Document:

Exhibit 4(aa)

Capacity Prepayment Agreement

Details

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Parties
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Reach Networks      Name         Reach Networks Hong Kong Limited (formerly
                                 PCCW-HKT International Limited and before that
                                 Cable & Wireless HKT International Limited)

                    Address      20th Floor, Telecom House, 3 Gloucester Road,
                                 Wanchai, Hong Kong
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Reach Global        Name         Reach Global Services Limited

                    Address      20th Floor, Telecom House, 3 Gloucester Road,
                                 Wanchai, Hong Kong
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HKTC                Name         PCCW-HKT Telephone Limited (formerly Cable &
                                 Wireless HKT Telephone Limited)

                    Address      39th Floor, PCCW Tower, TaiKoo Place, 979 Kings
                                 Road, Quarry Bay, Hong Kong
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Telstra             Name         Telstra Corporation Limited

                    ABN          33 051 775 556

                    Address      231 Elizabeth Street, Sydney, NSW, Australia
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Reach               Name         Reach Ltd. (formerly Joint Venture No 1
                                 (Bermuda) Limited

                    Address      Clarendon House, 2 Church Street, Hamilton,
                                 Bermuda
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PCCW                Name         PCCW Limited

                    Address      39th Floor, PCCW Tower, TaiKoo Place,
                                 979 Kings Road,
                                 Quarry Bay, Hong Kong
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Reach Finance       Name         Reach Finance Limited

                    Address      20th Floor, Telecom House, 3 Gloucester Road,
                                 Wanchai, Hong Kong
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Recitals  A         Reach Networks and HKTC are the parties to the HKISA.

          B         HKTC is a wholly owned subsidiary of PCCW.

          C         Reach Global and Telstra are the parties to the AISA.

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          D         The Financiers have agreed to enter into the Amended and
                    Restated Facility Agreement if and on condition that the
                    Parties first enter into this agreement.

          E         Each of the Parties is entering into this agreement at the
                    request of each of the other Parties and in consideration
                    of each of the other Parties entering into this agreement.
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Governing law       England and Wales
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Date of agreement   See Signing page

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Capacity Prepayment Agreement

General terms

1        Interpretation
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1.1

     In this agreement except if the context requires otherwise:

     (a)  words and expressions have the meanings set out in Schedule 1;

     (b)  words and expressions given particular meanings in the Amended and
          Restated Facility Agreement and not otherwise defined in Schedule 1
          have the meanings given in the Amended and Restated Facility
          Agreement;

     (c)  the singular includes the plural and vice versa;

     (d)  a reference to an agreement, document or another instrument includes
          any variation, amendment, novation or replacement of any of them;

     (e)  a reference to this agreement includes the Schedules;

     (f)  a reference to a person includes a natural person, firm, body
          corporate, unincorporated association, or a governmental or other
          authority;

     (g)  a reference to a person includes the person's executors,
          administrators, successors, substitutes (including, without
          limitation, persons taking by novation), and permitted assigns;

     (h)  references to times and dates refer to times and dates in Hong Kong;

     (i)  a reference to a period of time:

          (i)  which dates from a given day or the day of an act or event is to
               be calculated exclusive of that day; or

          (ii) which commences on a given day or the day of an act or event is
               to be calculated inclusive of that day;

     (j)  a reference to a month is a reference to a calendar month and a
          reference to a year is a reference to a calendar year;

     (k)  a reference to a third person or a third party is a reference to a
          person who is not a Party; and

     (l)  a reference to a notice includes a written notification.

1.2

     Headings and bold type are included for convenience and do not affect the
     interpretation of this agreement.
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2    Quarter End Cash Surplus

2.1

     Subject to clauses 2.2, 2.3 and 2.6 in each Quarter ("Reporting Quarter"),
     as soon as practical, and in any event within 45 days, after the end of
     the preceding Quarter,

     (a)  on the basis of the Reach Management Accounts for that preceding
          Quarter, the Reach CFO will submit to the Reach Board a calculation
          of and the Reach CFO and Reach Board (each acting reasonably and
          after making due enquiry) will together determine in accordance with
          the principles set out in Schedule 2:

          (i)  whether in their opinion there was a Cash Surplus for that
               preceding Quarter; and

          (ii) if so, the amount that in their opinion was the Cash Surplus,

     (b)  if an amount is determined for that preceding Quarter pursuant to
          clause 2.1(a)(ii) the Reach CFO will certify to PCCW and Telstra and
          unless the Total Amount Owing has been paid in full, to the Facility
          Agent:

          (i)  the amount so determined and the values of "ECB" and each of the
               integers in the formula in paragraph 2(b) of schedule 2 that
               were used to determine that amount; and

          (ii) the amount of the Cash Sweep Proportion, if any, for that
               preceding Quarter,

     (c)  the Reach CFO will issue to PCCW and Telstra a report that specifies:

          (i)  the Cash Surplus (if any), Cash Sweep Proportion (if any) and
               Capacity Prepayment Proportion (if any) for the preceding
               Quarter;

          (ii) the PCCW CP Balance for the Reporting Quarter and showing:

               (A)  LIBOR for the preceding Quarter;

               (B)  the aggregate of all amounts (if any) credited and applied
                    pursuant to section 4 during that preceding Quarter; and

               (C)  the aggregate of any Authorised PCCW CP Reductions in that
                    preceding Quarter,

               each as used in the calculation of that PCCW CP Balance,

         (iii) the PCCW Credit Entitlement for the preceding Quarter;

