairment of other assets
| | ---- | --------------------------

Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following
assets may be impaired or, except in the case of goodwill, an impairment loss previously recognized no longer exists or may have decreased:



| |  |  | property, plant and equipment;
| | - |  | ------------------------------



| |  |  | construction in progress;
| | - |  | -------------------------



| |  |  | prepaid interests in leasehold land classified as being held under an operating lease;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | goodwill; and
| | - |  | -------------



| |  |  | other intangible assets.
| | - |  | ------------------------

If any such indication exists, the assets recoverable amount is estimated. For goodwill and other intangible assets that have indefinite useful lives, the recoverable amount is estimated annually
whether or not there is any indication of impairment.



| |  |  | Calculation of recoverable amount
| | - |  | ---------------------------------

The recoverable amount of an asset is the greater of its fair value less costs to sell 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 the 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).



| |  |  | Recognition of impairment losses
| | - |  | --------------------------------

An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in
respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units)
on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.



| |  |  | Reversals of impairment losses
| | - |  | ------------------------------

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of
goodwill is not reversed.

A reversal of an impairment loss 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 profit or loss in the year in which the reversals are recognized.



F-20



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(j) | Impairment of assets (continued)
|--- | --------------------------------



| | (iii) | Interim financial reporting and impairment
| | ----- | ------------------------------------------

The Group prepares an interim financial report in compliance with IAS 34, Interim financial reporting, in respect of the first six months of the financial year. At the end of the interim period, the Group
applies the same impairment testing, recognition, and reversal criteria as it would at the end of the financial year (see notes 1(j)(i) and (ii)).

Impairment losses recognized in an interim period in respect of goodwill and unquoted equity securities carried at cost are not reversed in a subsequent period. This is the case even if no losses, or a
smaller loss, would have been recognized had the impairment been assessed only at the end of the financial year to which the interim period relates. No impairment losses were recognized in respect of goodwill and unquoted equity securities carried
at cost during the interim period.



|(k) | Construction in progress
|--- | ------------------------

Construction in progress is stated at cost less impairment losses (see note 1(j)). Cost comprises direct costs of construction as well as interest expense and exchange differences capitalized during the
periods of construction and installation. Capitalization of these costs ceases and the construction in progress is transferred to property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended
use are completed. No depreciation is provided for in respect of construction in progress until it is completed and ready for its intended use. No exchange difference was capitalized to construction in progress during the years presented.



|(l) | Inventories
|--- | -----------

Inventories are carried 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 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 net 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 period 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 period in which the reversal occurs. No reversal of any write-down of inventories occurred during the years
presented.



|(m) | Accounts receivable and other receivables
|--- | -----------------------------------------

Accounts receivable and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest method less allowance for impairment loss (see note
1(j)), except where the effect of discounting would be immaterial. In such case, the receivables are stated at cost less allowance for impairment loss (see note 1(j)).



F-21



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(n) | Deferred revenue
|--- | ----------------

Deferred revenue consists primarily of prepaid service fees received from customers, revenue deferred for unredeemed point rewards under
Customer Point Reward Program (Reward Program) and deferred tax credit on purchase of domestic telecommunications equipment.

Revenue from prepaid service fees are recognized when the mobile telecommunications services are rendered.

Revenue deferred for unredeemed point rewards are recognized when such rewards are redeemed or expired.

Deferred tax credit on purchase of domestic telecommunications equipment is amortized over the remaining lives of the related equipment as
a reduction to income tax expense.



|(o) | Interest-bearing borrowings
|--- | ---------------------------

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any
difference between the amount initially recognized and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.



|(p) | Accounts payable and other payables
|--- | -----------------------------------

Accounts payable and other payables are initially recognized at fair value and subsequently stated at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at
cost.



|(q) | 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.



|(r) | Revenue recognition
|--- | -------------------

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will
flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows:



| | (i) | revenue derived from voice and data services are recognized when the service is rendered;
| | --- | -----------------------------------------------------------------------------------------



| | (ii) | revenue from prepaid services is recognized when the mobile telecommunications services are delivered based upon actual usage by customers;
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | sales of SIM cards and terminals are recognized on delivery of goods to the buyer and such amount, net of cost of goods sold, is included in other net income due to its
insignificance;
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-22



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##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(r) | Revenue recognition (continued)
|--- | -------------------------------



| | (iv) | interest income is recognized as it accrues using the effective interest method; and
| | ---- | ------------------------------------------------------------------------------------



| | (v) | revenue from a fixed price contract is recognized using the percentage of completion method.
| | --- | --------------------------------------------------------------------------------------------



|(s) | Income tax
|--- | ----------

Income
tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to business
combination, or items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise
from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses
and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to
the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary
differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same
period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable
temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are
expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.

The limited exceptions to
recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided
they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the
differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.



F-23



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##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(s) | Income tax (continued)
|--- | ----------------------



The carrying amount of a deferred tax asset is reviewed at the end of each reporting
period and is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented
separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Group has the legal, enforceable right to set off current tax assets
against current tax liabilities and the following additional conditions are met:



| |  |  | in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | the same taxable entity; or
| | - |  | ---------------------------



| |  |  | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled
or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(t) | 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.



F-24



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##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(u) | Employee benefits
|--- | -----------------



| | (i) | Short term employee benefits and contributions to defined contribution retirement plans
| | --- | ---------------------------------------------------------------------------------------

Salaries, annual bonuses, paid annual leave, leave passage, contributions to defined contribution plans and the cost of non-monetary
benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

The Company and subsidiaries incorporated in the Hong Kong Special Administrative Region of the PRC (Hong Kong) are required
to make contributions to Mandatory Provident Funds under the Hong Kong Mandatory Provident Fund Schemes Ordinance. Such contributions are recognized as an expense in profit or loss as incurred.

The employees of the subsidiaries in Mainland China (For the purpose of preparing these financial statements, Mainland China refers to the
Peoples Republic of China (the PRC) excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan.) participate in the 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 or in accordance with the terms
of the plans. The Groups contributions to these plans are charged to profit or loss when incurred. The subsidiaries have no obligations for the payment of retirement and other post-retirement benefits of staff other than the contributions
described above.



| | (ii) | Share-based payments
| | ---- | --------------------

The fair
value of share options granted to employees is recognized as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the binomial lattice model, taking into account the terms
and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking
into account the probability that the options will vest.

During the vesting period, the number of share options that is
expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognized in prior years is charged/credited to the profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an
asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that vest (with a corresponding adjustment to the capital reserve) except
where forfeiture is only due to not achieving vesting conditions that relate to the market price of the Companys shares. The equity amount is recognized in the capital reserve until either the option is exercised (when it is transferred to the
share premium account) or the option expires (when it is released directly to retained profits).



F-25



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(u) | Employee benefits (continued)
|--- | -----------------------------



| | (iii) | Termination benefits
| | ----- | --------------------

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.



|(v) | Borrowing costs
|--- | ---------------

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being
incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceased when substantially all the activities
necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.



|(w) | Translation of foreign currencies
|--- | ---------------------------------

The primary functional currency of entities within the Group is Renminbi (RMB). The Group adopted RMB as its presentation currency in the preparation of the annual financial statements, which
is the currency of the primary economic environment in which most of the Groups entities operate.

Foreign currency
transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in currencies other than the functional currency are translated at the foreign exchange rates
ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.

Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in foreign currencies that are stated at
fair value are translated using the foreign exchange rates ruling at the dates the fair value was determined.

The results of
overseas entities are translated into RMB at the exchange rates approximating the foreign exchange rate ruling at the dates of transactions. Balance sheets items are translated into RMB at the exchange rates ruling at the balance sheet date. The
resulting exchange differences are recognized in other comprehensive income and accumulated separately in equity in the exchange reserve. On disposal of an overseas entity, the cumulative amount of the exchange differences relating to that
particular foreign operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognized.



F-26



---

##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(w) | Translation of foreign currencies (continued)
|--- | ---------------------------------------------



For the purpose of the consolidated cash flow statements, the cash flows of overseas
entities within the Group are translated into RMB by using the exchange rates approximating the foreign exchange rate ruling at the dates of the cash flows.



|(x) | Related parties
|--- | ---------------



| | (a) | A person, or a close member of that persons family, is related to the Group if that person:
| | --- | --------------------------------------------------------------------------------------------



| | (i) | has control or joint control over the Group;
| | --- | --------------------------------------------



| | (ii) | has significant influence over the Group; or
| | ---- | --------------------------------------------



| | (iii) | is a member of the key management personnel of the Group or the Groups parent.
| | ----- | -------------------------------------------------------------------------------



| | (b) | An entity is related to the Group if any of the following conditions applies:
| | --- | -----------------------------------------------------------------------------



| | (i) | The entity and the Group are members of the same Group (which means that each parent, subsidiary and fellow subsidiary is related to the others);
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a Group of which the other entity is a member);
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | Both entities are joint ventures of the same third party;
| | ----- | ---------------------------------------------------------



| | (iv) | One entity is a joint venture of a third entity and the other entity is an associate of the third entity;
| | ---- | ---------------------------------------------------------------------------------------------------------



| | (v) | The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
| | --- | --------------------------------------------------------------------------------------------------------------------------------



| | (vi) | The entity is controlled or jointly controlled by a person identified in (a); or
| | ---- | --------------------------------------------------------------------------------



| | (vii) | A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Close members of the family of a person are those family members who may be expected to influence, or be
influenced by, that person in their dealings with the entity.



F-27



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##### Table of Contents

|1 | Significant accounting policies (continued)
|- | -------------------------------------------



|(y) | Segment reporting
|--- | -----------------

An operating segment is a component of the Group that engages in business activities from which the Group may earn revenue and incur
expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Groups chief operating decision maker in order to allocate resource and assess performance of the segment. For the
periods presented, the Group as a whole is an operating segment since the Group is only engaged in mobile telecommunication and related business. No Groups geographical information has been disclosed as the majority of the Groups
operating activities are carried out in Mainland China. The Groups assets located and operating revenue derived from activities outside Mainland China are less than 5% of the Groups assets and operating revenue, respectively.



|2 | Changes in accounting policies
|- | ------------------------------

The IASB has issued a number of new or revised IFRSs that are first effective or available for early adoption for accounting periods beginning on or after January 1, 2011.

Of these, the following developments are relevant to the Groups financial statements:



| |  |  | IAS 24 (revised 2009), Related party disclosures
| | - |  | ------------------------------------------------



| |  |  | Improvements to IFRSs (2010)
| | - |  | ----------------------------

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period (see note 43).

The impacts of the developments are discussed below:



| |  |  | IAS 24 (revised 2009) revises the definition of a related party. As a result, the Group has re-assessed the identification of related parties and
concluded that the revised definition does not have any material impact on the Groups related party disclosures in the current and previous periods. IAS 24 (revised 2009) also introduces modified disclosure requirements for government-related
entities. As a result, the Group has re-assessed the modified disclosure requirements for government-related entities and revised the disclosures accordingly.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Improvements to IFRSs (2010) omnibus standard introduce a number of amendments to the disclosure requirements in IFRS 7, Financial instruments: Disclosures. The disclosures about the Groups
financial instruments have been conformed to the amended disclosure requirements. These amendments do not have any material impact on the classification, recognition and measurements of the amounts recognized in the financial statements in the
current and previous periods.



F-28



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##### Table of Contents

|3 | Turnover
|- | --------

The principal
activities of the Group are the provision of mobile telecommunications and related services in thirty-one provinces, autonomous regions and municipalities of Mainland China and in Hong Kong.

During the year, following a review of the presentation of the components of revenue, the Group re-categorized the presentation of revenue
in the consolidated statements of comprehensive income. The new presentation categorizes operating revenue into voice services revenue, data services revenue and other operating revenue. Voice services revenue mainly includes revenue derived from
voice usage services (including usage fees and monthly fee) and from voice value-added services which were categorized in value-added services in prior years presentation. Data services revenue includes revenue derived from short message
services (SMS) and multimedia message services (MMS), wireless data traffic, and applications and information services. Other operating revenue mainly includes interconnection revenue.

This change in presentation has no effect on reported profit or loss, total income and expense or net assets for any of the periods
presented. The comparative figures have been reclassified to conform to current years presentation.



|4 | Personnel
|- | ---------



|                                                                         |  |             |        |  |             |  |        |             |  |  |        | 
|------------------------------------------------------------------------ |  | ----------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                                                         |  | 2011        |        |  | 2010        |  |        | 2009        | 
|                                                                         |  | RMB million |        |  | RMB million |  |        | RMB million | 
|                                                                         |  |             |       
|Salaries, wages and other benefits                                       |  |             | 25,498 |  |             |  | 22,039 |             |  |  | 19,316 | 
|Retirement costs: contributions to defined contribution retirement plans |  |             | 3,174  |  |             |  | 2,485  |             |  |  | 2,164  | 
|                                                                         |  |             |        |  |             |  |        |             |  |  |        | 
|                                                                         |  |             |       
|                                                                         |  |             | 28,672 |  |             |  | 24,524 |             |  |  | 21,480 | 
|                                                                         |  |             |        |  |             |  |        |             |  |  |        | 



|5 | Other operating expenses
|- | ------------------------



|                                                  |  |             |         |  |             |  |         |             |  |  |        | 
|------------------------------------------------- |  | ----------- | ------- |  | ----------- |  | ------- | ----------- |  |  | ------ | 
|                                                  |  | 2011        |         |  | 2010        |  |         | 2009        | 
|                                                  |  | RMB million |         |  | RMB million |  |         | RMB million | 
|                                                  |  |             |        
|Maintenance                                       |  |             | 35,096  |  |             |  | 31,390  |             |  |  | 28,109 | 
|Impairment loss of doubtful accounts              |  |             | 3,548   |  |             |  | 4,019   |             |  |  | 4,503  | 
|Impairment loss of inventories                    |  |             | 87      |  |             |  | 55      |             |  |  | 16     | 
|Amortization of other intangible assets           |  |             | 54      |  |             |  | 62      |             |  |  | 56     | 
|Operating lease charges                           |  |             |         |  |             |  |         |             |  |  |        | 
|- land and buildings                              |  |             | 8,150   |  |             |  | 7,208   |             |  |  | 6,449  | 
|- others (Note 1)                                 |  |             | 3,085   |  |             |  | 2,631   |             |  |  | 2,302  | 
|Loss on disposal of property, plant and equipment |  |             | 3       |  |             |  |        |             |  |  | 11     | 
|Write-off of property, plant and equipment        |  |             | 5,853   |  |             |  | 2,763   |             |  |  | 4,493  | 
|Auditors remuneration                            |  |             |         |  |             |  |         |             |  |  |        | 
|- audit services (Note 2)                         |  |             | 84      |  |             |  | 83      |             |  |  | 80     | 
|- tax services (Note 3)                           |  |             | 1       |  |             |  | 1       |             |  |  |       | 
|- other services (Note 4)                         |  |             | 11      |  |             |  | 11      |             |  |  | 9      | 
|Others (Note 5)                                   |  |             | 69,392  |  |             |  | 59,127  |             |  |  | 52,512 | 
|                                                  |  |             |         |  |             |  |         |             |  |  |        | 
|                                                  |  |             |        
|                                                  |  |             | 125,364 |  |             |  | 107,350 |             |  |  | 98,540 | 
|                                                  |  |             |         |  |             |  |         |             |  |  |        | 



F-29



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##### Table of Contents

|5 | Other operating expenses (continued)
|- | ------------------------------------



Notes:



|(1) | Other operating lease charges represent the operating lease charges for motor vehicles, computer and other office equipment.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | Audit services include reporting on the Groups internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of the United
States of America (SOX 404) of RMB19,000,000 (2010: RMB19,000,000; 2009: RMB19,000,000).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax services include tax compliance services for the Group of RMB600,000 (2010: RMB1,000,000; 2009: RMB72,000).
|--- | ---------------------------------------------------------------------------------------------------------------

|(4) | Other services include SOX 404 advisory services, risk assessment and other IT related advisory services.
|--- | ---------------------------------------------------------------------------------------------------------

|(5) | Others consist of office expenses, utilities charges, travelling expenses, entertainment expenses, spectrum charges, consultancy and professional fees, consumables and
supplies, labour services expenses and other miscellaneous expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6 | Other net income
|- | ----------------



|                                 |  |             | (4,926) |   |             |  | (4,926) |             |  |  | (4,926) |  
|-------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                 |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                 |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                 |  |             |        
|Sales of SIM cards and terminals |  |             | 6,020   |   |             |  | 5,451   |             |  |  | 7,754   |  
|Cost of SIM cards and terminals  |  |             | (4,926  | ) |             |  | (4,361  | )           |  |  | (5,974  | )
|Others                           |  |             | 1,465   |   |             |  | 1,246   |             |  |  |        |  
|                                 |  |             |         |   |             |  |         |             |  |  |         |  
|                                 |  |             |        
|                                 |  |             | 2,559   |   |             |  | 2,336   |             |  |  | 1,780   |  
|                                 |  |             |         |   |             |  |         |             |  |  |         |  



|7 | Non-operating net income
|- | ------------------------



|                                         |  |             | (4,926) |   |             |  | (4,926) |             |  |  | (4,926) | 
|---------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | 
|                                         |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                         |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                         |  |             |        
|Exchange (loss)/gain                     |  |             | (9      | ) |             |  | (6      | )           |  |  | 3       | 
|Penalty income                           |  |             | 257     |   |             |  | 257     |             |  |  | 265     | 
|Dividend income from unlisted securities |  |             | 13      |   |             |  | 17      |             |  |  | 18      | 
|Others                                   |  |             | 310     |   |             |  | 417     |             |  |  | 73      | 
|                                         |  |             |         |   |             |  |         |             |  |  |         | 
|                                         |  |             |        
|                                         |  |             | 571     |   |             |  | 685     |             |  |  | 359     | 
|                                         |  |             |         |   |             |  |         |             |  |  |         | 