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          (iv) the aggregate of all PCCW Credit Entitlements for all Quarters
               up to and including the preceding Quarter;

          (v)  the aggregate of all amounts credited and applied pursuant to
               section 4 in all Quarters up and including the preceding
               Quarter;

          (vi) the Telstra CP Balance for the Reporting Quarter and showing:

               (A)  LIBOR for the preceding Quarter;

               (B)  the aggregate of all amounts (if any) credited and applied
                    pursuant to section 6 during that preceding Quarter; and

               (C)  the aggregate of any Authorised Telstra CP Reductions in
                    that preceding Quarter,

               each as used in the calculation of that Telstra CP Balance;

         (vii) the Telstra Credit Entitlement for the preceding Quarter;

        (viii) the aggregate of all Telstra Credit Entitlements for all
               Quarters up to and including the preceding Quarter;

          (ix) the aggregate of all amounts credited and applied pursuant to
               section 6 in all Quarters up and including the preceding
               Quarter;

           (x) the Unused PCCW Credit Entitlement Balance at the beginning of
               the Reporting Quarter;

          (xi) the Unallocated PCCW CP Balance for the Reporting Quarter;

         (xii) the Unused Telstra Credit Entitlement Balance at the beginning
               of the Reporting Quarter; and

        (xiii) the Unallocated Telstra CP Balance for the Reporting Quarter;
               and

     (d)  unless the Total Amount Owing has been paid in full, Reach will
          provide to the Facility Agent a copy of the report issued pursuant to
          clause 2.1(c).

2.2

     For any Quarter for which there is a Cash Surplus:

     (a)  subject to clauses 2.2(b), (c), (d) and (e), the Cash Sweep
          Proportion is an amount equal to one half of the Cash Surplus;

     (b)  subject to clauses 2.2(c), (d) and (e), if the Unallocated Aggregate
          CP Balance is less than one half of the Cash Surplus, the Cash Sweep

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          Proportion is an amount equal to the remainder of the Cash Surplus
          after deducting the Unallocated Aggregate CP Balance;

     (c)  subject to clauses 2.2(d) and (e), if there is no Unallocated
          Aggregate CP Balance, the Cash Sweep Proportion is an amount equal to
          the Cash Surplus;

     (d)  subject to clause 2.2(e), if the Total Amount Owing is less than the
          greater of:

          (i)  one half of the Cash Surplus; and

         (ii)  the Cash Surplus after deducting the Unallocated Aggregate CP
               Balance, if any,

          the Cash Sweep Proportion is an amount equal to the Total Amount
          Owing;

     (e)  if the Quarter ends after the Total Amount Owing has been paid in
          full, there is no Cash Sweep Proportion;

     (f)  subject to clauses 2.2(g) and (h), the Capacity Prepayment Proportion
          is an amount equal to the remainder of the Cash Surplus after
          deducting the Cash Sweep Proportion, if any;

     (g)  subject to clause 2.2(h), if the Unallocated Aggregate CP Balance is
          less than the amount referred to in clause 2.2(f), the Capacity
          Prepayment Proportion is an amount equal to the Unallocated Aggregate
          CP Balance;

     (h)  if there is no Unallocated Aggregate CP Balance, there is no Capacity
          Prepayment Proportion;

     (i)  subject to clauses 2.2(j) to (o) inclusive:

          (i)  the PCCW Credit Entitlement is an amount equal to one half of
               the Capacity Prepayment Proportion, and

         (ii)  the Telstra Credit Entitlement is an amount equal to one half of
               the Capacity Prepayment Proportion;

     (j)  subject to clauses 2.2(k) and (l), if the Unallocated PCCW CP Balance
          is less than the amount referred to in clause 2.2(i)(i) then the
          Telstra Credit Entitlement is an amount equal to the remainder of the
          Capacity Prepayment Proportion after deducting the PCCW Credit
          Entitlement;

     (k)  subject to clause2.2(l), if there is no Unallocated PCCW CP Balance,
          then the Telstra Credit Entitlement is an amount equal to the whole
          of the Capacity Prepayment Proportion;

     (l)  the Telstra Credit Entitlement is limited to and cannot exceed the
          Unallocated Telstra CP Balance and accordingly:

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          (i)  if the Unallocated Telstra CP Balance is less than the amount
               that otherwise would apply under the foregoing provisions, then
               the Telstra Credit Entitlement is the amount of the Unallocated
               Telstra CP Balance; and

         (ii)  if there is no Unallocated Telstra CP Balance, then there is no
               Telstra Credit Entitlement;

     (m)  subject to clauses 2.2(n) and (o) inclusive, if the Unallocated
          Telstra CP Balance is less than the amount referred to in clause
          2.2(i)(ii), then the PCCW Credit Entitlement is the amount equal to
          the remainder of the Capacity Prepayment Proportion after deducting
          the Telstra Credit Entitlement;

     (n)  subject to clause 2.2(o), if there is no Unallocated Telstra CP
          Balance, then the PCCW Credit Entitlement is an amount equal to the
          whole of the Capacity Prepayment Proportion; and

     (o)  the PCCW Credit Entitlement is limited to and cannot exceed the
          Unallocated PCCW CP Balance and accordingly:

          (i)  if the Unallocated PCCW CP Balance is less than the amount that
               otherwise would apply under the foregoing provisions, then the
               PCCW Credit Entitlement is the amount of the Unallocated PCCW CP
               Balance; and

         (ii)  if there is no Unallocated PCCW CP Balance, then there is no
               PCCW Credit Entitlement.

2.2A

     For the avoidance of doubt, for any Quarter for which there is not a Cash
     Surplus:

     (a)  there is no Cash Sweep Proportion; and

     (b)  there is no Capacity Prepayment Proportion.

2.3

     Upon the occurrence of a Relevant Event:

     (a)  the operation of clauses 2.1, 2.2, 3.3 and 5.3 and sections 4 and 6
          will terminate and all of those provisions will cease to have any
          further effect except to the extent necessary to calculate the
          amounts due under this clause 2.3;

     (b)  subject to clause 2.3(c):

          (i)  the Outstanding PCCW CP Balance will become immediately due and
               payable by Reach Networks to PCCW; and

         (ii)  the Outstanding Telstra CP Balance will become immediately due
               and payable by Reach Global to Telstra;

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     (c)  if the Relevant Event is the termination of the HKISA or the AISA
          then:

          (i)  at any time after the occurrence of that Relevant Event, either
               of PCCW or Telstra may give to the Facility Agent a notice in
               writing stating that by reason of the occurrence of that
               Relevant Event the operation of the provisions referred to in
               clause 2.3(a) has terminated; and

         (ii)  the provisions of clause 2.3(b) will not operate or have effect
               before, but will operate and have effect on and from, the
               expiration of 3 Business Days after a notice in writing pursuant
               to clause 2.3(c)(i) is given to the Facility Agent; and

     (d)  from the occurrence of a Relevant Event and until the Total Amount
          Owing has been paid in full:

          (i)  PCCW's and Telstra's rights to receive payments from Reach
               Networks and Reach Global of amounts becoming due under this
               clause and clause 2.5 are subordinated in accordance with the
               terms of the Subordination Deed to the rights of the Financiers
               to receive payments in respect of the Total Amount Owing; and

         (ii)  Reach Networks and Reach Global must make any such payments to
               the Security Trustee in accordance with the terms of the
               Subordination Deed.

2.4

     For the purposes of clause 2.3:

     (a)  the "Outstanding PCCW CP Balance" is the remainder of the PCCW CP
          Balance for the Quarter in which the Relevant Event occurs after
          deducting the aggregate of:

          (i)  any Authorised PCCW CP Reductions made during that Quarter but
               prior to the occurrence of the Relevant Event; plus

         (ii)  all amounts credited and applied against and towards
               satisfaction of HKISA Invoices during that Quarter but prior to
               the occurrence of the Relevant Event; and

     (b)  the "Outstanding Telstra CP Balance" is the remainder of the Telstra
          CP Balance for the Quarter in which the Relevant Event occurs after
          deducting the aggregate of:

          (i)  any Authorised Telstra CP Reductions made during that Quarter
               but prior to the occurrence of the Relevant Event; plus

         (ii)  all amounts credited and applied against and towards
               satisfaction of AISA Invoices during that Quarter but prior to
               the occurrence of the Relevant Event.

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2.5

     Interest will accrue and be payable by Reach Global to Telstra upon any
     amount that becomes payable by Reach Global to Telstra pursuant to clause
     2.3 and by Reach Networks to PCCW upon any amount that becomes payable by
     Reach Networks to PCCW pursuant to clause 2.3, in each case from the date
     on which the amount first becomes payable until it is paid in full, the
     interest being calculated from day to day on the unpaid balance of the
     amount at the Applicable Rate and payable, as to the unpaid interest
     accrued up to and on the last day of the preceding Quarter, on the first
     day of each Quarter.

     For this purpose, the Applicable Rate for any day in a Quarter will be a
     rate equal to the Margin on the first day of that Quarter plus LIBOR for
     the Quarter.

2.6

     Clauses 2.1, and 2.2 do not apply in relation to any Quarter that:

     (i)  is the second or a subsequent Quarter after the Quarter for which the
          Capacity Prepayment Proportion is an amount equal to the Unallocated
          Aggregate CP Balance, and

    (ii)  ends after the Total Amount Owing has been paid in full.

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3        PCCW and HKTC

3.1

     On the Date of Amendment, PCCW will pay to Reach Networks a sum of
     US$143,000,000.

3.2

     The PCCW Prepayment will be paid as a prepayment in respect of HKISA
     Services.

3.3

     Subject to section 2 and this section 3 in each Quarter the PCCW CP
     Balance for that Quarter is to be available to be used in accordance with
     section 4 to discharge HKTC's liability to pay HKISA Charges to Reach
     Networks.

3.4

     Prior to the occurrence of a Relevant Event, none of Reach Networks, HKTC
     and PCCW will in any Quarter make or allow to be made any PCCW CP
     Reduction that is not an Authorised PCCW CP Reduction.

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4        Application of PCCW CP Balance

4.1

     Subject to clause 2.3, in each Quarter, Reach Networks will to the maximum
     extent that is practical, subject to and consistently with the
     requirements of clauses 4.4 and 4.6, credit and apply the PCCW CP Balance
     for that Quarter against and towards satisfaction of HKISA Invoices that
     are (in whole or in part) unpaid.

4.2

     Within 14 days after the end of each Quarter, Reach Networks will issue to
     PCCW and Telstra a report that specifies:

     (a)  all amounts of the PCCW CP Balance for that Quarter that during that
          Quarter were credited and applied against and towards satisfaction of
          HKISA Invoices pursuant to clause 4.1;

     (b)  the HKISA Invoices against and towards satisfaction of which those
          amounts were credited and applied ("relevant invoices"); and

     (c)  in the case of each relevant invoice, the amount credited and applied
          against and towards satisfaction of that relevant invoice.