F-30



---

##### Table of Contents

|8 | Finance costs
|- | -------------



|                                                                        |  |             |     |  |             |  |     |             |  |  |       | 
|----------------------------------------------------------------------- |  | ----------- | --- |  | ----------- |  | --- | ----------- |  |  | ----- | 
|                                                                        |  | 2011        |     |  | 2010        |  |     | 2009        | 
|                                                                        |  | RMB million |     |  | RMB million |  |     | RMB million | 
|                                                                        |  |             |    
|Interest on bank loans and other borrowings repayable within five years |  |             | 7   |  |             |  |    |             |  |  |      | 
|Interest on bank loans and other borrowings repayable after five years  |  |             | 220 |  |             |  | 431 |             |  |  | 777   | 
|Interest on bonds                                                       |  |             | 338 |  |             |  | 471 |             |  |  | 466   | 
|                                                                        |  |             |     |  |             |  |     |             |  |  |       | 
|                                                                        |  |             |    
|                                                                        |  |             | 565 |  |             |  | 902 |             |  |  | 1,243 | 
|                                                                        |  |             |     |  |             |  |     |             |  |  |       | 



|9 | Directors remuneration
|- | -----------------------

Directors remuneration is as follows:



|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|----------------------------------- |  | -------------- | ----- |  | -------------------------------------- |  | ----- | ------------------------- |  |  | ----------------------------- |  |  | --------- | ----- |  |  |  | ------ | 
|                                    |  | Directorsfees |       |  | Salaries,allowancesand benefitsin kind |  |       | Performancerelatedbonuses |  |  | Retirementschemecontributions |  |  | 2011Total |      
|(Expressed in Hong Kong dollar)     |  | 000           |       |  | 000                                   |  |       | 000                      |  |  | 000                          |  |  | 000      |      
|                                    |  |                |       |  |                                       
|Executive directors                 |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|WANG Jianzhou                       |  |                | 180   |  |                                        |  | 1,172 |                           |  |  | 616                           |  |  |           | 287   |  |  |  | 2,255  | 
|XI Guohua*                          |  |                | 78    |  |                                        |  | 462   |                           |  |  | 244                           |  |  |           | 115   |  |  |  | 899    | 
|LI Yue                              |  |                | 180   |  |                                        |  | 1,067 |                           |  |  | 560                           |  |  |           | 261   |  |  |  | 2,068  | 
|LU Xiangdong**                      |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 236   |  |  |  | 1,880  | 
|XUE Taohai                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 236   |  |  |  | 1,880  | 
|HUANG Wenlin                        |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 236   |  |  |  | 1,880  | 
|SHA Yuejia                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 235   |  |  |  | 1,879  | 
|LIU Aili                            |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 235   |  |  |  | 1,879  | 
|XIN Fanfei                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 504                           |  |  |           | 229   |  |  |  | 1,873  | 
|XU Long                             |  |                | 180   |  |                                        |  | 950   |                           |  |  | 504                           |  |  |           | 232   |  |  |  | 1,866  | 
|                                    |  |                |       |  |                                       
|Independent non-executive directors |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|LO Ka Shui                          |  |                | 505   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 505    | 
|WONG Kwong Shing, Frank             |  |                | 440   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 440    | 
|CHENG Mo Chi, Moses                 |  |                | 440   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 440    | 
|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                    |  |                |       |  |                                       
|                                    |  |                | 3,083 |  |                                        |  | 9,411 |                           |  |  | 4,948                         |  |  |           | 2,302 |  |  |  | 19,744 | 
|                                    |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 



|* | Mr. XI Guohua was appointed as an executive director and the vice chairman of the Company with effect from July 26, 2011.
|- | -------------------------------------------------------------------------------------------------------------------------

|** | Mr. LU Xiangdong resigned from the position as an executive director and a vice president of the Company with effect from March 15, 2012.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------



F-31



---

##### Table of Contents

|9 | Directors remuneration (continued)
|- | -----------------------------------



|                                                                      |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|--------------------------------------------------------------------- |  | -------------- | ----- |  | -------------------------------------- |  | ----- | ------------------------- |  |  | ----------------------------- |  |  | --------- | ----- |  |  |  | ------ | 
|                                                                      |  | Directorsfees |       |  | Salaries,allowancesand benefitsin kind |  |       | Performancerelatedbonuses |  |  | Retirementschemecontributions |  |  | 2010Total |      
|(Expressed in Hong Kong dollar)                                       |  | 000           |       |  | 000                                   |  |       | 000                      |  |  | 000                          |  |  | 000      |      
|                                                                      |  |                |       |  |                                       
|Executive directors                                                   |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                                                      |  |                |       |  |                                       
|WANG Jianzhou                                                         |  |                | 180   |  |                                        |  | 1,172 |                           |  |  | 660                           |  |  |           | 286   |  |  |  | 2,298  | 
|ZHANG Chunjiang (removed on January 7, 2010)                          |  |                | 3     |  |                                        |  | 16    |                           |  |  |                              |  |  |           | 3     |  |  |  | 22     | 
|LI Yue                                                                |  |                | 180   |  |                                        |  | 1,005 |                           |  |  | 600                           |  |  |           | 245   |  |  |  | 2,030  | 
|LU Xiangdong                                                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 234   |  |  |  | 1,914  | 
|XUE Taohai                                                            |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 234   |  |  |  | 1,914  | 
|HUANG Wenlin                                                          |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 234   |  |  |  | 1,914  | 
|SHA Yuejia                                                            |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 233   |  |  |  | 1,913  | 
|LIU Aili                                                              |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 233   |  |  |  | 1,913  | 
|XIN Fanfei                                                            |  |                | 180   |  |                                        |  | 960   |                           |  |  | 540                           |  |  |           | 229   |  |  |  | 1,909  | 
|XU Long                                                               |  |                | 180   |  |                                        |  | 950   |                           |  |  | 540                           |  |  |           | 232   |  |  |  | 1,902  | 
|                                                                      |  |                |       |  |                                       
|Independent non-executive directors                                   |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                                                      |  |                |       |  |                                       
|LO Ka Shui                                                            |  |                | 505   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 505    | 
|WONG Kwong Shing, Frank                                               |  |                | 440   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 440    | 
|CHENG Mo Chi, Moses                                                   |  |                | 440   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 440    | 
|                                                                      |  |                |       |  |                                       
|Non-executive director                                                |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                                                      |  |                |       |  |                                       
|Nicholas Jonathan READ (resigned with effect from September 22, 2010) |  |                | 131   |  |                                        |  |      |                           |  |  |                              |  |  |           |      |  |  |  | 131    | 
|                                                                      |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 
|                                                                      |  |                |       |  |                                       
|                                                                      |  |                | 3,139 |  |                                        |  | 8,903 |                           |  |  | 5,040                         |  |  |           | 2,163 |  |  |  | 19,245 | 
|                                                                      |  |                |       |  |                                        |  |       |                           |  |  |                               |  |  |           |       |  |  |  |        | 



|10 | Individuals with highest emoluments
|-- | -----------------------------------

For the years ended December 31, 2010 and 2011, all of the five individuals with the highest emoluments are directors whose emoluments are disclosed in note 9.



|11 | Taxation
|-- | --------



|(a) | Taxation in the consolidated statements of comprehensive income represents:
|--- | ---------------------------------------------------------------------------



|                                                                                          |  |             |        |   |             |  |        |             |  |  |        |  
|----------------------------------------------------------------------------------------- |  | ----------- | ------ | - | ----------- |  | ------ | ----------- |  |  | ------ | -
|                                                                                          |  | 2011        |        |   | 2010        |  |        | 2009        | 
|                                                                                          |  | RMB million |        |   | RMB million |  |        | RMB million | 
|                                                                                          |  |             |       
|Current tax                                                                               |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                          |  |             |       
|Provision for Hong Kong profits tax on the estimated assessable profits for the year      |  |             | 112    |   |             |  | 123    |             |  |  | 91     |  
|Provision for the PRC enterprise income tax on the estimated taxable profits for the year |  |             | 41,693 |   |             |  | 39,726 |             |  |  | 39,666 |  
|                                                                                          |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                          |  |             |       
|                                                                                          |  |             | 41,805 |   |             |  | 39,849 |             |  |  | 39,757 |  
|                                                                                          |  |             |       
|Deferred tax                                                                              |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                          |  |             |       
|Origination and reversal of temporary differences (note 20)                               |  |             | (1,202 | ) |             |  | (802   | )           |  |  | (1,344 | )
|                                                                                          |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                          |  |             |       
|                                                                                          |  |             | 40,603 |   |             |  | 39,047 |             |  |  | 38,413 |  
|                                                                                          |  |             |        |   |             |  |        |             |  |  |        |  



F-32



---

##### Table of Contents

|11 | Taxation (continued)
|-- | --------------------



|(a) | Taxation in the consolidated statements of comprehensive income represents: (continued)
|--- | ---------------------------------------------------------------------------------------



| | (i) | The provision of Hong Kong profits tax is calculated at 16.5% (2010 and 2009: 16.5%) of the estimated assessable profits for the year ended December 31, 2011.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | The provision for the PRC enterprise income tax is based on the statutory rate of 25% of the taxable profits determined in accordance with the relevant income tax rules
and regulations of the PRC for the year ended December 31, 2011, except for certain subsidiaries of the Company and certain operations of the subsidiaries located within special economic zones in the PRC, for which the applicable preferential
tax rate were 22%, 24% and 25% for 2010, 2011 and 2012 onwards, respectively. Deferred taxes are recognized based on tax rates that are expected to apply to the periods when the temporary differences are realized or settled.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reconciliation between income tax expense and accounting profit at applicable tax rates:
|--- | ----------------------------------------------------------------------------------------



|                                                                                        |  |             |         |   |             |  |         |             |  |  |         |  
|--------------------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                                                        |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                                                                        |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                                                                        |  |             |        
|Profit before taxation                                                                  |  |             | 166,582 |   |             |  | 159,071 |             |  |  | 153,836 |  
|                                                                                        |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                        |  |             |        
|Notional tax on profit before tax, calculated at PRCs statutory tax rate of 25% (note) |  |             | 41,645  |   |             |  | 39,768  |             |  |  | 38,459  |  
|Tax effect of non-taxable items                                                         |  |             |         |   |             |  |         |             |  |  |         |  
|- Share of profit of associates                                                         |  |             | (1,076  | ) |             |  | (139    | )           |  |  |        |  
|- Interest income                                                                       |  |             | (8      | ) |             |  | (3      | )           |  |  | (2      | )
|Tax effect of non-deductible expenses on the PRC operations                             |  |             | 736     |   |             |  | 562     |             |  |  | 699     |  
|Tax effect of non-deductible expenses on Hong Kong operations                           |  |             | 66      |   |             |  | 111     |             |  |  | 155     |  
|Rate differential on the PRC operations                                                 |  |             | (198    | ) |             |  | (561    | )           |  |  | (470    | )
|Rate differential on Hong Kong operations                                               |  |             | (16     | ) |             |  | 1       |             |  |  | 35      |  
|Tax credit on purchase of domestic telecommunications equipment                         |  |             | (171    | ) |             |  | (352    | )           |  |  | (527    | )
|Others                                                                                  |  |             | (375    | ) |             |  | (340    | )           |  |  | 64      |  
|                                                                                        |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                                        |  |             |        
|Taxation                                                                                |  |             | 40,603  |   |             |  | 39,047  |             |  |  | 38,413  |  
|                                                                                        |  |             |         |   |             |  |         |             |  |  |         |  



|Note: | The PRCs statutory tax rate is adopted as the majority of the Groups operations are subject to this rate.
|----- | -----------------------------------------------------------------------------------------------------------



|(c) | Current taxation in the consolidated balance sheets represents:
|--- | ---------------------------------------------------------------



|                                                                            |  |             |         |   |             |  |         |             |  |  |         |  
|--------------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                                            |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                                                            |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                                                            |  |             |        
|Provision for the PRC enterprise income tax for the year                    |  |             | 41,693  |   |             |  | 39,726  |             |  |  | 39,666  |  
|Provision for Hong Kong profits tax for the year                            |  |             | 112     |   |             |  | 123     |             |  |  | 91      |  
|Balance of the PRC enterprise income tax recoverable relating to prior year |  |             | (135    | ) |             |  | (17     | )           |  |  | (39     | )
|The PRC enterprise income tax paid for the year                             |  |             | (30,830 | ) |             |  | (30,730 | )           |  |  | (31,605 | )
|Hong Kong profits tax paid for the year                                     |  |             | (70     | ) |             |  | (59     | )           |  |  | (51     | )
|                                                                            |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                            |  |             |        
|Balance as at December 31                                                   |  |             | 10,770  |   |             |  | 9,043   |             |  |  | 8,062   |  
|Add: Tax recoverable                                                        |  |             | 91      |   |             |  | 135     |             |  |  | 17      |  
|                                                                            |  |             |         |   |             |  |         |             |  |  |         |  
|                                                                            |  |             |        
|Tax payable                                                                 |  |             | 10,861  |   |             |  | 9,178   |             |  |  | 8,079   |  
|                                                                            |  |             |         |   |             |  |         |             |  |  |         |  



F-33



---

##### Table of Contents

|12 | Earnings per share
|-- | ------------------



|(a) | Basic earnings per share
|--- | ------------------------

The calculation of basic earnings per share for the year is based on the profit attributable to equity shareholders of the Company of RMB125,870,000,000 (2010: RMB119,640,000,000; 2009:
RMB115,166,000,000) and the weighted average number of 20,068,193,892 shares (2010: 20,062,910,111 shares; 2009:20,057,674,088 shares) in issue during the year, calculated as follows:

Weighted average number of shares



|                                                    |  |                     |                |  |                     |  |                |                     |  |  |                | 
|--------------------------------------------------- |  | ------------------- | -------------- |  | ------------------- |  | -------------- | ------------------- |  |  | -------------- | 
|                                                    |  | 2011Numberof shares |                |  | 2010Numberof shares |  |                | 2009Numberof shares | 
|                                                    |  |                     |               
|Issued shares as at January 1                       |  |                     | 20,065,423,246 |  |                     |  | 20,060,853,651 |                     |  |  | 20,054,379,231 | 
|Effect of share options exercised                   |  |                     | 2,770,646      |  |                     |  | 2,056,460      |                     |  |  | 3,294,857      | 
|                                                    |  |                     |                |  |                     |  |                |                     |  |  |                | 
|                                                    |  |                     |               
|Weighted average number of shares as at December 31 |  |                     | 20,068,193,892 |  |                     |  | 20,062,910,111 |                     |  |  | 20,057,674,088 | 
|                                                    |  |                     |                |  |                     |  |                |                     |  |  |                | 



|(b) | Diluted earnings per share
|--- | --------------------------

The calculation of diluted earnings per share for the year is based on the profit attributable to equity shareholders of the Company of RMB125,870,000,000 (2010: RMB119,640,000,000; 2009:
RMB115,166,000,000) and the weighted average number of 20,315,252,412 shares (2010: 20,321,332,465 shares; 2009: 20,312,459,133 shares), calculated as follows:

Weighted average number of shares (diluted)



|                                                                                               |  |                     |                |  |                     |  |                |                     |  |  |                | 
|---------------------------------------------------------------------------------------------- |  | ------------------- | -------------- |  | ------------------- |  | -------------- | ------------------- |  |  | -------------- | 
|                                                                                               |  | 2011Numberof shares |                |  | 2010Numberof shares |  |                | 2009Numberof shares | 
|                                                                                               |  |                     |               
|Weighted average number of shares as at December 31                                            |  |                     | 20,068,193,892 |  |                     |  | 20,062,910,111 |                     |  |  | 20,057,674,088 | 
|Effect of deemed issue of shares under the Companys share option scheme for nil consideration |  |                     | 247,058,520    |  |                     |  | 258,422,354    |                     |  |  | 254,785,045    | 
|                                                                                               |  |                     |                |  |                     |  |                |                     |  |  |                | 
|                                                                                               |  |                     |               
|Weighted average number of shares (diluted) as at December 31                                  |  |                     | 20,315,252,412 |  |                     |  | 20,321,332,465 |                     |  |  | 20,312,459,133 | 
|                                                                                               |  |                     |                |  |                     |  |                |                     |  |  |                | 



F-34



---

##### Table of Contents

|13 | Property, plant and equipment
|-- | -----------------------------



|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|--------------------------------------------- |  | ----------- | ------ | - | -------------- |  | ------- | ------------ |  |  | ----------- | - |  |  | ------- | -
|                                              |  |             |        |   | Tele-          |  |         |              |  |  |             |  
|                                              |  |             |        |   | communications |  |         |              |  |  |             |  
|                                              |  |             |        |   | transceivers,  |  |         |              |  |  |             |  
|                                              |  |             |        |   | switching      |  |         |              |  |  |             |  
|                                              |  |             |        |   | centers,       |  |         | Office       |  |  |             |  
|                                              |  |             |        |   | transmission   |  |         | equipments,  |  |  |             |  
|                                              |  |             |        |   | and other      |  |         | furniture    |  |  |             |  
|                                              |  |             |        |   | network        |  |         | and fixtures |  |  |             |  
|                                              |  | Buildings   |        |   | equipment      |  |         | and others   |  |  | Total       |  
|                                              |  | RMB million |        |   | RMB million    |  |         | RMB million  |  |  | RMB million |  
|                                              |  |             |        |  
|Cost:                                         |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|As at January 1, 2010                         |  |             | 73,506 |   |                |  | 612,012 |              |  |  | 24,749      |   |  |  | 710,267 |  
|Additions                                     |  |             | 571    |   |                |  | 1,231   |              |  |  | 1,071       |   |  |  | 2,873   |  
|Transferred from construction in progress     |  |             | 11,742 |   |                |  | 95,876  |              |  |  | 3,756       |   |  |  | 111,374 |  
|Disposals                                     |  |             | (2     | ) |                |  | (43     | )            |  |  | (37         | ) |  |  | (82     | )
|Assets written-off                            |  |             | (254   | ) |                |  | (19,294 | )            |  |  | (1,596      | ) |  |  | (21,144 | )
|Exchange differences                          |  |             | (1     | ) |                |  | (80     | )            |  |  | (3          | ) |  |  | (84     | )
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at December 31, 2010                       |  |             | 85,562 |   |                |  | 689,702 |              |  |  | 27,940      |   |  |  | 803,204 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at January 1, 2011                         |  |             | 85,562 |   |                |  | 689,702 |              |  |  | 27,940      |   |  |  | 803,204 |  
|Additions from an acquisition of a subsidiary |  |             |       |   |                |  |        |              |  |  | 8           |   |  |  | 8       |  
|Additions                                     |  |             | 787    |   |                |  | 1,427   |              |  |  | 1,273       |   |  |  | 3,487   |  
|Transferred from construction in progress     |  |             | 10,176 |   |                |  | 111,203 |              |  |  | 1,112       |   |  |  | 122,491 |  
|Reclassification                              |  |             |       |   |                |  | 10,915  |              |  |  | (10,915     | ) |  |  |        |  
|Disposals                                     |  |             |       |   |                |  | (398    | )            |  |  | (22         | ) |  |  | (420    | )
|Assets written-off                            |  |             | (242   | ) |                |  | (53,198 | )            |  |  | (1,121      | ) |  |  | (54,561 | )
|Exchange differences                          |  |             | (1     | ) |                |  | (115    | )            |  |  | (5          | ) |  |  | (121    | )
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at December 31, 2011                       |  |             | 96,282 |   |                |  | 759,536 |              |  |  | 18,270      |   |  |  | 874,088 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|Accumulated depreciation:                     |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|As at January 1, 2010                         |  |             | 15,206 |   |                |  | 322,169 |              |  |  | 12,817      |   |  |  | 350,192 |  
|Charge for the year                           |  |             | 4,345  |   |                |  | 78,225  |              |  |  | 3,660       |   |  |  | 86,230  |  
|Written back on disposals                     |  |             |       |   |                |  | (40     | )            |  |  | (30         | ) |  |  | (70     | )
|Assets written-off                            |  |             | (236   | ) |                |  | (16,666 | )            |  |  | (1,479      | ) |  |  | (18,381 | )
|Exchange differences                          |  |             |       |   |                |  | (61     | )            |  |  | (2          | ) |  |  | (63     | )
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at December 31, 2010                       |  |             | 19,315 |   |                |  | 383,627 |              |  |  | 14,966      |   |  |  | 417,908 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at January 1, 2011                         |  |             | 19,315 |   |                |  | 383,627 |              |  |  | 14,966      |   |  |  | 417,908 |  
|Reclassification                              |  |             |       |   |                |  | 5,422   |              |  |  | (5,422      | ) |  |  |        |  
|Charge for the year                           |  |             | 4,140  |   |                |  | 90,142  |              |  |  | 2,831       |   |  |  | 97,113  |  
|Written back on disposals                     |  |             |       |   |                |  | (284    | )            |  |  | (10         | ) |  |  | (294    | )
|Assets written-off                            |  |             | (171   | ) |                |  | (47,516 | )            |  |  | (1,021      | ) |  |  | (48,708 | )
|Exchange differences                          |  |             |       |   |                |  | (93     | )            |  |  | (3          | ) |  |  | (96     | )
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at December 31, 2011                       |  |             | 23,284 |   |                |  | 431,298 |              |  |  | 11,341      |   |  |  | 465,923 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|Net book value:                               |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|As at December 31, 2011                       |  |             | 72,998 |   |                |  | 328,238 |              |  |  | 6,929       |   |  |  | 408,165 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  
|                                              |  |             |        |  
|As at December 31, 2010                       |  |             | 66,247 |   |                |  | 306,075 |              |  |  | 12,974      |   |  |  | 385,296 |  
|                                              |  |             |        |   |                |  |         |              |  |  |             |   |  |  |         |  



F-35



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##### Table of Contents

|13 | Property, plant and equipment (continued)
|-- | -----------------------------------------



Write-off of property, plant and equipment represents the retirement of individual
network assets due to obsolescence or damages. Such assets have been disconnected from existing network, abandoned and demolished. Total net book value of the write-off of such assets were RMB5,853,000,000 in 2011 (2010: RMB2,763,000,000, 2009:
RMB4,493,000,000). These assets were disposed of for scrap value, which was close to nil.

During the year, as a result of a
review on the assets categorization, certain types of equipments were re-categorized from office equipments to other network equipment, with no change of estimated useful life.



|14 | Construction in progress
|-- | ------------------------



|                                             |  |             |          |   |             |  |          |  
|-------------------------------------------- |  | ----------- | -------- | - | ----------- |  | -------- | -
|                                             |  | 2011        |          |   | 2010        | 
|                                             |  | RMB million |          |   | RMB million | 
|                                             |  |            
|Balance as at January 1                      |  |             | 54,868   |   |             |  | 46,094   |  
|Additions                                    |  |             | 123,858  |   |             |  | 120,148  |  
|Transferred to property, plant and equipment |  |             | (122,491 | ) |             |  | (111,374 | )
|                                             |  |             |          |   |             |  |          |  
|                                             |  |            
|Balance as at December 31                    |  |             | 56,235   |   |             |  | 54,868   |  
|                                             |  |             |          |   |             |  |          |  

Construction in progress comprises expenditure incurred on the network expansion projects and
construction of office buildings not yet completed as at December 31, 2011.



|15 | Goodwill
|-- | --------



|                                |  |             |        |  |             |  |        | 
|------------------------------- |  | ----------- | ------ |  | ----------- |  | ------ | 
|                                |  | 2011        |        |  | 2010        | 
|                                |  | RMB million |        |  | RMB million | 
|                                |  |            
|Cost and carrying amount:       |  |             |        |  |             |  |        | 
|As at January 1 and December 31 |  |             | 36,894 |  |             |  | 36,894 | 
|                                |  |             |        |  |             |  |        | 

Impairment tests for goodwill

As set out in IAS 36 Impairment of Assets, a cash-generating unit is the smallest identifiable group of assets that generate cash inflows
from continuing use that are largely independent of the cash flows from other assets or groups of assets. For the purpose of impairment testing of goodwill, goodwill is allocated to a group of cash-generating units (being subsidiaries acquired in
each acquisition). Such group of cash-generating units represent the lowest level within the Group for which the goodwill is monitored for internal management purposes.



F-36



---

##### Table of Contents

|15 | Goodwill (continued)
|-- | --------------------



The recoverable amount of the cash-generating units is determined based on value-in-use,
which is calculated by using the discounted cash flow method. This method considers the cash flows of the subsidiaries (cash-generating units) for the five years ending December 31, 2016 with subsequent transition to perpetuity. For the years
following the detailed planning period, the assumed continual growth of 0.5% for the operation in Hong Kong and 1% for operations in Mainland China to perpetuity are used which comply with general expectations for the business. The present value of
cash flows is calculated by discounting the cash flow by pre-tax interest rate of approximately 10% (2010: 10%). Management performed impairment tests for the goodwill and determined that goodwill was not impaired.



|16 | Other intangible assets
|-- | -----------------------



|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|------------------------- |  | ----------- | --- |  | ------------ |  | --- | ----------------- |  |  | ----------- | - |  |  | ----- | -
|                          |  | Brand name  |     |  | Customerbase |  |     | License andothers |  |  | Total       |  
|                          |  | RMB million |     |  | RMB million  |  |     | RMB million       |  |  | RMB million |  
|                          |  |             |     | 
|Cost:                     |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|As at January 1, 2010     |  |             | 184 |  |              |  | 516 |                   |  |  | 901         |   |  |  | 1,601 |  
|Additions                 |  |             |    |  |              |  |    |                   |  |  | 162         |   |  |  | 162   |  
|Exchange differences      |  |             |    |  |              |  |    |                   |  |  | (23         | ) |  |  | (23   | )
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at December 31, 2010   |  |             | 184 |  |              |  | 516 |                   |  |  | 1,040       |   |  |  | 1,740 |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at January 1, 2011     |  |             | 184 |  |              |  | 516 |                   |  |  | 1,040       |   |  |  | 1,740 |  
|Additions                 |  |             |    |  |              |  |    |                   |  |  | 85          |   |  |  | 85    |  
|Exchange differences      |  |             |    |  |              |  |    |                   |  |  | (39         | ) |  |  | (39   | )
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at December 31, 2011   |  |             | 184 |  |              |  | 516 |                   |  |  | 1,086       |   |  |  | 1,786 |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|Accumulated amortization: |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|As at January 1, 2010     |  |             |    |  |              |  | 516 |                   |  |  | 358         |   |  |  | 874   |  
|Amortization for the year |  |             |    |  |              |  |    |                   |  |  | 62          |   |  |  | 62    |  
|Exchange differences      |  |             |    |  |              |  |    |                   |  |  | (9          | ) |  |  | (9    | )
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at December 31, 2010   |  |             |    |  |              |  | 516 |                   |  |  | 411         |   |  |  | 927   |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at January 1, 2011     |  |             |    |  |              |  | 516 |                   |  |  | 411         |   |  |  | 927   |  
|Amortization for the year |  |             |    |  |              |  |    |                   |  |  | 54          |   |  |  | 54    |  
|Exchange differences      |  |             |    |  |              |  |    |                   |  |  | (13         | ) |  |  | (13   | )
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at December 31, 2011   |  |             |    |  |              |  | 516 |                   |  |  | 452         |   |  |  | 968   |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|Net book value:           |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|As at December 31, 2011   |  |             | 184 |  |              |  |    |                   |  |  | 634         |   |  |  | 818   |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  
|                          |  |             |     | 
|As at December 31, 2010   |  |             | 184 |  |              |  |    |                   |  |  | 629         |   |  |  | 813   |  
|                          |  |             |     |  |              |  |     |                   |  |  |             |   |  |  |       |  

The amortization charge for the year is included in other operating expenses in the
consolidated statements of the comprehensive income.



F-37



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##### Table of Contents

|17 | Principal subsidiaries
|-- | ----------------------

The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the
Group. The class of shares held is ordinary unless otherwise stated.



|                                                             |  |                                    |                    |                                         |                  |                     |                                 |  |     |                    |  |  |     |   |  |                                   
|------------------------------------------------------------ |  | ---------------------------------- | ------------------ | --------------------------------------- | ---------------- | ------------------- | ------------------------------- |  | --- | ------------------ |  |  | --- | - |  | ----------------------------------
|Name of company                                              |  | Place ofincorporationand operation |                    | Particularsof issued
andpaid up capital |                  |                     | Proportion ofownership
interest |  |     | Principal activity
|                                                             |  |                                    | Held by theCompany |                                         |                  | Held by asubsidiary |                                 | 
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Guangdong Co., Ltd. (Guangdong Mobile)* |  | PRC                                |                    |                                         | RMB5,594,840,700 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Zhejiang Co., Ltd. *                      |  | PRC                                |                    |                                         | RMB2,117,790,000 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Jiangsu Mobile (BVI) Limited                                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Jiangsu Co., Ltd.*                        |  | PRC                                |                    |                                         | RMB2,800,000,000 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Fujian Mobile (BVI) Limited                                  |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Fujian Co., Ltd.*                         |  | PRC                                |                    |                                         | RMB5,247,480,000 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Henan Mobile (BVI) Limited                                   |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Henan Co., Ltd. *                         |  | PRC                                |                    |                                         | RMB4,367,733,641 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Hainan Mobile (BVI) Limited                                  |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Hainan Co., Ltd.*                         |  | PRC                                |                    |                                         | RMB643,000,000   |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Beijing Mobile (BVI) Limited                                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Beijing Co., Ltd. *                       |  | PRC                                |                    |                                         | RMB6,124,696,053 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Shanghai Mobile (BVI) Limited                                |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Shanghai Co., Ltd.*                       |  | PRC                                |                    |                                         | RMB6,038,667,706 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Tianjin Mobile (BVI) Limited                                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Tianjin Co., Ltd. *                       |  | PRC                                |                    |                                         | RMB2,151,035,483 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                                             |  |                                    |                    |                                         |                 
|Hebei Mobile (BVI) Limited                                   |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                                             |  |                                    |                    |                                         |                 
|China Mobile Group Hebei Co., Ltd. *                         |  | PRC                                |                    |                                         | RMB4,314,668,600 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator



F-38



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##### Table of Contents

|17 | Principal subsidiaries (continued)
|-- | ----------------------------------









|                                        |  |                                    |                    |                                         |                  |                     |                                 |  |     |                    |  |  |     |   |  |                                   
|--------------------------------------- |  | ---------------------------------- | ------------------ | --------------------------------------- | ---------------- | ------------------- | ------------------------------- |  | --- | ------------------ |  |  | --- | - |  | ----------------------------------
|Name of company                         |  | Place ofincorporationand operation |                    | Particularsof issued
andpaid up capital |                  |                     | Proportion ofownership
interest |  |     | Principal activity
|                                        |  |                                    | Held by theCompany |                                         |                  | Held by asubsidiary |                                 | 
|                                        |  |                                    |                    |                                         |                 
|Liaoning Mobile (BVI) Limited           |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Liaoning Co., Ltd.*  |  | PRC                                |                    |                                         | RMB5,140,126,680 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Shandong Mobile (BVI) Limited           |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Shandong Co., Ltd.*  |  | PRC                                |                    |                                         | RMB6,341,851,146 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Guangxi Mobile (BVI) Limited            |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Guangxi Co., Ltd.*   |  | PRC                                |                    |                                         | RMB2,340,750,100 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Anhui Mobile (BVI) Limited              |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Anhui Co., Ltd. *    |  | PRC                                |                    |                                         | RMB4,099,495,494 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Jiangxi Mobile (BVI) Limited            |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Jiangxi Co., Ltd. *  |  | PRC                                |                    |                                         | RMB2,932,824,234 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Chongqing Mobile (BVI) Limited          |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Chongqing Co., Ltd.* |  | PRC                                |                    |                                         | RMB3,029,645,401 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Sichuan Mobile (BVI) Limited            |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Sichuan Co., Ltd. *  |  | PRC                                |                    |                                         | RMB7,483,625,572 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Hubei Mobile (BVI) Limited              |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Hubei Co., Ltd. *    |  | PRC                                |                    |                                         | RMB3,961,279,556 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Hunan Mobile (BVI) Limited              |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Hunan Co., Ltd.*     |  | PRC                                |                    |                                         | RMB4,015,668,593 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                        |  |                                    |                    |                                         |                 
|Shaanxi Mobile (BVI) Limited            |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                        |  |                                    |                    |                                         |                 
|China Mobile Group Shaanxi Co., Ltd.*   |  | PRC                                |                    |                                         | RMB3,171,267,431 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator



F-39



---

##### Table of Contents

|17 | Principal subsidiaries (continued)
|-- | ----------------------------------



|                                           |  |                                    |                    |                                         |                  |                     |                                 |  |     |                    |  |  |     |   |  |                                   
|------------------------------------------ |  | ---------------------------------- | ------------------ | --------------------------------------- | ---------------- | ------------------- | ------------------------------- |  | --- | ------------------ |  |  | --- | - |  | ----------------------------------
|Name of company                            |  | Place ofincorporationand operation |                    | Particularsof issued
andpaid up capital |                  |                     | Proportion ofownership
interest |  |     | Principal activity
|                                           |  |                                    | Held by theCompany |                                         |                  | Held by asubsidiary |                                 | 
|                                           |  |                                    |                    |                                         |                 
|Shanxi Mobile Communication (BVI) Limited  |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Shanxi Co., Ltd.*       |  | PRC                                |                    |                                         | RMB2,773,448,313 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Neimenggu Mobile (BVI) Limited             |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Neimenggu Co., Ltd.*    |  | PRC                                |                    |                                         | RMB2,862,621,870 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Jilin Mobile (BVI) Limited                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Jilin Co., Ltd. *       |  | PRC                                |                    |                                         | RMB3,277,579,314 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Heilongjiang Mobile (BVI) Limited          |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Heilongjiang Co., Ltd.* |  | PRC                                |                    |                                         | RMB4,500,508,035 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Guizhou Mobile (BVI) Limited               |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Guizhou Co., Ltd.*      |  | PRC                                |                    |                                         | RMB2,541,981,749 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Yunnan Mobile (BVI) Limited                |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Yunnan Co., Ltd.*       |  | PRC                                |                    |                                         | RMB4,137,130,733 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Xizang Mobile (BVI) Limited                |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Xizang Co., Ltd.*       |  | PRC                                |                    |                                         | RMB848,643,686   |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Gansu Mobile (BVI) Limited                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Gansu Co., Ltd.*        |  | PRC                                |                    |                                         | RMB1,702,599,589 |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Qinghai Mobile (BVI) Limited               |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        
|                                           |  |                                    |                    |                                         |                 
|China Mobile Group Qinghai Co., Ltd.*      |  | PRC                                |                    |                                         | RMB902,564,911   |                     |                                 |  |    |                    |  |  | 100 | % |  | Mobile telecommunications operator
|                                           |  |                                    |                    |                                         |                 
|Ningxia Mobile (BVI) Limited               |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |    |   |  | Investment holding company        