4.3

     Amounts may be credited and applied pursuant to clause 4.1 against and
     towards unpaid amounts of HKISA Invoices that have become due for payment
     and/or unpaid amounts of HKISA Invoices that have not become due for
     payment.

4.4

     The total amount that in a Quarter is credited and applied against and
     towards satisfaction of HKISA Invoices pursuant to clause 4.1:

     (a)  cannot exceed the Unused PCCW Credit Entitlement Balance at the
          beginning of that Quarter, provided that this restriction will not
          apply after the Total Amount Owing has been paid in full; and

     (b)  cannot exceed the remainder of the PCCW CP Balance for that Quarter
          after deducting the aggregate of any Authorised PCCW CP Reductions
          made during that Quarter.

4.5

     Whenever pursuant to this section 4, an amount of PCCW CP Balance is
     credited and applied against and towards satisfaction of the unpaid amount
     of an HKISA Invoice, HKTC's liability to pay the HKISA Invoice will be
     discharged to the same extent.

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4.6

     Whenever during a Quarter amounts are credited and applied pursuant to
     this section 4 against and towards satisfaction of unpaid amounts of HKISA
     Invoices which are expressed in Hong Kong dollars ("HKD"):

     (a)  the amounts that are so credited and applied will be converted from
          United States dollars ("USD") at the Specified Exchange Rate for the
          Quarter; and

     (b)  for the purpose of determining:

          (i)  the total amount in USD that was so credited and applied during
               the Quarter;

         (ii)  the Unused PCCW Credit Entitlement Balance at the beginning of
               the next Quarter; and

        (iii)  the PCCW CP Balance for the next Quarter,

          the total amount in HKD credited and applied during the Quarter
          against HKISA Invoices will be converted to USD at the Specified
          Exchange Rate for the Quarter.

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5        Telstra

5.1

     On the Date of Amendment, Telstra will pay to Reach Global a sum of
     US$143,000,000.

5.2

     The Telstra Prepayment will be paid as a prepayment in respect of AISA
     Services.

5.3

     Subject to section 2 and this section 5, in each Quarter the Telstra CP
     Balance for that Quarter is to be available to be used in accordance with
     section 6 to discharge Telstra's liability to pay AISA Charges to Reach
     Global.

5.4

     At any time at which there is an Outstanding AJC Indemnity Obligation,
     Telstra may by notice in writing to Reach Global ("Suspension Notice")
     suspend the application of clauses 5.3 and 6.1 and the following
     provisions will apply:

     (a)  the suspension period will begin on the giving of the Suspension
          Notice and continue until the earlier of:

          (i)  the date on which Telstra by further notice in writing to Reach
               Global (which Telstra will be at liberty to give at any time)
               withdraws the Suspension Notice; and

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         (ii)  the first date after the beginning of the suspension period in
               which there is no longer any outstanding AJC indemnity
               obligation; and

     (b)  during the suspension period the operation of clauses 5.3 and 6.1
          will be suspended and during any part of any Quarter that falls
          within the suspension period, Reach Global must not credit or apply
          any of the Telstra CP Balance for that Quarter against or towards
          satisfaction of AISA Invoices.

5.5

     Telstra must promptly provide to the Facility Agent a copy of any
     Suspension Notice, or notice of the kind referred to in clause 5.4(a)(i),
     given by Telstra to Reach Global.

5.6

     Prior to the occurrence of a Relevant Event, neither Reach Global nor
     Telstra will in any Quarter make or allow to be made any Telstra CP
     Reduction that is not an Authorised Telstra CP Reduction.

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6    Application of Telstra CP Balance

6.1

     Subject to clauses 2.3 and 5.4, in each Quarter, Reach Global will to the
     maximum extent that is practical, subject to and consistently with the
     requirements of clauses 6.4 and 6.6, credit and apply the Telstra CP
     Balance for that Quarter against and towards satisfaction of AISA Invoices
     that are (in whole or in part) unpaid.

6.2

     Within 14 days after the end of each Quarter, Reach Global will issue to
     PCCW and Telstra a report that specifies:

     (a)  all amounts of the Telstra CP Balance for that Quarter that during
          that Quarter were credited and applied against and towards
          satisfaction of AISA Invoices pursuant to clause 6.1;

     (b)  the AISA Invoices against and towards satisfaction of which those
          amounts were credited and applied ("relevant invoices"); and

     (c)  in the case of each relevant invoice, the amount credited and applied
          against and towards satisfaction of that relevant invoice.

6.3

     Amounts may be credited and applied pursuant to clause 6.1 against and
     towards unpaid amounts of AISA Invoices that have become due for payment
     and/or unpaid amounts of AISA Invoices that have not become due for
     payment.

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6.4

     The total amount that in a Quarter is credited and applied against and
     towards satisfaction of AISA Invoices pursuant to clause 6.1:

     (a)  cannot exceed the Unused Telstra Credit Entitlement Balance at the
          beginning of that Quarter, provided that this restriction will not
          apply after the Total Amount Owing has been paid in full; and

     (b)  cannot exceed the remainder of the Telstra CP Balance for that
          Quarter after deducting the aggregate of any Authorised Telstra CP
          Reductions made during that Quarter.

6.5

     Whenever pursuant to this section 6, an amount of Telstra CP Balance is
     credited and applied against and towards satisfaction of the unpaid amount
     of an AISA Invoice, Telstra's liability to pay the AISA Invoice will be
     discharged to the same extent.

6.6

     Whenever during a Quarter amounts are credited and applied pursuant to
     this section 6 against and towards satisfaction of unpaid amounts of AISA
     Invoices which are expressed in Australian dollars ("AUD"):

     (a)  the amounts that are so credited and applied will be converted from
          United States dollars ("USD") at the Specified Exchange Rate for the
          Quarter; and

     (b)  for the purpose of determining:

          (i)  the total amount in USD that was so credited and applied during
               the Quarter;

         (ii)  the Unused Telstra Credit Entitlement Balance at the beginning
               of the next Quarter; and

        (iii)  the Telstra CP Balance for the next Quarter,

          the total amount in AUD credited and applied during the Quarter
          against AISA Invoices will be converted to USD at the Specified
          Exchange Rate for the Quarter.

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7    Operational

7.1

     PCCW must procure that the PCCW Shareholder:

     (a)  causes:

          (i)  each director of Reach;

         (ii)  each director of Reach Networks; and

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        (iii)  each director of Reach Global,

          appointed by it (when exercising powers, performing duties or
          otherwise acting in that capacity) to the extent permitted by law to
          act and vote; and

     (b)  generally takes all reasonable steps within its power,

     to procure and ensure that the provisions and requirements of sections 2
     to 6 (inclusive) are performed and observed.

7.2

     Telstra must procure that the Telstra Shareholder:

     (a)  causes:

          (i)  each director of Reach;

         (ii)  each director of Reach Global; and

        (iii)  each director of Reach Networks,

          appointed by it (when exercising powers, performing duties or
          otherwise acting in that capacity) to the extent permitted by law to
          act and vote; and

     (b)  generally takes all reasonable steps within its power,

     to procure and ensure that the provisions and requirements of sections 2
     to 6 (inclusive) are performed and observed.

7.3

     The Parties will develop and implement operating procedures and practices
     that are appropriate and expedient for applying and administering and
     otherwise giving effect to sections 2, 3, 4, 5 and 6 and for dealing with
     and resolving all material operational or other issues relating to the
     interaction of those sections and the provisions of the HKISA and AISA,
     including (without limitation):

     (a)  procedures for determining, where the amount to be credited or
          applied against an invoice pursuant to clause 4.1 and 6.1 is less
          than the full amount of the invoice, the particular accounts or
          charges comprised in the invoice against which that amount is to be
          applied and credited; and

     (b)  procedures for identifying and appropriately dealing with accounts or
          charges that are disputed, for example, by quarantining disputed
          accounts or charges that are comprised in an invoice from those
          against which any amount is to be credited and applied pursuant to
          clause 4.1 or 6.1.

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7.4

     The Parties will as and whenever desirable, consult together and negotiate
     in good faith for the purpose of developing and implementing (including
     from time to time updating, varying or adding to) operating procedures and
     practices as provided in clause 7.3.

7.5

     The procedures and practices developed and implemented pursuant to clauses
     7.3 and 7.4 must:

     (a)  have regard to and be consistent with all relevant requirements of
          this agreement; and

     (b)  not have the purpose or effect of derogating in any material respect
          from the rights of the Financiers under the Amended and Restated
          Facility Agreement with respect to the Cash Sweep Proportion of the
          Cash Surplus for any Quarter,

     and so far as practical, those procedures and practices developed and
     implemented in relation to the HKISA will be common or equivalent to those
     developed and implemented in relation to the AISA and vice versa.

7.6

     If a Party ("Requesting Party") receives:

     (a)  a notice from a regulator stating that a Relevant Provision is in
          breach of a statutory requirement; or

     (b)  a direction from a regulator that requires the Receiving Party to act
          in a manner contrary to a Relevant Provision,

     upon request from the Requesting Party, the Parties must as soon as
     practicable meet to discuss ways in which the requirements of the
     regulator's notice or direction might be addressed by varying the Relevant
     Provision so as to achieve an equivalent economic effect or otherwise
     without derogating from or jeopardising the achievement of the objectives
     of this agreement.

7.7

     For the purpose of clause 7.6 a Relevant Provision is:

     (a)  a provision of this agreement;

     (b)  a provision of the HKISA inserted or amended by the HKISA Amendment
          Agreement; or

     (c)  a provision of the AISA inserted or amended by the AISA Amendment
          Agreement.

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8    Conditions Precedent

8.1

     The provisions of sections 2 to 7 (inclusive) do not take effect until and
     subject to clause 8.2 will become operative at and from the Date of
     Amendment.

8.2

     If the provisions of sections 2 to 7 (inclusive) do not become operative
     before 31 May 2003 then on and from that date, this agreement will
     terminate and have no further force or effect.

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9    Costs

     The parties agree to pay their own legal and other costs and expenses in
     connection with the preparation, execution and completion of this
     agreement.