F-40



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##### Table of Contents

|17 | Principal subsidiaries (continued)
|-- | ----------------------------------



|                                                              |  |                                    |                    |                                         |                  |                     |                                 |  |       |                    |  |  |     |   |  |                                                                                                                                                                    
|------------------------------------------------------------- |  | ---------------------------------- | ------------------ | --------------------------------------- | ---------------- | ------------------- | ------------------------------- |  | ----- | ------------------ |  |  | --- | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of company                                               |  | Place ofincorporationand operation |                    | Particularsof issued
andpaid up capital |                  |                     | Proportion ofownership
interest |  |       | Principal activity
|                                                              |  |                                    | Held by theCompany |                                         |                  | Held by asubsidiary |                                 | 
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Group Ningxia Co., Ltd.*                         |  | PRC                                |                    |                                         | RMB740,447,232   |                     |                                 |  |      |                    |  |  | 100 | % |  | Mobile telecommunications operator                                                                                                                                 
|                                                              |  |                                    |                    |                                         |                 
|Xinjiang Mobile (BVI) Limited                                 |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100   | %                  |  |  |    |   |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Group Xinjiang Co., Ltd. *                       |  | PRC                                |                    |                                         | RMB2,581,599,600 |                     |                                 |  |      |                    |  |  | 100 | % |  | Mobile telecommunications operator                                                                                                                                 
|                                                              |  |                                    |                    |                                         |                 
|Beijing P&T Consulting & Design Institute (BVI) Limited       |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100   | %                  |  |  |    |   |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Group Design Institute Co., Ltd. *               |  | PRC                                |                    |                                         | RMB160,232,500   |                     |                                 |  |      |                    |  |  | 100 | % |  | Provision of telecommunications network planning design and consulting services                                                                                    
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Communication (BVI) Limited                      |  | BVI                                |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100   | %                  |  |  |    |   |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Communication Co., Ltd. ***                      |  | PRC                                |                    |                                         | RMB1,641,848,326 |                     |                                 |  |      |                    |  |  | 100 | % |  | Network and business coordination center                                                                                                                           
|                                                              |  |                                    |                    |                                         |                 
|China Mobile Holding Company Limited***                       |  | PRC                                |                    |                                         | US$30,000,000    |                     |                                 |  | 100   | %                  |  |  |    |   |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|China Mobile (Shenzhen) Limited***                            |  | PRC                                |                    |                                         | US$7,633,000     |                     |                                 |  |      |                    |  |  | 100 | % |  | Provision of roaming clearance services                                                                                                                            
|                                                              |  |                                    |                    |                                         |                 
|Aspire Holdings Limited                                       |  | CaymanIslands                      |                    |                                         | HK$93,964,583    |                     |                                 |  | 66.41 | %                  |  |  |    |   |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|Aspire (BVI) Limited#                                         |  | BVI                                |                    |                                         | US$1,000         |                     |                                 |  |      |                    |  |  | 100 | % |  | Investment holding company                                                                                                                                         
|                                                              |  |                                    |                    |                                         |                 
|Aspire Technologies (Shenzhen) Limited***#                    |  | PRC                                |                    |                                         | US$10,000,000    |                     |                                 |  |      |                    |  |  | 100 | % |  | Technology platform development and maintenance                                                                                                                    
|                                                              |  |                                    |                    |                                         |                 
|Aspire Information Network(Shenzhen) Limited***#              |  | PRC                                |                    |                                         | US$5,000,000     |                     |                                 |  |      |                    |  |  | 100 | % |  | Provision of mobile data solutions, system integration and development                                                                                             
|                                                              |  |                                    |                    |                                         |                 
|Aspire Information Technologies (Beijing) Limited***#         |  | PRC                                |                    |                                         | US$5,000,000     |                     |                                 |  |      |                    |  |  | 100 | % |  | Technology platform development and maintenance                                                                                                                    
|                                                              |  |                                    |                    |                                         |                 
|Fujian FUNO Mobile Communication Technology Company Limited** |  | PRC                                |                    |                                         | US$3,800,000     |                     |                                 |  |      |                    |  |  | 51  | % |  | Network planning and optimizing construction testing and supervising, technology support, development and training of Nokia
GSM900/1800 Mobile Communication System



F-41



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##### Table of Contents

|17 | Principal subsidiaries (continued)
|-- | ----------------------------------



|                                                                                                  |  |                                    |                    |                                         |                  |                     |                                 |  |     |                    |  |  |       |   |  |                                                                                              
|------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------------------ | --------------------------------------- | ---------------- | ------------------- | ------------------------------- |  | --- | ------------------ |  |  | ----- | - |  | ---------------------------------------------------------------------------------------------
|Name of company                                                                                   |  | Place ofincorporationand operation |                    | Particularsof issued
andpaid up capital |                  |                     | Proportion ofownership
interest |  |     | Principal activity
|                                                                                                  |  |                                    | Held by theCompany |                                         |                  | Held by asubsidiary |                                 | 
|                                                                                                  |  |                                    |                    |                                         |                 
|Advanced Roaming & Clearing House Limited                                                         |  | BVI                                |                    |                                         | US$2             |                     |                                 |  | 100 | %                  |  |  |      |   |  | Provision of roaming clearance services                                                      
|                                                                                                  |  |                                    |                    |                                         |                 
|Fit Best Limited                                                                                  |  | BVI                                |                    |                                         | US$1             |                     |                                 |  | 100 | %                  |  |  |      |   |  | Investment holding company                                                                   
|                                                                                                  |  |                                    |                    |                                         |                 
|China Mobile Hong Kong Company Limited (CMHK)                                                   |  | Hong Kong                          |                    |                                         | HK$356,947,689   |                     |                                 |  |    |                    |  |  | 100   | % |  | Provision of mobile telecommunications and related services                                  
|                                                                                                  |  |                                    |                    |                                         |                 
|China Mobile International Holdings Limited                                                       |  | Hong Kong                          |                    |                                         | 1 share at HK$1  |                     |                                 |  | 100 | %                  |  |  |      |   |  | Investment holding company                                                                   
|                                                                                                  |  |                                    |                    |                                         |                 
|China Mobile International Limited                                                                |  | Hong Kong                          |                    |                                         | 1 share at HK$1  |                     |                                 |  |    |                    |  |  | 100   | % |  | Provision of voice and roaming clearance services, internet services and value-added services
|                                                                                                  |  |                                    |                    |                                         |                 
|China Mobile Group Terminal Co., Ltd (formerly China Topssion Communication Co., Ltd.) (Note 1) |  | PRC                                |                    |                                         | RMB6,200,000,000 |                     |                                 |  |    |                    |  |  | 99.97 | % |  | Provision of electronic communication products design and selling                            



|* | The Group underwent an intra-group restructuring in 2011 in order to improve the management and operational efficiency. Pursuant to the restructuring plan, the Company
or the immediate holding BVI company of provincial operating company transferred its 100% of equity interests of the provincial operating company to China Mobile Communication Co., Ltd., a wholly owned subsidiary of the Company. As at
December 31, 2011, the restructuring was completed. Those immediate holding BVI companies are now in the process of liquidation.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Company registered as a sino-foreign equity joint venture in the PRC.
|-- | ---------------------------------------------------------------------

|*** | Companies registered as wholly-foreign owned enterprises in the PRC.
|--- | --------------------------------------------------------------------

|# | Effective interest held by the Group is 66.41%.
|- | -----------------------------------------------

|Note 1: | The Group acquired China Topssion Communication Co., Ltd. (Topssion) from China Mobile Communications Corporation (CMCC), the ultimate holding
company, and other third parties for a total consideration of RMB237,070,000. Topssion is primarily engaged in the business of sales of mobile handsets and other communication devices.
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-42



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##### Table of Contents

|18 | Interest in associates
|-- | ----------------------



|                                  |  |                       |        |  |                       |  |        | 
|--------------------------------- |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                                  |  | As atDecember 31,2011 |        |  | As atDecember 31,2010 | 
|                                  |  | RMB million           |        |  | RMB million           | 
|                                  |  |                      
|Share of net assets of associates |  |                       | 43,794 |  |                       |  | 40,175 | 
|                                  |  |                       |        |  |                       |  |        | 

Details of the associates are as follows:



|                                                        |  |                                    |  |                                                    |    |   |                    |                                         
|------------------------------------------------------- |  | ---------------------------------- |  | -------------------------------------------------- | -- | - | ------------------ | ----------------------------------------
|Name of associate                                       |  | Place ofincorporationand operation |  | Proportion ofownershipinterest heldby a subsidiary |    |   | Principal activity
|                                                        |  |                                    | 
|Non-listed company                                      |  |                                    |  |                                                    |    |   |                    |                                         
|China Motion United Telecom Limited                     |  | Hong Kong                          |  |                                                    | 30 | % |                    | Provision of telecommunications services
|                                                        |  |                                    | 
|Shenzhen China Motion Telecom United Limited            |  | PRC                                |  |                                                    | 30 | % |                    | Provision of telecommunications services
|                                                        |  |                                    | 
|Listed company                                          |  |                                    |  |                                                    |    |   |                    |                                         
|Shanghai Pudong Development Bank Co., Ltd. (SPD Bank) |  | PRC                                |  |                                                    | 20 | % |                    | Provision of banking services           

All the above investments in associates are owned by Guangdong Mobile, the Companys wholly-owned
subsidiary.

The carrying amounts of Groups share of net assets of China Motion United Telecom Limited and Shenzhen China
Motion Telecom United Limited were nil. These two entities were in a net liability position based on their latest management accounts as at December 31 2010 and 2011.

As at December 31 2011, the interests in associates include the investment in SPD Bank, which is a listed company on The Shanghai Stock Exchange, the PRC. In 2010, the Company, through Guangdong
Mobile, acquired 20% of the total issued share capital in SPD Bank for a total consideration and direct costs of RMB39,617,000,000. The acquisition was completed in October 2010.

Up to the date of these financial statements released, SPD Bank has not yet announced its audited annual results for the year ended
December 31, 2011. The Group has recognized its share of SPD Banks comprehensive income for the year ended December 31, 2011 based on the unaudited financial information which was publicly released by SPD Bank.

Summary financial information on SPD Bank:



|                                 |  |             |           |  |             |  |           |             |  |  |                  |  |  |  |        | 
|-------------------------------- |  | ----------- | --------- |  | ----------- |  | --------- | ----------- |  |  | ---------------- |  |  |  | ------ | 
|                                 |  | Assets      |           |  | Liabilities |  |           | Revenue     |  |  | Profit after tax | 
|                                 |  | RMB million |           |  | RMB million |  |           | RMB million |  |  | RMB million      | 
|                                 |  |             |           | 
|2011                             |  |             |           |  |             |  |           |             |  |  |                  |  |  |  |        | 
|100%                             |  |             | 2,690,300 |  |             |  | 2,540,700 |             |  |  | 67,497           |  |  |  | 27,236 | 
|                                 |  |             |           | 
|Groups effective interest (20%) |  |             | 538,060   |  |             |  | 508,140   |             |  |  | 13,499           |  |  |  | 5,447  | 



F-43



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##### Table of Contents

|18 | Interest in associates (continued)
|-- | ----------------------------------



The fair value of the interest in SPD Bank is disclosed in Note 37(e). The management
has determined that there was no impairment of the Groups interest in SPD Bank for the years ended December 31 2010 and December 31 2011.



|19 | Interest in jointly controlled entity
|-- | -------------------------------------



|                    |  |                       |   |  |                       |  |   | 
|------------------- |  | --------------------- | - |  | --------------------- |  | - | 
|                    |  | As atDecember 31,2011 |   |  | As atDecember 31,2010 | 
|                    |  | RMB million           |   |  | RMB million           | 
|                    |  |                      
|Share of net assets |  |                       | 7 |  |                       |  | 8 | 
|                    |  |                       |   |  |                       |  |   | 

Details of the Groups interest in the jointly controlled entity is as follows:



|                                  |  |                                    |                 |  |                                                 |  |    |                    |  |                                                                             
|--------------------------------- |  | ---------------------------------- | --------------- |  | ----------------------------------------------- |  | -- | ------------------ |  | ----------------------------------------------------------------------------
|Name of jointly controlled entity |  | Place ofincorporationand
operation |                 |  | Proportion ofownershipinterest heldby the Group |  |    | Principal activity
|                                  |  |                                    |                
|JIL B.V.                          |  |                                    | The Netherlands |  |                                                 |  | 25 | %                  |  | Research and develop telecommunication technologies and application services

JIL B.V. was formed by the Company and two other shareholders in 2008, and commenced its operation in
2009. During 2009, a new investor became the fourth shareholder and the proportion of ownership interests held by the Group and the Company decreased from 33.33% to 25%. At the end of 2011, each of the four shareholders, including the Company, has
contributed US$5,000,000 (equivalent to RMB34,000,000) to JIL B.V. in accordance with the shareholders agreement.

JIL B.V. is
considered a jointly controlled entity since the Company and other shareholders have the right to appoint an equal number of directors to the board of directors. The Company and the other shareholders share joint control over the major economic
activities of JIL B.V..

As at and for the year ended December 31, 2011, the Groups share of the JIL B.V.s
current assets, non-current assets, current liabilities, net assets and loss for the year of JIL B.V. are RMB7,000,000 (2010: RMB19,000,000), RMB1,000,000 (2010: RMB1,000,000), RMB1,000,000 (2010: RMB12,000,000), RMB7,000,000 (2010: RMB8,000,000)
and RMB1,000,000 (2010: RMB18,000,000), respectively.



F-44



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##### Table of Contents

|20 | Deferred tax assets and liabilities
|-- | -----------------------------------

The components of deferred tax assets/(liabilities) recognized in the consolidated balance sheets and the movements during the year for the Group are as follows:

Deferred tax assets and liabilities recognized and the movements during 2011



|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|--------------------------------------------------------- |  | ------------------- | ----- | - | ------------------------- |  | -- | ----------------------------------- |  |  | ------------------- | - |  | --------------------- | - |  |  |  | ------ | -
|                                                          |  | As atJanuary 1,2011 |       |   | Acquisitionof asubsidiary |  |    | Credited/(charged) toprofit or loss |  |  | Exchangedifferences |   |  | As atDecember 31,2011 |  
|                                                          |  | RMB million         |       |   | RMB million               |  |    | RMB million                         |  |  | RMB million         |   |  | RMB million           |  
|                                                          |  |                     |       |   |                          
|Deferred tax assets arising from:                         |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|Provision for obsolete inventories                        |  |                     | 12    |   |                           |  | 5  |                                     |  |  | 8                   |   |  |                       |  |  |  |  | 25     |  
|Write-off of certain network equipment and related assets |  |                     | 1,235 |   |                           |  |   |                                     |  |  | 147                 |   |  |                       |  |  |  |  | 1,382  |  
|Provision for certain operating expenses                  |  |                     | 5,147 |   |                           |  | 3  |                                     |  |  | 560                 |   |  |                       |  |  |  |  | 5,710  |  
|Deferred revenue from customer point reward program       |  |                     | 2,114 |   |                           |  |   |                                     |  |  | 531                 |   |  |                       |  |  |  |  | 2,645  |  
|Impairment loss for doubtful accounts                     |  |                     | 1,212 |   |                           |  | 4  |                                     |  |  | (65                 | ) |  |                       |  |  |  |  | 1,151  |  
|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|                                                          |  |                     | 9,720 |   |                           |  | 12 |                                     |  |  | 1,181               |   |  |                       |  |  |  |  | 10,913 |  
|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|Deferred tax liabilities arising from:                    |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|Capitalized interest                                      |  |                     | (4    | ) |                           |  |   |                                     |  |  | 3                   |   |  |                       |  |  |  |  | (1     | )
|Depreciation allowance in excess of related depreciation  |  |                     | (35   | ) |                           |  |   |                                     |  |  | 18                  |   |  |                       | 1 |  |  |  | (16    | )
|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|                                                          |  |                     | (39   | ) |                           |  |   |                                     |  |  | 21                  |   |  |                       | 1 |  |  |  | (17    | )
|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  
|                                                          |  |                     |       |   |                          
|Total                                                     |  |                     | 9,681 |   |                           |  | 12 |                                     |  |  | 1,202               |   |  |                       | 1 |  |  |  | 10,896 |  
|                                                          |  |                     |       |   |                           |  |    |                                     |  |  |                     |   |  |                       |   |  |  |  |        |  



F-45



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##### Table of Contents

|20 | Deferred tax assets and liabilities (continued)
|-- | -----------------------------------------------



Deferred tax assets and liabilities recognized and the movements during 2010



|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|--------------------------------------------------------- |  | ------------------- | ----- | - | ----------------------------------- |  | ----- | ------------------- |  |  | --------------------- |  |  |  | ----- | -
|                                                          |  | As atJanuary 1,2010 |       |   | Credited/(charged) toprofit or loss |  |       | Exchangedifferences |  |  | As atDecember 31,2010 | 
|                                                          |  | RMB million         |       |   | RMB million                         |  |       | RMB million         |  |  | RMB million           | 
|                                                          |  |                     |       |  
|Deferred tax assets arising from:                         |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|Provision for obsolete inventories                        |  |                     | 6     |   |                                     |  | 6     |                     |  |  |                      |  |  |  | 12    |  
|Write-off of certain network equipment and related assets |  |                     | 1,515 |   |                                     |  | (280  | )                   |  |  |                      |  |  |  | 1,235 |  
|Provision for certain operating expenses                  |  |                     | 3,935 |   |                                     |  | 1,212 |                     |  |  |                      |  |  |  | 5,147 |  
|Deferred revenue from customer point reward program       |  |                     | 1,520 |   |                                     |  | 594   |                     |  |  |                      |  |  |  | 2,114 |  
|Impairment loss for doubtful accounts                     |  |                     | 1,963 |   |                                     |  | (751  | )                   |  |  |                      |  |  |  | 1,212 |  
|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|                                                          |  |                     | 8,939 |   |                                     |  | 781   |                     |  |  |                      |  |  |  | 9,720 |  
|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|Deferred tax liabilities arising from:                    |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|Capitalized interest                                      |  |                     | (7    | ) |                                     |  | 3     |                     |  |  |                      |  |  |  | (4    | )
|Depreciation allowance in excess of related depreciation  |  |                     | (54   | ) |                                     |  | 18    |                     |  |  | 1                     |  |  |  | (35   | )
|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|                                                          |  |                     | (61   | ) |                                     |  | 21    |                     |  |  | 1                     |  |  |  | (39   | )
|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  
|                                                          |  |                     |       |  
|Total                                                     |  |                     | 8,878 |   |                                     |  | 802   |                     |  |  | 1                     |  |  |  | 9,681 |  
|                                                          |  |                     |       |   |                                     |  |       |                     |  |  |                       |  |  |  |       |  



|                                                                       |  |                       |        |   |                       |  |       |  
|---------------------------------------------------------------------- |  | --------------------- | ------ | - | --------------------- |  | ----- | -
|                                                                       |  | As atDecember 31,2011 |        |   | As atDecember 31,2010 | 
|                                                                       |  | RMB million           |        |   | RMB million           | 
|                                                                       |  |                      
|Deferred tax assets recognized in the consolidated balance sheets      |  |                       | 10,913 |   |                       |  | 9,720 |  
|Deferred tax liabilities recognized in the consolidated balance sheets |  |                       | (17    | ) |                       |  | (39   | )
|                                                                       |  |                       |        |   |                       |  |       |  
|                                                                       |  |                      
|Balance as at December 31                                              |  |                       | 10,896 |   |                       |  | 9,681 |  
|                                                                       |  |                       |        |   |                       |  |       |  



F-46



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##### Table of Contents

|21 | Pledged bank deposits
|-- | ---------------------

The pledged deposit classified in non-current assets of HK$150,000,000 (equivalent to RMB122,000,000) matures in 2014 and is related to a
performance bond issued by a bank in favour of the Telecommunications Authority of Hong Kong in order to secure CMHKs due performance of network coverage for the application of the next generation mobile services technology license.