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10   Notices

10.1

     The details for notices to Reach Networks under this agreement are:

     Reach Networks Hong Kong Limited
     20th Floor, Telecom House
     3 Gloucester Road
     Wanchai
     Hong Kong

     Attention:  Chief Executive Officer

     Facsimile:  +852 2962 5678

10.2

     The details for notices to Reach Global under this agreement are:

     Reach Global Services Limited
     20th Floor, Telecom House
     3 Gloucester Road
     Wanchai
     Hong Kong

     Attention:  Chief Executive Officer

     Facsimile:  +852 2962 5678

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                                                                             16
<PAGE>

10.3

     The details for notices to HKTC under this agreement are:

     PCCW-HKT Telephone Limited
     39th Floor PCCW Tower
     TaiKoo Place
     979 Kings Road
     Quarry Bay
     Hong Kong

     Attention: Company Secretary

     Facsimile: +852 2962 5725

10.4

     The details for notices to Telstra Corporation Limited under this
     agreement are:

     Telstra Corporation Limited
     231 Elizabeth Street
     Sydney  NSW  2000
     New South Wales

     Attention:  Managing Director, Domestic Wholesale

     Facsimile: +61 2 9266 0607

10.5

     The details for notices to Reach Ltd under this agreement are:

     Reach Ltd
     Clarendon House
     2 Church Street
     Hamilton, Bermuda

     Attention:  Company Secretary

     Facsimile: + 1 441 292 4720

10.6

     The details for notice to PCCW Limited under this agreement are:

     PCCW Limited
     39th Floor PCCW Tower
     TaiKoo Place
     979 Kings Road
     Quarry Bay
     Hong Kong

     Attention:  Company Secretary

     Facsimile:  +852 2962 5725

-------------------------------------------------------------------------------
                                                                             17
<PAGE>

10.7

     The details for notice to Reach Finance Limited under this agreement are:

     Reach Finance Limited
     20th Floor, Telecom House
     3 Gloucester Road
     Wanchai
     Hong Kong

     Attention: Chief Executive Officer

     Facsimile: +852 2962 5678

-------------------------------------------------------------------------------
11   Variation and Waiver

     A provision of this agreement or a right or obligation created under it,
     may not be waived or varied except in writing signed by each of the
     Parties.

-------------------------------------------------------------------------------
12   Third Party Rights

     A person who is not, or has not become a Party to this agreement has no
     rights under the Contracts (Rights of Third Parties) Act 1999 (UK) to
     enforce any provision of this agreement.

-------------------------------------------------------------------------------
13   Governing Law

     This agreement is governed by the law in force in the place specified in
     the Details. Each Party submits to the non-exclusive jurisdiction of the
     courts of that place.

-------------------------------------------------------------------------------
14   Counterparts

     This agreement may consist of any number of counterparts each executed by
     one or more Parties. When taken together, the executed counterparts are
     treated as making up the one document.

-------------------------------------------------------------------------------
15   General

15.1 Discretion in exercising rights

     A Party may exercise a right or remedy or give or refuse its consent in
     any way it considers appropriate (including by imposing conditions),
     unless this agreement expressly states otherwise.

15.2 Partial exercising of rights

     If a Party does not exercise a right or remedy fully or at a given time,
     the Party may still exercise it later.

-------------------------------------------------------------------------------
                                                                             18
<PAGE>

15.3 No liability for loss

     A Party is not liable for loss caused by the exercise or attempted
     exercise of, failure to exercise, or delay in exercising a right or remedy
     under this agreement.

15.4 Approvals and consents

     By giving its approval or consent a Party does not make or give any
     warranty or representation as to any circumstance relating to the subject
     matter of the consent or approval.

15.5 Conflict of interest

     The Parties' rights and remedies under this agreement may be exercised
     even if this involves a conflict of duty or a Party has a personal
     interest in their exercise.

15.6 Remedies cumulative

     The rights and remedies provided in this agreement are in addition to
     other rights and remedies given by law independently of this agreement.

15.7 Rights and obligations are unaffected

     Rights given to the Parties under this agreement and the parties'
     liabilities under it are not affected by anything which might otherwise
     affect them by law.

15.8 Prompt performance

     If this agreement specifies when the Party agrees to perform an
     obligation, the party agrees to perform it by the time specified. Each
     Party agrees to perform all other obligations promptly.

15.9 Inconsistent law

     To the extent permitted by law, this agreement prevails to the extent it
     is inconsistent with any law.

15.10 Supervening legislation

     Any present or future legislation which operates to vary the obligations
     of a Party in connection with this agreement with the result that another
     Party's rights, powers or remedies are adversely affected (including, by
     way of delay or postponement) is excluded except to the extent that its
     exclusion is prohibited or rendered ineffective by law.

15.11 Partial invalidity

     If, at any time, any provision of this agreement is or becomes illegal,
     invalid or unenforceable in any respect under any law of any jurisdiction,
     neither the legality, validity or enforceability of the remaining
     provisions nor the legality, validity or enforceability of the provision
     under the law of any other jurisdiction will be affected or impaired.

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                                                                             19
<PAGE>

15.12 Manner of payment

     Unless this agreement expressly states otherwise, each Party agrees to
     make payments (including by way of reimbursement) under this agreement:

     (a)  on the due date (or, if that is not a Business Day, on the next
          Business Day unless that day falls in the following month, in which
          case, on the previous Business Day); and

     (b)  in United States dollars in immediately available funds; and

     (c)  in full without set-off or counterclaim and without any deduction in
          respect of taxes or other charges unless required by law.

EXECUTED as an agreement

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                                                                             20
<PAGE>

Capacity Prepayment Agreement

Schedule 1 - Definitions

"AISA" is the agreement between Reach Global and Telstra constituted by the
International Services Agreement (Australia) dated 13 October 2000 made between
Reach and Telstra as novated between Reach Global and Telstra by the Novation
Agreement (International Services Agreement (Australia)) dated 26 April 2002
made between Reach, Reach Global and Telstra.

"AISA Amendment Agreement" is the International Services Agreement (Australia)
Amendment Agreement dated 15 April 2003 made between Reach Global and Telstra.

"AISA Charge" is a "Charge" as defined in the AISA.

"AISA Invoice" is an "Invoice" as defined in the AISA.

"AISA Service" is a "Service" as defined in the AISA.

"Amendment and Restatement Agreement" is the agreement dated 15 April 2003 made
between Reach Finance, Reach, Reach Networks, Reach Networks Australia Pty
Limited, Reach Global Networks Limited, Reach Global and JP Morgan Chase Bank.

"Amended and Restated Facility Agreement" has the meaning given in the
Amendment and Restatement Agreement.

"Authorised PCCW CP Reduction" in a Quarter is a PCCW CP Reduction made in that
Quarter with the prior written consent of each of Reach Finance, PCCW, Telstra
and unless the Total Amount Owing has been paid in full, the Facility Agent.

"Authorised Telstra CP Reduction" in a Quarter is a Telstra CP Reduction made
in that Quarter with the prior written consent of each of Reach Finance, PCCW,
Telstra and unless the Total Amount Owing has been paid in full, the Facility
Agent.

"Business Day" means a day (not being a Saturday, Sunday or public holiday) on
which banks are open for banking business in Hong Kong.

"Capacity Prepayment Proportion" for a Quarter is the amount determined in
accordance with clauses 2.2(f), (g) and (h).

"Cash Surplus" for a Quarter is the amount, if any, determined in accordance
with clause 2.1(a)(ii).

"Cash Sweep Proportion" for a Quarter is to be determined in accordance with
clauses 2.2(a), (b), (c), (d) and (e).

"Date of Amendment" has meaning given in the Amendment and Restatement
Agreement.

"HKISA" is the International Services Agreement (Hong Kong) dated 13 October
2000 made between Reach Networks and HKTC.

-------------------------------------------------------------------------------
                                                                             21
<PAGE>

"HKISA Amendment Agreement" is the International Services Agreement (Hong Kong)
Amendment Agreement dated 15 April 2003 made between Reach Networks and HKTC.

"HKISA Charge" is a "Charge" as defined in the HKISA.

"HKISA Invoice" is an "Invoice" as defined in the HKISA.

"HKISA Service" is a "Service" as defined in the HKISA.

"LIBOR" for a Quarter is the rate per centum per annum (rounded upwards if
necessary to the nearest four decimal places) equal to the average of the
offered quotations which on that day appear on the page of the Reuters Monitor
Money Rates Service (or if not available, a successor or substitute page or
service selected by the Reach Board after consultation with PCCW and Telstra)
which displays London inter-bank offered rates for United States Dollars (being
"LIBO" for US$) for deposits for a 3 month maturity period, as of 11:00am
London time on the quotation date for the Quarter.

For the purposes of this definition, the "quotation date" for a Quarter is the
day on which quotations would ordinarily be given by prime banks in the London
interbank market for deposits in United States Dollars for a 3 month maturity
for delivery on the first day of that Quarter, except, if, for a Quarter,
quotations would ordinarily be given on more than one day, the "quotation date"
for that Quarter is the last of those days and provided that for the Quarter
ending on 30 June 2003 ("First Quarter") the "quotation date" is the day on
which quotations would ordinarily be given by prime banks in the London
interbank market for deposits in United States dollars for a 3 month maturity
for delivery on the Date of Amendment except, if, for those deposits quotations
would ordinarily be given on more than one day, the "quotation date" for the
First Quarter is the last of those days.

"Margin" on a particular day is the Margin that under the Amended and Restated
Facility Agreement is current and applies as at that day.

"Outstanding AJC Indemnity Obligation" is a liability which has arisen on the
part of Reach Global to indemnify Telstra in respect of a payment made by
Telstra to Australia-Japan Cable Limited and has not been fully satisfied and
discharged by Reach Global.

"PCCW CP Balance" is:

(a)  for the Quarter ending on 30 June 2003, US$143,000,000;

(b)  for the Quarter ending on 30 September 2003, the value of:

                           D
                (P - J) + --- (P-J)R
                          360

         Where

         "P" is US$143,000,000,

        "J" is the sum of:

-------------------------------------------------------------------------------
                                                                             22
<PAGE>

     (i)  any Authorised PCCW CP Reductions made during the preceding Quarter;
          and

     (ii) all amounts (if any) credited and applied pursuant to section 4
          during the preceding Quarter,

        "D" is the number of days from the Date of Amendment to 30 June 2003
        (both inclusive), and

        "R" is a rate percentum equal to the Margin on the Date of Amendment
        plus LIBOR for the Quarter ending on 30 June 2003,

(c)  for any subsequent Quarter, the value of:

                           D
                (P - J) + --- (P-J)R
                          360

        Where

        "P" is the PCCW CP Balance for the preceding Quarter,

        "J" is the sum of:

     (i)  any Authorised PCCW CP Reductions made during the preceding Quarter;
          and

     (ii) all amounts (if any) credited and applied pursuant to section 4
          during the preceding Quarter,

        "D" is the number of days in the preceding Quarter, and

        "R" is a rate percentum equal to the Margin on the first day of the
        preceding Quarter plus LIBOR for the preceding Quarter.

"PCCW Credit Entitlement" for a Quarter is to be determined in accordance with
clause 2.2.

"PCCW CP Reduction" in a Quarter, is:

(a)  a cash payment by Reach Networks to PCCW or HKTC of all or any part of the
     PCCW CP Balance for that Quarter; or

(b)  a setting off or the application of any other sort of withholding,
     deduction or counterclaim by PCCW or HKTCor Reach Networks, otherwise than
     in accordance with clause 3.3 and section 4, of a present or future
     liability of PCCW or HKTC to Reach Networks against all or any part of the
     PCCW CP Balance for that Quarter; or

(c)  an application or crediting, by PCCW or HKTC or Reach Networks, otherwise
     than in accordance with clause 3.3 and section 4, of all or any part of
     the PCCW CP Balance for that Quarter against or towards discharge of a
     present or future liability of PCCW or HKTC to Reach Networks.