Other pledged deposit classified in current assets of HK$40,000,000 (equivalent to RMB32,000,000) matures in 2012 and is
related to a performance bond issued by a bank in favor of the Telecommunications Authority of Hong Kong in order to secure CMHKs due performance of network coverage for the application of Mobile TV license.



|22 | Other financial assets
|-- | ----------------------



|                                                             |  |                       |     |  |                       |  |     | 
|------------------------------------------------------------ |  | --------------------- | --- |  | --------------------- |  | --- | 
|                                                             |  | As atDecember 31,2011 |     |  | As atDecember 31,2010 | 
|                                                             |  | RMB million           |     |  | RMB million           | 
|                                                             |  |                      
|Investment in unlisted equity securities in the PRC, at cost |  |                       | 127 |  |                       |  | 127 | 
|                                                             |  |                       |     |  |                       |  |     | 



|23 | Inventories
|-- | -----------

Inventories
primarily comprise SIM cards, terminals and other consumables.



|                        |  |                       |       |  |                       |  |       | 
|----------------------- |  | --------------------- | ----- |  | --------------------- |  | ----- | 
|                        |  | As atDecember 31,2011 |       |  | As atDecember 31,2010 | 
|                        |  | RMB million           |       |  | RMB million           | 
|                        |  |                      
|SIM cards and terminals |  |                       | 5,445 |  |                       |  | 2,144 | 
|Other consumables       |  |                       | 2,499 |  |                       |  | 2,105 | 
|                        |  |                       |       |  |                       |  |       | 
|                        |  |                      
|                        |  |                       | 7,944 |  |                       |  | 4,249 | 
|                        |  |                       |       |  |                       |  |       | 



F-47



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##### Table of Contents

|24 | Accounts receivable
|-- | -------------------



|(a) | Aging analysis
|--- | --------------

Aging analysis of accounts receivable, net of allowance for impairment loss for doubtful accounts is as follows:



|               |  |                       |       |  |                       |  |       | 
|-------------- |  | --------------------- | ----- |  | --------------------- |  | ----- | 
|               |  | As atDecember 31,2011 |       |  | As atDecember 31,2010 | 
|               |  | RMB million           |       |  | RMB million           | 
|               |  |                      
|Within 30 days |  |                       | 5,979 |  |                       |  | 5,295 | 
|31 - 60 days   |  |                       | 1,447 |  |                       |  | 1,317 | 
|61 - 90 days   |  |                       | 732   |  |                       |  | 639   | 
|Over 90 days   |  |                       | 1,007 |  |                       |  | 381   | 
|               |  |                       |       |  |                       |  |       | 
|               |  |                      
|               |  |                       | 9,165 |  |                       |  | 7,632 | 
|               |  |                       |       |  |                       |  |       | 

Accounts receivable primarily comprise receivables from customers and telecommunications operators.
Accounts receivable from the provision of telecommunications services to customers are due for payment within one month from date of billing. Customers with balances that are overdue or exceed credit limits are required to settle all outstanding
balances before any further telecommunications services can be used. The increase of accounts receivable over 90 days is mainly due to receivables arising from overseas telecommunications operators within normal settlement period.

Accounts receivable are expected to be recovered within one year.



|(b) | Impairment of accounts receivable
|--- | ---------------------------------

Impairment loss in respect of accounts receivable are recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written
off against accounts receivable directly.

The following table summarizes the changes in impairment losses of doubtful
accounts:



|                                |  |             |        |   |             |  |        |             |  |  |        |  
|------------------------------- |  | ----------- | ------ | - | ----------- |  | ------ | ----------- |  |  | ------ | -
|                                |  | 2011        |        |   | 2010        |  |        | 2009        | 
|                                |  | RMB million |        |   | RMB million |  |        | RMB million | 
|                                |  |             |       
|Balance as at January 1         |  |             | 4,851  |   |             |  | 6,095  |             |  |  | 4,548  |  
|Impairment loss recognized      |  |             | 3,683  |   |             |  | 4,005  |             |  |  | 4,514  |  
|Accounts receivable written off |  |             | (4,133 | ) |             |  | (5,248 | )           |  |  | (2,967 | )
|Exchange differences            |  |             | (1     | ) |             |  | (1     | )           |  |  |       |  
|                                |  |             |        |   |             |  |        |             |  |  |        |  
|                                |  |             |       
|Balance as at December 31       |  |             | 4,400  |   |             |  | 4,851  |             |  |  | 6,095  |  
|                                |  |             |        |   |             |  |        |             |  |  |        |  



F-48



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##### Table of Contents

|24 | Accounts receivable (continued)
|-- | -------------------------------



|(c) | Accounts receivable that are not impaired
|--- | -----------------------------------------

Accounts receivable that are neither individually nor collectively considered to be impaired are as follows:



|                              |  |                       |       |  |                       |  |       | 
|----------------------------- |  | --------------------- | ----- |  | --------------------- |  | ----- | 
|                              |  | As
atDecember 31,2011 |       |  | As
atDecember 31,2010 | 
|                              |  | RMB million           |       |  | RMB million           | 
|                              |  |                      
|Neither past due nor impaired |  |                       | 8,672 |  |                       |  | 6,869 | 
|Less than 1 month past due    |  |                       | 493   |  |                       |  | 763   | 
|                              |  |                       |       |  |                       |  |       | 
|                              |  |                      
|                              |  |                       | 9,165 |  |                       |  | 7,632 | 
|                              |  |                       |       |  |                       |  |       | 

Receivables that were neither past due nor impaired relate to a wide range of customers for which there
was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers
that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are
still considered fully recoverable. The Group does not hold any collateral over these balances.



|25 | Other receivables, prepayments and other current assets
|-- | -------------------------------------------------------

Other receivables primarily comprise interest receivable from banks, utilities deposits, rental deposits and trust loan receivables, which are expected to be recovered within one year except for utilities
deposits and rental deposits.

Trust loan receivables represent loans to other PRC state-owned entities arranged through a
bank, bearing initial interest rate at 5.10% - 6.56% per annum, which will be adjusted in line with the increase of benchmark loan interest rate published by the Peoples Bank of China (PBOC), and are recoverable within one
year.

Prepayments and other current assets include primarily rental prepayment.



|26 | Amounts due from/to ultimate holding company and amount due to immediate holding company
|-- | ----------------------------------------------------------------------------------------

Amounts due from/to ultimate holding company are unsecured, interest free, repayable on demand and arose in the ordinary course of
business.

Amount due to immediate holding company represented interest payable on the deferred consideration payable (see note
30(b)), which is expected to be settled within one year.



F-49



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##### Table of Contents

|27 | Cash and cash equivalents
|-- | -------------------------



|                                                             |  |                       |        |  |                       |  |        | 
|------------------------------------------------------------ |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                                                             |  | As atDecember 31,2011 |        |  | As atDecember 31,2010 | 
|                                                             |  | RMB million           |        |  | RMB million           | 
|                                                             |  |                      
|Deposits with banks within three months of original maturity |  |                       | 23,618 |  |                       |  | 6,043  | 
|Cash at banks and in hand                                    |  |                       | 62,641 |  |                       |  | 81,500 | 
|                                                             |  |                       |        |  |                       |  |        | 
|                                                             |  |                      
|                                                             |  |                       | 86,259 |  |                       |  | 87,543 | 
|                                                             |  |                       |        |  |                       |  |        | 



|28 | Accounts payable
|-- | ----------------

Accounts payable primarily include payables for network expansion projects expenditure, maintenance and interconnection expenses.

The aging analysis of accounts payable as is as follows:



|                                        |  |                       |         |  |                       |  |         | 
|--------------------------------------- |  | --------------------- | ------- |  | --------------------- |  | ------- | 
|                                        |  | As atDecember 31,2011 |         |  | As atDecember 31,2010 | 
|                                        |  | RMB million           |         |  | RMB million           | 
|                                        |  |                      
|Due within 1 month or on demand         |  |                       | 95,744  |  |                       |  | 88,525  | 
|Due after 1 month but within 3 months   |  |                       | 6,984   |  |                       |  | 9,888   | 
|Due after 3 months but within 6 months  |  |                       | 5,237   |  |                       |  | 5,519   | 
|Due after 6 months but within 9 months  |  |                       | 3,736   |  |                       |  | 3,337   | 
|Due after 9 months but within 12 months |  |                       | 4,565   |  |                       |  | 4,377   | 
|                                        |  |                       |         |  |                       |  |         | 
|                                        |  |                      
|                                        |  |                       | 116,266 |  |                       |  | 111,646 | 
|                                        |  |                       |         |  |                       |  |         | 

All of the accounts payable are expected to be settled within one year or are repayable on demand.



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##### Table of Contents

|29 | Deferred revenue
|-- | ----------------

Deferred revenue primarily includes prepaid service fees received from customers, unredeemed point rewards, and deferred tax credit on
purchase of domestic telecommunications equipment.



|                                                  |  |             |          |   |             |  |          |  
|------------------------------------------------- |  | ----------- | -------- | - | ----------- |  | -------- | -
|                                                  |  | 2011        |          |   | 2010        | 
|                                                  |  | RMB million |          |   | RMB million | 
|                                                  |  |            
|Balance as at January 1                           |  |             | 43,737   |   |             |  | 35,890   |  
|-Current portion                                  |  |             | 43,489   |   |             |  | 35,573   |  
|-Non-current portion                              |  |             | 248      |   |             |  | 317      |  
|Additions during the year                         |  |             | 240,342  |   |             |  | 241,927  |  
|Recognized in the comprehensive income statements |  |             | (232,060 | ) |             |  | (234,076 | )
|Exchange differences                              |  |             | (5       | ) |             |  | (4       | )
|                                                  |  |             |          |   |             |  |          |  
|                                                  |  |            
|Balance as at December 31                         |  |             | 52,014   |   |             |  | 43,737   |  
|Less: Current portion                             |  |             | (51,753  | ) |             |  | (43,489  | )
|                                                  |  |             |          |   |             |  |          |  
|                                                  |  |            
|Non-current portion                               |  |             | 261      |   |             |  | 248      |  
|                                                  |  |             |          |   |             |  |          |  



|30 | Interest-bearing borrowings
|-- | ---------------------------



|                               |  |       |  |                         |   |  |                         |  |        |            |  |  |                    |  |  |                        |       |  |            |  |        |  |  |  |        | 
|------------------------------ |  | ----- |  | ----------------------- | - |  | ----------------------- |  | ------ | ---------- |  |  | ------------------ |  |  | ---------------------- | ----- |  | ---------- |  | ------ |  |  |  | ------ | 
|                               |  |       |  | As at December 31, 2011 |   |  | As at December 31, 2010 | 
|                               |  | Note  |  | Currentliabilities      |   |  | Non-currentliabilities  |  |        | Total      |  |  | Currentliabilities |  |  | Non-currentliabilities |       |  | Total      | 
|                               |  |       |  | RMBmillion              |   |  | RMBmillion              |  |        | RMBmillion |  |  | RMBmillion         |  |  | RMBmillion             |       |  | RMBmillion | 
|                               |  |       |  |                         |   |  |                        
|Bonds                          |  | 30(a) |  |                         |  |  |                         |  | 4,984  |            |  |  | 4,984              |  |  |                        | 4,981 |  |            |  | 4,982  |  |  |  | 9,963  | 
|Deferred consideration payable |  | 30(b) |  |                         |  |  |                         |  | 23,633 |            |  |  | 23,633             |  |  |                        |      |  |            |  | 23,633 |  |  |  | 23,633 | 
|                               |  |       |  |                         |   |  |                         |  |        |            |  |  |                    |  |  |                        |       |  |            |  |        |  |  |  |        | 
|                               |  |       |  |                         |   |  |                        
|                               |  |       |  |                         |  |  |                         |  | 28,617 |            |  |  | 28,617             |  |  |                        | 4,981 |  |            |  | 28,615 |  |  |  | 33,596 | 
|                               |  |       |  |                         |   |  |                         |  |        |            |  |  |                    |  |  |                        |       |  |            |  |        |  |  |  |        | 

All of the above interest-bearing borrowings are unsecured, and the non-current portion is not expected
to be settled within one year.



| | (a) | Bonds
| | --- | -----

As at December 31,
2011, the bonds represent the balance of fifteen-year guaranteed bonds (Fifteen-year Bonds) issued by Guangdong Mobile, with a principal amount of RMB5,000,000,000, at an issue price equal to the face value of the bonds. The bonds bear
interest at the rate of 4.5% per annum and payable annually. The bonds, redeemable at 100% of the principal amount, will mature on October 28, 2017. The ten-year guaranteed bonds with a principal amount of RMB5,000,000,000 issued by
Guangdong Mobile on June 18, 2001, was fully repaid in June 2011.

The Company has issued a joint and irrevocable
guarantee (the Guarantee) for the performance of the Fifteen-year Bonds. CMCC, the ultimate holding company, has also issued a further guarantee in relation to the performance by the Company of its obligations under the Guarantee.



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##### Table of Contents

|30 | Interest-bearing borrowings (continued)
|-- | ---------------------------------------



| | (b) | Deferred consideration payable
| | --- | ------------------------------

As at December 31, 2011, the deferred consideration payable represents the balance of the deferred consideration of RMB9,976,000,000
and RMB13,657,000,000 payable to immediate holding company in respect of the acquisitions of subsidiaries in 2002 and 2004 respectively. The balances are due on July 1, 2017 and July 1, 2019, respectively.

The deferred consideration payable is unsecured and bears interest at the rate of two-year US dollar LIBOR swap rate per annum (for the
year ended December 31, 2011 and 2010: 1.123% to 1.238% per annum). The balances are subordinated to other senior debts owed by the Company from time to time. The Company may make early payment of all or part of the balances at any time
before the maturity date without penalty.



|31 | Accrued expenses and other payables
|-- | -----------------------------------



|                                     |  |                       |        |  |                       |  |        | 
|------------------------------------ |  | --------------------- | ------ |  | --------------------- |  | ------ | 
|                                     |  | As atDecember 31,2011 |        |  | As atDecember 31,2010 | 
|                                     |  | RMB million           |        |  | RMB million           | 
|                                     |  |                      
|Receipts-in-advance                  |  |                       | 56,015 |  |                       |  | 49,571 | 
|Other payables                       |  |                       | 12,125 |  |                       |  | 13,489 | 
|Accrued salaries, wages and benefits |  |                       | 5,376  |  |                       |  | 4,797  | 
|Accrued expense                      |  |                       | 18,846 |  |                       |  | 17,859 | 
|                                     |  |                       |        |  |                       |  |        | 
|                                     |  |                      
|                                     |  |                       | 92,362 |  |                       |  | 85,716 | 
|                                     |  |                       |        |  |                       |  |        | 



|32 | Obligations under finance leases
|-- | --------------------------------

The Groups obligations under finance leases as at December 31 are as follows:



|              |  |                                          |    |  |                                         |  |   |                           |  |  |                                         |  |  |                                         |    |  |                           |  |   |  |  |  |    | 
|------------- |  | ---------------------------------------- | -- |  | --------------------------------------- |  | - | ------------------------- |  |  | --------------------------------------- |  |  | --------------------------------------- | -- |  | ------------------------- |  | - |  |  |  | -- | 
|              |  | As at December 31, 2011                  |    |  | As at December 31, 2010                 | 
|              |  | Presentvalue of 
theminimumleasepayments |    |  | Interestexpenserelatingto futureperiods |  |   | Totalminimumleasepayments |  |  | Presentvalue of theminimumleasepayments |  |  | Interestexpenserelatingto futureperiods |    |  | Totalminimumleasepayments | 
|              |  | RMBmillion                               |    |  | RMBmillion                              |  |   | RMBmillion                |  |  | RMBmillion                              |  |  | RMBmillion                              |    |  | RMBmillion                | 
|              |  |                                          |    |  |                                         | 
|Within 1 year |  |                                          | 68 |  |                                         |  | 3 |                           |  |  | 71                                      |  |  |                                         | 68 |  |                           |  | 3 |  |  |  | 71 | 
|              |  |                                          |    |  |                                         |  |   |                           |  |  |                                         |  |  |                                         |    |  |                           |  |   |  |  |  |    | 



F-52



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##### Table of Contents

|33 | Employee retirement benefits
|-- | ----------------------------



|(a) | As stipulated by the regulations of Mainland China, the subsidiaries in Mainland China participate in basic defined contribution pension plans organized
by their respective municipal governments under which they are governed.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Employees in Mainland China 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 Companys
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 or in accordance with the terms of the plans.



|(b) | The Group also participates in the Mandatory Provident Fund Scheme (the MPF scheme) under the Hong Kong Mandatory Provident Fund Schemes
Ordinance with respect to 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$20,000. Contributions to the scheme vest immediately.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|34 | Equity settled share-based transactions
|-- | ---------------------------------------

Pursuant to a resolution passed at the Annual General Meeting held on June 24, 2002, the current share option scheme (the Current Scheme) was adopted.

Under the Current 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 an equity interest, to receive options to subscribe for shares of the
Company. The consideration payable for the grant of option under the Current Scheme is HK$1.00.

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

The
Stock Exchange of Hong Kong Limited (the HKEx) 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 HKEx on the date on which the option was granted
and the average closing price of the shares on the HKEx for the five trading days immediately preceding the date on which the option was granted.



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##### Table of Contents

|34 | Equity settled share-based transactions (continued)
|-- | ---------------------------------------------------



For options granted under the Current 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 HKEx on the date on which the option was granted; and
| | ---- | --------------------------------------------------------------------------------------------



| | (iii) | the average closing price of the shares on the HKEx for the five trading days immediately preceding the date on which the option was granted.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------

Under the Current 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 date on which the option is granted.



|(a) | The terms and conditions of the grants that existed during the years are as follows, whereby all options are settled by physical delivery of shares:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|                                   |  |                       |             |  |      |  |             |                    |  |                                        |  |         
|---------------------------------- |  | --------------------- | ----------- |  | ---- |  | ----------- | ------------------ |  | -------------------------------------- |  | --------
|                                   |  | Number of instruments |             |  |      |  | Contractual
|                                   |  | 2011                  |             |  | 2010 |  |             | Vesting conditions |  | life of options                       
|                                   |  |                       |             | 
|Options granted to directors       |  |                       |             |  |      |  |             |                    |  |                                        |  |         
|- on July 3, 2002                  |  |                       | 7,000       |  |      |  | 7,000       |                    |  | 50% two years from the date of grant,  |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 50% five years from the date of grant  |  |         
|                                   |  |                       |             | 
|- on October 28, 2004              |  |                       | 744,175     |  |      |  | 744,175     |                    |  | 40% one year from the date of grant,   |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 30% two years from the date of grant,  |  |         
|                                   |  |                       |             |  |      |  |             |                    |  | 30% three years from the date of grant |  |         
|                                   |  |                       |             | 
|- on December 21, 2004             |  |                       | 475,000     |  |      |  | 475,000     |                    |  | 40% one year from the date of grant,   |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 30% two years from the date of grant,  |  |         
|                                   |  |                       |             |  |      |  |             |                    |  | 30% three years from the date of grant |  |         
|                                   |  |                       |             | 
|- on November 8, 2005              |  |                       | 4,885,500   |  |      |  | 5,685,500   |                    |  | 40% one year from the date of grant,   |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 30% two years from the date of grant,  |  |         
|                                   |  |                       |             |  |      |  |             |                    |  | 30% three years from the date of grant |  |         
|                                   |  |                       |             | 
|Options granted to other employees |  |                       |             |  |      |  |             |                    |  |                                        |  |         
|- on July 3, 2002                  |  |                       | 25,361,299  |  |      |  | 29,997,239  |                    |  | 50% two years from the date of grant,  |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 50% five years from the date of grant  |  |         
|                                   |  |                       |             | 
|- on October 28, 2004              |  |                       | 117,742,235 |  |      |  | 118,704,584 |                    |  | 40% one year from the date of grant,   |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 30% two years from the date of grant,  |  |         
|                                   |  |                       |             |  |      |  |             |                    |  | 30% three years from the date of grant |  |         
|                                   |  |                       |             | 
|- on November 8, 2005              |  |                       | 267,147,939 |  |      |  | 267,391,975 |                    |  | 40% one year from the date of grant,   |  | 10 years
|                                   |  |                       |             |  |      |  |             |                    |  | 30% two years from the date of grant,  |  |         
|                                   |  |                       |             |  |      |  |             |                    |  | 30% three years from the date of grant |  |         
|                                   |  |                       |             |  |      |  |             |                    |  |                                        |  |         
|Total share options                |  |                       | 416,363,148 |  |      |  | 423,005,473 |                    |  |                                        |  |         
|                                   |  |                       |             |  |      |  |             |                    |  |                                        |  |         



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##### Table of Contents

|34 | Equity settled share-based transactions (continued)
|-- | ---------------------------------------------------



|(b) | The number and weighted average exercise prices of share options are as follows:
|--- | --------------------------------------------------------------------------------



|                                |  |                              |       |  |                                       |  |             |                              |  |  |                                       |  |  |  |             |  
|------------------------------- |  | ---------------------------- | ----- |  | ------------------------------------- |  | ----------- | ---------------------------- |  |  | ------------------------------------- |  |  |  | ----------- | -
|                                |  | 2011                         |       |  | 2010                                  | 
|                                |  | Weightedaverageexerciseprice |       |  | Number ofsharesinvolved
inthe options |  |             | Weightedaverageexerciseprice |  |  | Number ofsharesinvolved
inthe options | 
|                                |  | HK$                          |       |  |                                       |  |             | HK$                          |  |  |                                       | 
|                                |  |                              |       | 
|As at January 1                 |  |                              | 30.59 |  |                                       |  | 423,005,473 |                              |  |  | 30.51                                 |  |  |  | 427,575,068 |  
|Exercised                       |  |                              | 24.72 |  |                                       |  | (6,642,325  | )                            |  |  | 23.26                                 |  |  |  | (4,569,595  | )
|                                |  |                              |       |  |                                       |  |             |                              |  |  |                                       |  |  |  |             |  
|As at December 31               |  |                              | 30.68 |  |                                       |  | 416,363,148 |                              |  |  | 30.59                                 |  |  |  | 423,005,473 |  
|                                |  |                              |       |  |                                       |  |             |                              |  |  |                                       |  |  |  |             |  
|Option vested as at December 31 |  |                              | 30.68 |  |                                       |  | 416,363,148 |                              |  |  | 30.59                                 |  |  |  | 423,005,473 |  
|                                |  |                              |       |  |                                       |  |             |                              |  |  |                                       |  |  |  |             |  

The weighted average share price at the date of exercise for shares options exercised during the year was
HK$75.45 (2010: HK$79.63).

The options outstanding as at December 31, 2011 had exercise prices ranging from HK$22.75 to
HK$34.87 (2010: HK$22.75 to HK$34.87) and a weighted average remaining contractual life of 3.4 years (2010: 4.3 years).

The
fair value of services received in return for share options granted are measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on a binomial lattice model. The
contractual life of the option is used as an input into this model. Expectations of early exercise are incorporated into the binomial lattice model. No share options were granted during 2010 and 2011.



|35 | Capital, reserves and dividends
|-- | -------------------------------



|(a) | Dividends
|--- | ---------



|(i) | Dividends attributable to the year:
|--- | -----------------------------------



|                                                                                                                                                                                                                                         |  |             |        |  |             |  |        |             |  |  |        | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                                                                                                                                                                                                                         |  | 2011        |        |  | 2010        |  |        | 2009        | 
|                                                                                                                                                                                                                                         |  | RMB million |        |  | RMB million |  |        | RMB million | 
|                                                                                                                                                                                                                                         |  |             |       
|Ordinary interim dividend declared and paid of HK$1.580 (equivalent to approximately RMB1.314) (2010: HK$1.417 (equivalent to
approximately RMB1.236); 2009: HK$1.346 (equivalent to approximately RMB1.187)) per share                  |  |             | 25,857 |  |             |  | 24,550 |             |  |  | 23,791 | 
|                                                                                                                                                                                                                                         |  |             |       
|Ordinary final dividend proposed after the balance sheet date of HK$1.747 (equivalent to approximately RMB1.416) (2010: HK$1.597
(equivalent to approximately RMB1.359); 2009: HK$1.458 (equivalent to approximately RMB1.284))per share |  |             | 28,441 |  |             |  | 27,268 |             |  |  | 25,753 | 
|                                                                                                                                                                                                                                         |  |             |        |  |             |  |        |             |  |  |        | 
|                                                                                                                                                                                                                                         |  |             |       
|                                                                                                                                                                                                                                         |  |             | 54,298 |  |             |  | 51,818 |             |  |  | 49,544 | 
|                                                                                                                                                                                                                                         |  |             |        |  |             |  |        |             |  |  |        | 



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##### Table of Contents

|35 | Capital, reserves and dividends (continued)
|-- | -------------------------------------------



|(a) | Dividends (continued)
|--- | ---------------------



|(i) | Dividends attributable to the year: (continued)
|--- | -----------------------------------------------



The proposed ordinary final dividend which is declared in Hong Kong dollar is translated
into RMB at the rate HK$1 = RMB0.81070, being the rate announced by the State Administration of Foreign Exchange in the PRC on December 30, 2011. As the ordinary final dividend is declared after the balance sheet date, such dividend is not
recognized as liability as at December 31, 2011.



|(ii) | Dividends attributable to the previous financial year, approved and paid during the year:
|---- | -----------------------------------------------------------------------------------------



|                                                                                                                                                                                                                                                                                  |  |             |        |  |             |  |        |             |  |  |        | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                                                                                                                                                                                                                                                                  |  | 2011        |        |  | 2010        |  |        | 2009        | 
|                                                                                                                                                                                                                                                                                  |  | RMB million |        |  | RMB million |  |        | RMB million | 
|                                                                                                                                                                                                                                                                                  |  |             |       
|Ordinary final dividend in respect of the previous financial year, approved and paid during the year, of HK$1.597 (equivalent to
approximately RMB1.359) (2010: HK$1.458 (equivalent to approximately RMB1.284); 2009: HK$1.404 (equivalent to approximately RMB1.238)) per share |  |             | 26,718 |  |             |  | 25,651 |             |  |  | 24,823 | 
|                                                                                                                                                                                                                                                                                  |  |             |        |  |             |  |        |             |  |  |        | 



|(b) | Share capital
|--- | -------------



|(i) | Authorized and issued share capital
|--- | -----------------------------------



|                                               |  |             |       |  |             |  |       | 
|---------------------------------------------- |  | ----------- | ----- |  | ----------- |  | ----- | 
|                                               |  | 2011        |       |  | 2010        | 
|                                               |  | HK$ million |       |  | HK$ million | 
|                                               |  |            
|Authorized:                                    |  |             |       |  |             |  |       | 
|30,000,000,000 ordinary shares of HK$0.10 each |  |             | 3,000 |  |             |  | 3,000 | 
|                                               |  |             |       |  |             |  |       | 



|                                                         |  |                 |                |  |            |  |       |                 |  |  |            |  |  |            |                |  |            |  |       |  |  |  |       | 
|-------------------------------------------------------- |  | --------------- | -------------- |  | ---------- |  | ----- | --------------- |  |  | ---------- |  |  | ---------- | -------------- |  | ---------- |  | ----- |  |  |  | ----- | 
|                                                         |  | 2011            |                |  | 2010       | 
|                                                         |  | Numberof shares |                |  | Equivalent |  |       | Numberof shares |  |  | Equivalent | 
|                                                         |  |                 |                |  | HK$million |  |       | RMBmillion      |  |  |            |  |  | HK$million |                |  | RMBmillion | 
|                                                         |  |                 |                |  |            | 
|Issued and fully paid:                                   |  |                 |                |  |            |  |       |                 |  |  |            |  |  |            |                |  |            |  |       |  |  |  |       | 
|As at January 1                                          |  |                 | 20,065,423,246 |  |            |  | 2,006 |                 |  |  | 2,139      |  |  |            | 20,060,853,651 |  |            |  | 2,006 |  |  |  | 2,139 | 
|Shares issued under share option scheme (note 35(b)(ii)) |  |                 | 6,642,325      |  |            |  | 1     |                 |  |  | 1          |  |  |            | 4,569,595      |  |            |  |      |  |  |  |      | 
|                                                         |  |                 |                |  |            |  |       |                 |  |  |            |  |  |            |                |  |            |  |       |  |  |  |       | 
|                                                         |  |                 |                |  |            | 
|As at December 31                                        |  |                 | 20,072,065,571 |  |            |  | 2,007 |                 |  |  | 2,140      |  |  |            | 20,065,423,246 |  |            |  | 2,006 |  |  |  | 2,139 | 
|                                                         |  |                 |                |  |            |  |       |                 |  |  |            |  |  |            |                |  |            |  |       |  |  |  |       | 

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Companys residual assets.



F-56



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##### Table of Contents

|35 | Capital, reserves and dividends (continued)
|-- | -------------------------------------------



|(b) | Share capital (continued)
|--- | -------------------------



|(ii) | Shares issued under share option scheme
|---- | ---------------------------------------

During 2011, options were exercised to subscribe for 6,642,325 ordinary shares in the Company at a consideration of HK$164,230,000 (equivalent to RMB135,967,000) of which HK$664,000 (equivalent to
RMB550,000) was credited to share capital and the balance of HK$163,566,000 (equivalent to RMB135,417,000) was credited to the share premium account. RMB18,000,000 has been transferred from the capital reserve to the share premium account in
accordance with policy set out in note 1(u)(ii).



|(c) | Nature and purpose of reserves
|--- | ------------------------------



|(i) | Capital reserve
|--- | ---------------

The capital
reserve comprises the following:



| |  |  | The fair value of unexercised share options granted to employees of the Group recognized in accordance with the accounting policy adopted for
share-based payments in note 1(u)(ii); and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | RMB295,665,000,000 debit balance brought forward as a result of the elimination of goodwill arising on the acquisition of subsidiaries before
January 1, 2001 against the capital reserve in previous years.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | PRC statutory reserves
|---- | ----------------------

PRC
statutory reserves mainly include statutory surplus reserve and discretionary surplus reserve. After the completion of the intra-group restructuring, as mentioned in note 17, all the provincial operating companies changed their legal registration
from foreign investment enterprises to domestic enterprises.

In accordance with the Company Law of PRC, domestic enterprises
in Mainland China are required to transfer 10% of their profit after taxation, as determined under accounting principles generally accepted in the PRC (PRC GAAP), to the statutory surplus reserve until such reserve balance reaches 50% of
the registered capital. Moreover, upon a resolution made by the shareholders, a certain percentage of domestic enterprises profit after taxation, as determined under PRC GAAP, is transferred to the discretionary surplus reserve. During the
year, appropriations were made by each of the above subsidiaries to the statutory surplus reserve and discretionary surplus reserve each at 10% of their profit after taxation determined under PRC GAAP.

The statutory and discretionary surplus reserve can be used to reduce 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.



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##### Table of Contents

|35 | Capital, reserves and dividends (continued)
|-- | -------------------------------------------



|(c) | Nature and purpose of reserves (continued)
|--- | ------------------------------------------



|(iii) | Exchange reserve
|----- | ----------------

The exchange
reserve comprises all foreign exchange differences arising from the translation of the financial statements of overseas entities. The reserve is dealt with in accordance with the accounting policies set out in note 1(w).



|(d) | Capital management
|--- | ------------------

The Groups primary objectives when managing capital are to maintain a reasonable capital structure and to safeguard the Groups
ability to continue as a going concern in order to provide returns for shareholders. The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with
higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions. The Group monitors capital on the basis of total
debt-to-book capitalization ratio. This ratio is calculated as total debts (including bills payable, obligations under finance leases, current and non-current interest-bearing borrowings as shown in the consolidated balance sheets) divided by book
capitalization (refer to the total equity attributable to equity shareholders of the Company as shown in the consolidated balance sheets and total debts).

As at December 31, 2011, the Groups total debt-to-book capitalization ratio was 4.5% (2010: 5.6%).

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.



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##### Table of Contents

|36 | Related party transactions
|-- | --------------------------



|(a) | Transactions with CMCC Group
|--- | ----------------------------

The following is a summary of principal related party transactions entered into by the Group with CMCC and its subsidiaries, excluding the Group, (the CMCC Group), for the year ended
December 31, 2009, 2010 and 2011.



|                                                       |  |       |  |             |       |  |             |  |       |             |  |  |       | 
|------------------------------------------------------ |  | ----- |  | ----------- | ----- |  | ----------- |  | ----- | ----------- |  |  | ----- | 
|                                                       |  | Note  |  | 2011        |       |  | 2010        |  |       | 2009        | 
|                                                       |  |       |  | RMB million |       |  | RMB million |  |       | RMB million | 
|                                                       |  |       |  |            
|Telecommunications services revenue                    |  | (i)   |  |             | 1,709 |  |             |  | 859   |             |  |  | 217   | 
|Telecommunications services charges                    |  | (i)   |  |             | 1,138 |  |             |  | 2,037 |             |  |  | 3,913 | 
|Property leasing and management services charges       |  | (ii)  |  |             | 776   |  |             |  | 951   |             |  |  | 1,207 | 
|Interest paid/payable                                  |  | (iii) |  |             | 219   |  |             |  | 431   |             |  |  | 774   | 
|Interconnection revenue                                |  | (iv)  |  |             | 279   |  |             |  | 319   |             |  |  | 379   | 
|Interconnection charges                                |  | (iv)  |  |             | 446   |  |             |  | 431   |             |  |  | 435   | 
|Network assets leasing revenue                         |  | (iv)  |  |             | 47    |  |             |  | 18    |             |  |  |      | 
|Network assets leasing charges                         |  | (iv)  |  |             | 328   |  |             |  | 94    |             |  |  | 59    | 
|TD network capacity leasing charges                    |  | (v)   |  |             | 1,092 |  |             |  | 578   |             |  |  | 222   | 
|Revenue for cooperation of telecommunications services |  | (vi)  |  |             | 177   |  |             |  | 37    |             |  |  | 10    | 
|Charges for cooperation of telecommunications services |  | (vi)  |  |             | 1,154 |  |             |  | 536   |             |  |  | 495   | 

Notes:



|(i) | The amounts represent telecommunications services settlement received/receivable from or paid/payable to CMCC Group for the telecommunications project planning,
design and construction services, telecommunications line and pipeline construction services, telecommunications line maintenance services and installation and maintenance services in respect of transmission towers.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | The amount represents the rental and property management fees paid/payable to CMCC Group in respect of business premises and offices, retail outlets and warehouses.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iii) | The amount represents the interest paid/payable to China Mobile Hong Kong (BVI) Limited, the Companys immediate holding company, in respect of the balance of
purchase consideration for acquisitions of subsidiaries.
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(iv) | The amounts represent settlement received/receivable from or paid/payable to China TieTong Telecommunications Corporation, a wholly-owned subsidiary of CMCC, in
respect of interconnection settlement and network assets leasing revenue and charges.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-59



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##### Table of Contents

|36 | Related party transactions (continued)
|-- | --------------------------------------



|(a) | Transactions with CMCC Group (continued)
|--- | ----------------------------------------



|(v) | The amounts represent the leasing fees paid/payable to CMCC Group in respect of the leasing of TD-SCDMA network capacity. On December 29, 2008, the Company
entered into a network capacity leasing agreement (the Network Capacity Leasing Agreement) with CMCC for the provision of TD-SCDMA related services. The lease was effective from January 1, 2009 to December 31, 2009 and is
automatically renewed for successive one-year periods unless otherwise notified by one party to the other party. The Group is permitted to terminate the lease by giving 60 days advance written notice to CMCC. No penalty will be imposed in the event
of a lease termination. Pursuant to the Network Capacity Leasing Agreement, the Group leases TD-SCDMA network capacity from CMCC and pays leasing fees to CMCC. The leasing fees are determined on a basis that reflects the actual usage of CMCCs
TD-SCDMA network capacity and compensates CMCC for the costs of such network capacity. At the end of the lease term, there is no purchase option granted to the Group to purchase the network assets. The Group also does not bear any gains or losses in
the fluctuation in the fair value of the leased network asset at the end of the lease term. The Group accounts for the TD-SCDMA network capacity lease as an operating lease.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(vi) | The amounts represent the services fee received/receivable from or paid/payable to CMCC Group for providing customer development services and cooperation in the
provision of basic and value added telecommunications services .
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Amounts due from/to CMCC Group
|--- | ------------------------------

Amounts due from/to CMCC Group are included in the following account captions summarized as follows:



|                                    |  |                   |       |  |                   |  |       | 
|----------------------------------- |  | ----------------- | ----- |  | ----------------- |  | ----- | 
|                                    |  | As at             |       |  | As at             | 
|                                    |  | December 
31,2011 |       |  | December 
31,2010 | 
|                                    |  | RMB million       |       |  | RMB million       | 
|                                    |  |                  
|Accounts receivable                 |  |                   | 654   |  |                   |  | 410   | 
|Other receivables                   |  |                   | 7     |  |                   |  | 24    | 
|Prepayment and other current assets |  |                   | 5     |  |                   |  | 3     | 
|Accounts payable                    |  |                   | 1,745 |  |                   |  | 1,783 | 
|Accrued expenses and other payables |  |                   | 258   |  |                   |  | 263   | 



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##### Table of Contents

|36 | Related party transactions (continued)
|-- | --------------------------------------



|(c) | Transactions with associates
|--- | ----------------------------

The Group also has entered into transactions with its associates, over which the Group can exercise significant influence. The major transactions entered into by the Group and the associate include the
bank deposits placed in SPD Bank, the interest income received/receivable from SPD Bank, and the mobile telecommunications service provided to SPD Bank, which were carried out in the ordinary course of business.



|                                        |  |      |  |             |        |  |             |  |       | 
|--------------------------------------- |  | ---- |  | ----------- | ------ |  | ----------- |  | ----- | 
|                                        |  | Note |  | 2011        |        |  | 2010        | 
|                                        |  |      |  | RMB million |        |  | RMB million | 
|                                        |  |      | 
|Bank deposits (as at December 31)       |  |      |  |             | 17,320 |  |             |  | 1,999 | 
|Interest income                         |  | (i)  |  |             | 237    |  |             |  | 9     | 
|Mobile telecommunications services fees |  | (ii) |  |             | 44     |  |             |  | 29    | 

Notes:



|(i) | Interest income represents interest earned from deposits placed at SPD Bank. The applicable interest rate is determined in accordance with the prevailing benchmark
loan interest rate published by PBOC.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(ii) | The amount represents the mobile telecommunications services fees received/receivable from SPD Bank.
|---- | ----------------------------------------------------------------------------------------------------



|(d) | Transactions with other government-related entities in the PRC
|--- | --------------------------------------------------------------

The Group is a government-related enterprise and operates in an economic regime currently dominated by entities directly or indirectly controlled by the PRC government through government authorities,
agencies, affiliations and other organisation (collectively referred to as government-related entities)

Apart from
transactions with CMCC Group (note 36(a)) and associates (note 36(c)), the Group has collectively, but not individually, significant transactions with other government-related entities which include but not limited to the following:



| |  |  | rendering and receiving telecommunications services, including interconnection revenue/charges
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | purchasing of goods , including use of public utilities
| | - |  | -------------------------------------------------------



| |  |  | placing of bank deposits
| | - |  | ------------------------



| |  |  | providing trust loans (note 25)
| | - |  | -------------------------------

These transactions are conducted in the ordinary course of the Groups business on terms comparable to the terms of transactions with other entities that are not government-related. The Group prices
its telecommunications services and products in accordance with rules and regulations stipulated by related authorities of the PRC Government, where applicable, or based on commercial negotiations. The Group has also established its procurement
policies and approval processes for purchases of products and services, which do not depend on whether the counterparties are government-related entities or not.



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##### Table of Contents

|37 | Financial risk management and fair values
|-- | -----------------------------------------

Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Groups business. The Groups exposure to these risks and the financial risk management
policies and practices used by the Group to manage these risks are described below.



|(a) | Credit risk and concentration risk
|--- | ----------------------------------

The Groups credit risk is primarily attributable to the financial assets in the balance sheets, which mainly include deposits with banks, accounts receivable and other receivables. The maximum
exposure to credit risk is represented by the carrying amount of the financial assets.

Substantially all the Groups cash
and cash equivalents are deposited in financial institutions in Hong Kong and Mainland China. The credit risk on liquid funds is limited as the majority of counter parties are financial institutions with high credit ratings assigned by international
credit-rating agencies and large state-controlled financial institutions.

The accounts receivable of the Group are primarily
comprised of receivables due from customers and telecommunications operators. Accounts receivable from customers are spread among an extensive number of customers and the majority of the receivables from customers are due for payment within one
month from the date of billing. Other receivables primarily comprise trust loan receivables, interest receivable from banks, utilities deposits and rental deposits. Management has a credit policy in place and the exposures to these credit risks are
monitored on an ongoing basis, taking into account the counter parties financial position, the Groups past experience and other factors. As such, management considers the aggregate risks arising from the possibility of credit losses is
limited and to be acceptable.

Concentrations of credit risk with respect to accounts receivable are limited due to the
Groups customer base being large and unrelated. As such, management does not expect any significant losses of accounts receivable that have not been provided for by way of allowances as shown in note 24(c).



|(b) | Liquidity risk
|--- | --------------

Liquidity risk refers to that funds will not be available to meet liabilities as they fall due, and results from timing and amount
mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining sufficient cash balances to meet its funding needs, including working capital, principal and interest payments on debts, dividend payments and capital
expenditures.



F-62



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##### Table of Contents

|37 | Financial risk management and fair values (continued)
|-- | -----------------------------------------------------



|(b) | Liquidity risk (continued)
|--- | --------------------------



The following table sets out the remaining contractual maturities at the balance sheet
date of the Groups financial liabilities, which are based on the undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on prevailing rates current at the balance sheets) and the earliest
date the Group would be required to repay:



|                                        |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|--------------------------------------- |  | ----------------------- | ------- |  | ------------------------------------- |  | ------- | ------------------------ |  |  | ----------------------------------- |  |  | ------------------------------------- | --- |  | --------------- |  | --- |  |  |  | ------ | 
|                                        |  | As at December 31, 2011 |        
|                                        |  | Carryingamount          |         |  | Totalcontractualundiscountedcash flow |  |         | Within
1year or ondemand |  |  | More than1 year
butless than3 years |  |  | More than3 years 
butless than5 years |     |  | Morethan5
years | 
|                                        |  | RMB million             |         |  | RMB million                           |  |         | RMB million              |  |  | RMB million                         |  |  | RMB million                           |     |  | RMB million     | 
|                                        |  |                         |         |  |                                       | 
|Accounts payable                        |  |                         | 116,266 |  |                                       |  | 116,266 |                          |  |  | 116,266                             |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Bills payable                           |  |                         | 1,616   |  |                                       |  | 1,616   |                          |  |  | 1,616                               |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Accrued expenses and other payables     |  |                         | 92,362  |  |                                       |  | 92,362  |                          |  |  | 92,362                              |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Amount due to ultimate holding company  |  |                         | 285     |  |                                       |  | 285     |                          |  |  | 285                                 |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Amount due to immediate holding company |  |                         | 33      |  |                                       |  | 33      |                          |  |  | 33                                  |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Interest-bearing borrowings             |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|- Deferred consideration payable        |  |                         | 23,633  |  |                                       |  | 24,563  |                          |  |  | 204                                 |  |  |                                       | 257 |  |                 |  | 257 |  |  |  | 23,845 | 
|- Bonds                                 |  |                         | 4,984   |  |                                       |  | 6,310   |                          |  |  | 225                                 |  |  |                                       | 450 |  |                 |  | 450 |  |  |  | 5,185  | 
|Obligations under finance leases        |  |                         | 68      |  |                                       |  | 71      |                          |  |  | 71                                  |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|                                        |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|                                        |  |                         |         |  |                                       | 
|                                        |  |                         | 239,247 |  |                                       |  | 241,506 |                          |  |  | 211,062                             |  |  |                                       | 707 |  |                 |  | 707 |  |  |  | 29,030 | 
|                                        |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|                                        | 
|                                        |  | As at December 31, 2010 |        
|                                        |  | Carryingamount          |         |  | Totalcontractualundiscountedcash flow |  |         | Within 1year or
ondemand |  |  | More than1 year
butless than3 years |  |  | More than3 years
butless than5 years  |     |  | Morethan5
years | 
|                                        |  | RMBmillion              |         |  | RMB million                           |  |         | RMBmillion               |  |  | RMBmillion                          |  |  | RMBmillion                            |     |  | RMBmillion      | 
|                                        |  |                         |         |  |                                       | 
|Accounts payable                        |  |                         | 111,646 |  |                                       |  | 111,646 |                          |  |  | 111,646                             |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Bills payable                           |  |                         | 502     |  |                                       |  | 502     |                          |  |  | 502                                 |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Accrued expenses and other payables     |  |                         | 85,716  |  |                                       |  | 85,716  |                          |  |  | 85,716                              |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|Amount due to ultimate holding company  |  |                         | 15      |  |                                       |  | 15      |                          |  |  | 15                                  |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Amount due to immediate holding company |  |                         | 35      |  |                                       |  | 35      |                          |  |  | 35                                  |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|Interest-bearing borrowings             |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|- Deferred consideration payable        |  |                         | 23,633  |  |                                       |  | 25,233  |                          |  |  | 281                                 |  |  |                                       | 428 |  |                 |  | 383 |  |  |  | 24,141 | 
|- Bonds                                 |  |                         | 9,963   |  |                                       |  | 11,627  |                          |  |  | 5,317                               |  |  |                                       | 450 |  |                 |  | 450 |  |  |  | 5,410  | 
|Obligations under finance leases        |  |                         | 68      |  |                                       |  | 71      |                          |  |  | 71                                  |  |  |                                       |    |  |                 |  |    |  |  |  |       | 
|                                        |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 
|                                        |  |                         |         |  |                                       | 
|                                        |  |                         | 231,578 |  |                                       |  | 234,845 |                          |  |  | 203,583                             |  |  |                                       | 878 |  |                 |  | 833 |  |  |  | 29,551 | 
|                                        |  |                         |         |  |                                       |  |         |                          |  |  |                                     |  |  |                                       |     |  |                 |  |     |  |  |  |        | 



F-63



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##### Table of Contents

|37 | Financial risk management and fair values (continued)
|-- | -----------------------------------------------------



|(c) | Interest rate risk
|--- | ------------------

The Group has interest rate risk as certain existing interest-bearing borrowings are at variable rates and therefore expose the Group to
cash flow interest rate risk. These borrowings mainly include deferred consideration payable for the acquisition of subsidiaries in 2002 and 2004. The interest rates and terms of repayment of the interest-bearing borrowings of the Group are
disclosed in note 30.

The following table set out the interest rate profile of the Groups floating interest bearing
borrowings at the balance sheet date:



|                                                              |  |                       |      |   |            |  |        |                       |  |  |            |   |  |  |        | 
|------------------------------------------------------------- |  | --------------------- | ---- | - | ---------- |  | ------ | --------------------- |  |  | ---------- | - |  |  | ------ | 
|                                                              |  | 2011                  |      |   | 2010       | 
|                                                              |  | Effectiveinterestrate |      |   | RMBmillion |  |        | Effectiveinterestrate |  |  | RMBmillion |  
|                                                              |  |                       |      |  
|Deferred consideration for acquisition ofsubsidiaries in 2002 |  |                       | 1.12 | % |            |  | 9,976  |                       |  |  | 2.22       | % |  |  | 9,976  | 
|Deferred consideration for acquisition ofsubsidiaries in 2004 |  |                       | 1.24 | % |            |  | 13,657 |                       |  |  | 2.23       | % |  |  | 13,657 | 

As at December 31, 2011, if the two-year US dollar LIBOR swap rate interest rate per annum
increases/decreases by 100 basis points, the effective interest rate for deferred consideration payable would increase/decrease by 100 basis points, and the profit for the year and total equity of the Group would decrease/increase by RMB236,000,000
(2010: RMB236,000,000).

The sensitivity analysis above indicates the instantaneous change in the Groups profit after tax
(and retained profits) and other components of consolidated equity that would arise assuming that the change in interest rates had occurred at the balance sheet date and had been applied to those financial instruments held by the Group which expose
the Group to interest rate risk at the balance sheet date. The assumption of increase or decrease of interest rate of the two-year US dollar LIBOR swap rate represents managements estimation of a reasonably possible change in interest rates
over the period until the next interest rate re-pricing date.

As at December 31, 2011, total cash and bank balances of
the Group amounted to RMB333,100,000,000 (2010: RMB292,508,000,000). The interest income for 2011 was RMB7,866,000,000 (2010: RMB5,657,000,000) and the average interest rate was 2.51% (2010: 2.03%). Assuming the total cash and bank balances are
stable in the coming year and interest rate increases/decreases by 100 basis points, the profit for the year and total equity would approximately increase/decrease by RMB2,508,000,000 (2010: RMB2,203,000,000).

As at December 31, 2011, the balance of trust loan receivable of the Group amounted to RMB14,000,000,000 (2010: RMB2,700,000,000).
The interest income for 2011 was RMB547,000,000 (2010: RMB722,000) and the average interest rate was 6.55% (2010: 4.82%). Assuming the total trust loan balances are stable in the coming year and interest rate increases/decreases by 100 basis points,
the profit for the year and total equity would approximately increase/decrease by RMB105,000,000 (2010: RMB20,250,000).



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|37 | Financial risk management and fair values (continued)
|-- | -----------------------------------------------------



|(c) | Interest rate risk (continued)
|--- | ------------------------------



On the whole, interest rate risk of the Group is expected to be low due to the high
balance of cash and cash equivalent and low level of floating rate debts. The Group consistently monitors the current and potential fluctuation of interest rates to monitor the interest risk on a reasonable level.

During the year, the Group had not entered into any interest rate swap contracts.



|(d) | Foreign currency risk
|--- | ---------------------

The Group has foreign currency risk as certain cash and deposits with banks are denominated in foreign currencies, principally US dollars and Hong Kong dollars. As the amount of the Groups foreign
currency represented 1.2% (2010: 1.4%) of the total cash and deposits with banks and major business operations of the Group were carried out in RMB, the Group does not expect the appreciation or depreciation of the RMB against foreign currency will
materially affect the Groups financial position and result of operations.

During the year, the Group had not entered
into any forward exchange contracts.



|(e) | Fair values
|--- | -----------

All
financial instruments are carried at amounts not materially different from their fair values as at December 31 except as follows:



|                                    |  |                         |        |  |                         |  |        |                |  |  |             |  |  |  |        | 
|----------------------------------- |  | ----------------------- | ------ |  | ----------------------- |  | ------ | -------------- |  |  | ----------- |  |  |  | ------ | 
|                                    |  | As at December 31, 2011 |        |  | As at December 31, 2010 | 
|                                    |  | Carryingamount          |        |  | Fair value              |  |        | Carryingamount |  |  | Fair value  | 
|                                    |  | RMB million             |        |  | RMB million             |  |        | RMB million    |  |  | RMB million | 
|                                    |  |                         |        | 
|Interest in associate               |  |                         | 43,794 |  |                         |  | 31,674 |                |  |  | 40,175      |  |  |  | 35,556 | 
|Interest-bearing borrowings - bonds |  |                         | 4,984  |  |                         |  | 4,845  |                |  |  | 9,963       |  |  |  | 10,038 | 

The fair value of investment in associate and bonds is based on quoted market prices at the balance sheet
date without any deduction for transaction costs.



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|38 | Commitments
|-- | -----------



|(a) | Capital commitments
|--- | -------------------

Capital commitments outstanding as at December 31 not provided for in the financial statements were as follows:



|                                                       |  |             |         |  |             |  |         | 
|------------------------------------------------------ |  | ----------- | ------- |  | ----------- |  | ------- | 
|                                                       |  | 2011        |         |  | 2010        | 
|                                                       |  | RMB million |         |  | RMB million | 
|                                                       |  |            
|Commitments in respect of land and buildings           |  |             |         |  |             |  |         | 
|- authorized and contracted for                        |  |             | 4,772   |  |             |  | 4,469   | 
|- authorized but not contracted for                    |  |             | 34,089  |  |             |  | 14,211  | 
|                                                       |  |             |         |  |             |  |         | 
|                                                       |  |            
|                                                       |  |             | 38,861  |  |             |  | 18,680  | 
|                                                       |  |             |         |  |             |  |         | 
|Commitments in respect of telecommunications equipment |  |             |         |  |             |  |         | 
|- authorized and contracted for                        |  |             | 17,754  |  |             |  | 17,669  | 
|- authorized but not contracted for                    |  |             | 85,108  |  |             |  | 79,819  | 
|                                                       |  |             |         |  |             |  |         | 
|                                                       |  |            
|                                                       |  |             | 102,862 |  |             |  | 97,488  | 
|                                                       |  |             |         |  |             |  |         | 
|                                                       |  |            
|Total commitments                                      |  |             |         |  |             |  |         | 
|- authorized and contracted for                        |  |             | 22,526  |  |             |  | 22,138  | 
|- authorized but not contracted for                    |  |             | 119,197 |  |             |  | 94,030  | 
|                                                       |  |             |         |  |             |  |         | 
|                                                       |  |            
|                                                       |  |             | 141,723 |  |             |  | 116,168 | 
|                                                       |  |             |         |  |             |  |         | 



|(b) | Operating lease commitments
|--- | ---------------------------

The total future minimum lease payments under non-cancellable operating leases as at December 31 are as follows:



|                                     |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|------------------------------------ |  | ----------------- | ------ |  | ----------- |  | ----- | ----------- |  |  | ----------- |  |  |  | ------ | 
|                                     |  | Land andbuildings |        |  | Leasedlines |  |       | Others      |  |  | Total       | 
|                                     |  | RMB million       |        |  | RMB million |  |       | RMB million |  |  | RMB million | 
|                                     |  |                   |        | 
|As at December 31, 2011              |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|Within one year                      |  |                   | 6,090  |  |             |  | 1,718 |             |  |  | 838         |  |  |  | 8,646  | 
|After one year but within five years |  |                   | 12,993 |  |             |  | 2,368 |             |  |  | 560         |  |  |  | 15,921 | 
|After five years                     |  |                   | 4,050  |  |             |  | 574   |             |  |  | 92          |  |  |  | 4,716  | 
|                                     |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|                                     |  |                   |        | 
|                                     |  |                   | 23,133 |  |             |  | 4,660 |             |  |  | 1,490       |  |  |  | 29,283 | 
|                                     |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|                                     |  |                   |        | 
|As at December 31, 2010              |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|Within one year                      |  |                   | 5,100  |  |             |  | 1,121 |             |  |  | 730         |  |  |  | 6,951  | 
|After one year but within five years |  |                   | 10,250 |  |             |  | 1,335 |             |  |  | 687         |  |  |  | 12,272 | 
|After five years                     |  |                   | 3,652  |  |             |  | 360   |             |  |  | 150         |  |  |  | 4,162  | 
|                                     |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 
|                                     |  |                   |        | 
|                                     |  |                   | 19,002 |  |             |  | 2,816 |             |  |  | 1,567       |  |  |  | 23,385 | 
|                                     |  |                   |        |  |             |  |       |             |  |  |             |  |  |  |        | 

The Group leases certain land and buildings, leased lines, motor vehicles, and other equipment under
operating leases. None of the leases include contingent rentals.



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##### Table of Contents

|39 | Non-adjusting post balance sheet events
|-- | ---------------------------------------

After the balance sheet date the directors proposed an ordinary final dividend. Further details are disclosed in note 35(a)(i).



|40 | Comparative figures
|-- | -------------------

Certain comparative figures have been adjusted to conform to current years presentation.



|41 | Ultimate holding company
|-- | ------------------------

The directors consider the ultimate holding company as at December 31, 2011 to be CMCC, a company incorporated in the PRC.



|42 | Accounting estimates and judgements
|-- | -----------------------------------

Key sources of estimation uncertainty

Notes 15 and 37 contain
information about the assumptions and their risk factors relating to goodwill impairment and financial instruments. Other key sources of estimation uncertainty are as follows:

Impairment loss for doubtful accounts

The Group assesses impairment loss
for doubtful accounts based upon evaluation of the recoverability of the accounts receivable and other receivables at each balance sheet date. The estimates are based on the aging of the accounts receivable and other receivables balances and the
historical write-off experience, net of recoveries. If the financial condition of the customers were to deteriorate, additional impairment may be required.

Depreciation

Depreciation is calculated to write off the cost of items of
property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives. The Group reviews the estimated useful lives and residual values of the assets annually in order to
determine the amount of depreciation expense to be recorded during any reporting period. The useful lives and residual values are based on the Groups historical experience with similar assets and take into account anticipated technological
changes. The depreciation expense for future periods is adjusted if there are significant changes from previous estimates.



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|42 | Accounting estimates and judgements (continued)
|-- | -----------------------------------------------



Key sources of estimation uncertainty (continued)



Amortization of other intangible assets

Amortization of other intangible assets is calculated to write off the cost of items of other intangible assets using the straight-line
method over their estimated useful lives unless such lives are indefinite. The Group reviews the estimated useful lives of other intangible assets annually in order to determine the amount of amortization expense to be recorded during any reporting
period. The useful lives are based on the estimate period over which future economic benefits will be received by the Group and take into account any unexpected adverse changes in circumstances or events. The amortization expense for future periods
is adjusted if there are significant changes from previous estimates.

Impairment of property, plant and equipment,
goodwill and other intangible assets

The Groups property, plant and equipment comprise a significant portion of the
Groups total assets. Changes in technology or industry conditions may cause the estimated period of use or the value of these assets to change. Property, plant and equipment and other intangible assets subject to amortization, are reviewed at
least annually to determine whether there is any indication of impairment. The recoverable amount is estimated whenever events or changes in circumstances have indicated that their carrying amounts may not be recoverable. In addition, for goodwill
and other intangible assets have indefinite useful lives, the recoverable amount is estimated annually whether or not there is any indication of impairment.

Impairment of property, plant and equipment

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 the time value
of money and the risks specific to the asset, which requires significant judgement relating to level of revenue and amount of operating costs. The Group uses all readily available information in determining an amount that is a reasonable
approximation of the recoverable amount, including estimates based on reasonable and supportable assumptions and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying value of the
assets and could result in impairment charge or reversal of impairment in future periods.



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|43 | Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended December 31, 2011
|-- | ----------------------------------------------------------------------------------------------------------------------------------

Up to the date of issue of these financial statements, the IASB have issued a number of amendments, new standards and interpretations
which are not yet effective for the year ended December 31, 2011 and which have not been adopted in these financial statements.

Of these developments, the following relate to matters that may be relevant to the Groups operations and financial statements:



|                                                          |  |                                                       |                 | 
|--------------------------------------------------------- |  | ----------------------------------------------------- | --------------- | 
|                                                          |  | Effective 
foraccounting periodsbeginning on or after |                
|                                                          | 
|Amendments to IFRS 7, Financial Instruments               |  |                                                       |                 | 
|Disclosures: transfers of financial assets                |  |                                                       | July 1, 2011    | 
|Amendments to IAS 12, Income Taxes                        |  |                                                       |                 | 
|- Deferred tax: recovery of underlying assets             |  |                                                       | January 1, 2012 | 
|Amendments to IAS 1, Presentation of Financial Statements |  |                                                       | July 1, 2012    | 
|IFRS 10, Consolidated Financial Statements                |  |                                                       | January 1, 2013 | 
|IFRS 11, Joint Arrangements                               |  |                                                       | January 1, 2013 | 
|IFRS 12, Disclosure of Interests in Other Entities        |  |                                                       | January 1, 2013 | 
|IFRS 13, Fair Value Measurement                           |  |                                                       | January 1, 2013 | 
|IAS 27, Separate Financial Statements                     |  |                                                       | January 1, 2013 | 
|IAS 28, Investments in Associates and Joint Ventures      |  |                                                       | January 1, 2013 | 
|Revised IAS 19, Employee benefits                         |  |                                                       | January 1, 2013 | 
|IFRS 9, Financial Instruments                             |  |                                                       | January 1, 2015 | 

The Group is in the process of making an assessment of what the impact of these amendments, new standards
and new interpretations is expected to be in the period of initial application. So far it has concluded that while the adoption of them may result in new or amended disclosures, it is unlikely to have a significant impact on the Groups results
of operations and financial position.



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##### Table of Contents

|44 | Condensed financial information of parent company
|-- | -------------------------------------------------



|(a) | Condensed statements of comprehensive income
|--- | --------------------------------------------



|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  
|-------------------------------------------------------------------------------- |  | ----------- | ------ | - | ----------- |  | ------ | ----------- |  |  | ------ | -
|                                                                                 |  | 2011        |        |   | 2010        |  |        | 2009        | 
|                                                                                 |  | RMB million |        |   | RMB million |  |        | RMB million | 
|                                                                                 |  |             |       
|Dividend income                                                                  |  |             | 68,762 |   |             |  | 50,613 |             |  |  | 61,561 |  
|                                                                                 |  |             |       
|Operating expenses                                                               |  |             | 83     |   |             |  | 89     |             |  |  | 91     |  
|                                                                                 |  |             |       
|Interest income                                                                  |  |             | 11     |   |             |  | 15     |             |  |  | 2      |  
|                                                                                 |  |             |       
|Finance costs                                                                    |  |             | (241   | ) |             |  | (476   | )           |  |  | (772   | )
|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                 |  |             |       
|Profit before taxation                                                           |  |             | 68,449 |   |             |  | 50,063 |             |  |  | 60,700 |  
|                                                                                 |  |             |       
|Taxation                                                                         |  |             |       |   |             |  |       |             |  |  |       |  
|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                 |  |             |       
|PROFIT FOR THE YEAR                                                              |  |             | 68,449 |   |             |  | 50,063 |             |  |  | 60,700 |  
|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                 |  |             |       
|Other comprehensive income for the year                                          |  |             |        |   |             |  |        |             |  |  |        |  
|Exchange differences on translation of financial statements of overseas entities |  |             | (186   | ) |             |  | (53    | )           |  |  | 45     |  
|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  
|                                                                                 |  |             |       
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                          |  |             | 68,263 |   |             |  | 50,010 |             |  |  | 60,745 |  
|                                                                                 |  |             |        |   |             |  |        |             |  |  |        |  



|(b) | Condensed balance sheets
|--- | ------------------------



|                        |  |                   |         |  |                   |  |         | 
|----------------------- |  | ----------------- | ------- |  | ----------------- |  | ------- | 
|                        |  | As at             |         |  | As at             | 
|                        |  | December 
31,2011 |         |  | December 
31,2010 | 
|                        |  | RMB million       |         |  | RMB million       | 
|                        |  |                  
|Non-current assets      |  |                   | 476,819 |  |                   |  | 476,819 | 
|                        |  |                  
|Current assets          |  |                   | 57,729  |  |                   |  | 49,340  | 
|                        |  |                  
|Current liabilities     |  |                   | 56      |  |                   |  | 7,493   | 
|                        |  |                  
|Non-current liabilities |  |                   | 28,617  |  |                   |  | 28,615  | 
|                        |  |                  
|NET ASSETS              |  |                   | 505,875 |  |                   |  | 490,051 | 
|                        |  |                   |         |  |                   |  |         | 
|                        |  |                  
|TOTAL EQUITY            |  |                   | 505,875 |  |                   |  | 490,051 | 
|                        |  |                   |         |  |                   |  |         | 



F-70



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##### Table of Contents

|44 | Condensed financial information of parent company (continued)
|-- | -------------------------------------------------------------



|(c) | Condensed cash flow statements
|--- | ------------------------------



|                                                     |  |             |         |   |             |  |         |             |  |  |         |  
|---------------------------------------------------- |  | ----------- | ------- | - | ----------- |  | ------- | ----------- |  |  | ------- | -
|                                                     |  | 2011        |         |   | 2010        |  |         | 2009        | 
|                                                     |  | RMB million |         |   | RMB million |  |         | RMB million | 
|                                                     |  |             |        
|Net cash used in operating activities                |  |             | (80     | ) |             |  | (92     | )           |  |  | (93     | )
|                                                     |  |             |         |   |             |  |         |             |  |  |         |  
|                                                     |  |             |        
|Net cash generated from investing activities         |  |             | 13,137  |   |             |  | 7,894   |             |  |  | 17,757  |  
|                                                     |  |             |         |   |             |  |         |             |  |  |         |  
|                                                     |  |             |        
|Net cash used in financing activities                |  |             | (14,231 | ) |             |  | (12,060 | )           |  |  | (11,537 | )
|                                                     |  |             |         |   |             |  |         |             |  |  |         |  
|                                                     |  |             |        
|Net (decrease)/increase in cash and cash equivalents |  |             | (1,174  | ) |             |  | (4,258  | )           |  |  | 6,127   |  
|                                                     |  |             |        
|Cash and cash equivalents at beginning of year       |  |             | 2,259   |   |             |  | 6,662   |             |  |  | 489     |  
|                                                     |  |             |        
|Effect of changes in foreign exchange rate           |  |             | (166    | ) |             |  | (145    | )           |  |  | 46      |  
|                                                     |  |             |         |   |             |  |         |             |  |  |         |  
|                                                     |  |             |        
|Cash and cash equivalents at end of year             |  |             | 919     |   |             |  | 2,259   |             |  |  | 6,662   |  
|                                                     |  |             |         |   |             |  |         |             |  |  |         |  



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##### Table of Contents

Exhibit Index



|               |  |                                                                                                                                                                                                                                                                                                                                               
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                        
|               | 
|1.1            |  | Memorandum and Articles of Association (as
amended).(1)                                                                                                                                                                                                                                                                                       
|               | 
|2.1            |  | We agree to provide the SEC, 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 RMB5,000 million guaranteed bonds due 2011 issued by Guangdong Mobile.(2)                                                                                                                                                                                                      
|               | 
|2.3            |  | Letter of Guarantee from China Mobile Communications Corporation for the RMB3,000 million guaranteed bonds due 2007 and RMB5,000 million guaranteed bonds due 2017, both issued by
Guangdong Mobile in 2002 (with English
translation).(3)                                                                                                    
|               | 
|4.1            |  | Agreement regarding Settlement of Interconnection and Roaming, Transmission Line Leasing, Usage of Spectrum Frequency and Numbering Resources, dated July 1, 2004, between China
Mobile (Hong Kong) Limited and China Mobile Communications Corporation (with English translation).(4)                                                        
|               | 
|4.2            |  | Tax Indemnity, dated July 1, 2004, among China Mobile Hong Kong (BVI) Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(4)                                                                                                                                                                               
|               | 
|4.3            |  | Conditional Sale and Purchase Agreement, dated April 28, 2004 between China Mobile (Hong Kong) Limited, China Mobile Hong Kong (BVI) Limited and China Mobile Communications
Corporation.(5)                                                                                                                                                  
|               | 
|4.4            |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation, Neimenggu Mobile and Neimenggu Communication Service Company (with English
translation and schedule).(5)                                                                                                                                     
|               | 
|4.5            |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation, China Mobile Group Design Institute Co., Ltd. And Beijing P&T Consulting &
Design Institute (with English
translation).(5)                                                                                                                   
|               | 
|4.6            |  | Asset Injection Agreement, dated April 9, 2004, between China Mobile Communications Corporation and China Mobile Communication Company Limited (with English translation).(5)                                                                                                                                                                 
|               | 
|4.7            |  | Agreement on the Confirmation of Rights and Obligations, dated April 9, 2004, between China Mobile Communications Corporation, Neimenggu Mobile and Neimenggu Communication Service
Company (with English translation and
schedule).(5)                                                                                                       
|               | 
|4.8            |  | Agreement on the Confirmation of Rights and Obligations, dated April 9, 2004, between China Mobile Communications Corporation, China Mobile Group Design Institute Co., Ltd. And
Beijing P&T Consulting & Design Institute (with English translation).(5)                                                                                     
|               | 
|4.9            |  | Consent Letter to the Substitution of Borrowers under the Consigned Loan Agreement, dated February 13, 2004, between China Mobile Communications Corporation, Neimenggu Mobile,
Neimenggu Communication Service Company and Beijing Changan Sub-branch of Industrial and Commercial Bank of China (with English translation and schedule).(5)
|               | 
|4.10           |  | Agreement on Sharing of Administrative Services and Administrative Costs, dated April 27, 2004, between China Mobile Communication Co., Ltd. And China Mobile Communications
Corporation (with English
translation).(5)                                                                                                                       
|               | 
|4.11           |  | Tax Indemnity dated July 1, 2002 between China Mobile Hong Kong (BVI) Limited, China Mobile (Hong Kong) Limited and China Mobile Communications Corporation.(3)                                                                                                                                                                               
|               | 
|4.12           |  | 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).(3)                                                                                                                                           



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##### Table of Contents

|     |  |                                                                                                                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|4.13 |  | 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.(6)                                                                            
|     | 
|4.14 |  | Trademark License Agreement, dated January 1, 2008, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(7)                                                                                                                                             
|     | 
|4.15 |  | Tripartite Agreement on the Transfer of Rights and Obligations Relating to the Interconnection and Settlement Arrangements, dated November 13, 2008, among China Mobile
Communications Corporation, China Tietong Telecommunications Corporation and China Mobile Limited (with English
translation).(8)
|     | 
|4.16 |  | TD-SCDMA Network Capacity Leasing Agreement, dated December 29, 2008, between China Mobile Communications Corporation and China Mobile Limited (with English translation).(8)                                                                                                                           
|     | 
|4.17 |  | Telecommunications Services Cooperation Agreement, dated November 6, 2009, between China Mobile Communications Corporation and China Mobile Limited (with English
translation).(9)                                                                                                                      
|     | 
|4.18 |  | Share Subscription Agreement, dated March 10, 2010, between China Mobile Group Guangdong Co., Ltd. And Shanghai Pudong Development Bank Co., Ltd. (with English summary).(9)                                                                                                                            
|     | 
|4.19 |  | Property Leasing and Management Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation
(with English translation).(10)                                                                                   
|     | 
|4.20 |  | Telecommunications Services Agreement for the Years from 2011 to 2013, dated December 21, 2010, between China Mobile Limited and China Mobile Communications Corporation (with
English translation).(10)                                                                                                
|     | 
|4.21 |  | Network Assets Leasing Agreement, dated August 18, 2011, between China Mobile Communications Corporation and China Mobile Limited (with English translation).                                                                                                                                           
|     | 
|8.1  |  | List of Major Subsidiaries.                                                                                                                                                                                                                                                                             
|     | 
|11.1 |  | Code of Ethics.(5)                                                                                                                                                                                                                                                                                      
|     | 
|12.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                    
|     | 
|12.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                                                                                                    
|     | 
|13.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(b).                                                                                                                                                                                                                                    
|     | 
|13.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(b).                                                                                                                                                                                                                                    



|(1) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2005 (File No. 1-14696), filed with the SEC on June 9,
2006.
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|(2) | 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 SEC on
June 26, 2001.
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|(3) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2002 (File No. 1-14696), filed with the SEC on
June 17, 2003.
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|(4) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2004 (File No. 1-14696), filed with the SEC on
June 13, 2005.
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|(5) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2003 (File No. 1-14696), filed with the SEC on
June 17, 2004.
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|(6) | Incorporated by reference to our Registration Statement on Form F-3 (File No. 333-47256), filed with the SEC on October 30, 2000.
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|(7) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2007 (File No. 1-14696), filed with the SEC on
June 11, 2008.
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|(8) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2008 (File No. 1-14696), filed with the SEC on
June 23, 2009.
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|(9) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2009 (File No. 1-14696), filed with the SEC on June 7,
2010.
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|(10) | Incorporated by reference to our Annual Report on Form 20-F for the fiscal year ended December 31, 2010 (File No. 1-14696), filed with the SEC on
April 27, 2011.
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