"PCCW Prepayment" is the sum paid by PCCW to Reach Networks pursuant to clause
3.1.

-------------------------------------------------------------------------------
                                                                             23
<PAGE>

"PCCW Shareholder" is Pacific Century Cable Holdings Limited.

"Quarter" is a calendar quarter ending after the Date of Amendment.

"Reach Board" is the board of directors of Reach.

"Reach CFO" means the chief financial officer of Reach.

"Reach Management Accounts" for a Quarter are the unaudited consolidated
financial statements of Reach and its subsidiaries for the Quarter (including a
profit and loss statement for the Quarter and a balance sheet as at the end of
the Quarter) prepared by the management of Reach substantially in accordance
with GAAP for the purposes of internal management of Reach and its subsidiaries
and reporting to the Reach Board.

"Relevant Event" is any of the following:

(a)  termination however arising of the HKISA;

(b)  termination however arising of the AISA; and

(c)  the giving of a notice of a declaration by the Facility Agent on the
     instruction of the majority of Financiers in accordance with clause 13.2
     of the Amended and Restated Facility Agreement.

"Specified Exchange Rate" for a Quarter is:

(a)  in clause 4.6 a rate equal to the average of the Federal Bank of New
     York's Noon Buying Rates for Hong Kong Dollars,

(b)  in clause 6.6 a rate equal to the average of the Federal Bank of New
     York's Noon Buying Rates for Australian Dollars,

as published on the page "FEDSPOT" of the Reuters Monitor System, for the 3
days that are respectively the last Business Days for which such Noon Buying
Rates are so published, in each of the months in the Quarter.

"Telstra CP Balance" is:

(a)  for the Quarter ending on 30 June 2003, US$143,000,000;

(b)  for the Quarter ending on 30 September 2003, the value of:

                           D
                (P - J) + --- (P-J)R
                          360

        Where

        "P" is US$143,000,000,

        "J" is the sum of:

     (i)  any Authorised Telstra CP Reductions made during the preceding
          Quarter; and

-------------------------------------------------------------------------------
                                                                             24
<PAGE>

    (ii)  all amounts (if any) credited and applied pursuant to section 6
          during the preceding Quarter,

        "D" is the number of days from the Date of Amendment to 30 June 2003
        (both inclusive), and

        "R" is a rate percentum equal to the Margin on the Date of Amendment
        plus LIBOR for the Quarter ending on 30 June 2003,

(c)  for any subsequent Quarter, the value of:

                           D
                (P - J) + --- (P-J)R
                          360

        Where

        "P" is the Telstra CP Balance for the preceding Quarter,

        "J" is the sum of:

     (i)  any Authorised Telstra CP Reductions made during the preceding
          Quarter; and

    (ii)  all amounts (if any) credited and applied pursuant to section 6
          during the preceding Quarter,

        "D" is the number of days in the preceding Quarter, and

        "R" is a rate percentum equal to the Margin on the first day of the
        preceding Quarter plus LIBOR for the preceding Quarter.

"Telstra CP Reduction" in a Quarter, is:

(a)  a cash payment by Reach Global to Telstra of all or any part of the
     Telstra CP Balance for that Quarter; or

(b)  a setting off or the application of any other sort of withholding,
     deduction or counterclaim by Telstra or Reach Global otherwise than in
     accordance with clause 5.3 and section 6, of a present or future liability
     of Telstra to Reach Global against all or any part of the Telstra CP
     Balance for that Quarter; or

(c)  an application or crediting by Telstra or Reach Global, otherwise than in
     accordance with clause 5.3 and section 6, of all or any part of that
     Telstra CP Balance for the Quarter against or towards discharge of a
     present or future liability of Telstra to Reach Global.

"Telstra Credit Entitlement" for a Quarter is to be determined in accordance
with clause 2.2.

"Telstra Prepayment" is the sum paid by Telstra to Reach Global pursuant to
clause 5.1.

"Telstra Shareholder" is Telstra Holdings (Bermuda) No 1 Limited.

-------------------------------------------------------------------------------
                                                                             25
<PAGE>

"Unallocated Aggregate CP Balance" for a Quarter is the sum of the Unallocated
PCCW CP Balance for the Quarter and the Unallocated Telstra CP Balance for the
Quarter.

"Unallocated PCCW CP Balance" for a Quarter is the remainder of the PCCW CP
Balance for that Quarter after deducting the Unused PCCW Credit Entitlement
Balance at the beginning of that Quarter.

"Unallocated Telstra CP Balance" for a Quarter is the remainder of the Telstra
CP Balance for that Quarter after deducting the Unused Telstra Credit
Entitlement Balance at the beginning of that Quarter.

"Unused PCCW Credit Entitlement Balance" at the beginning of a Quarter is the
net balance of:

(a)  the aggregate of all PCCW Credit Entitlements for Quarters ending prior to
     that Quarter; less

(b)  the aggregate of all amounts credited and applied pursuant to section 4
     prior to that Quarter.

"Unused Telstra Credit Entitlement Balance" at the beginning of a Quarter is
the net balance of:

(a)  the aggregate of all Telstra Credit Entitlements for Quarters ending prior
     to that Quarter; less

(b)  the aggregate of all amounts credited and applied pursuant to section 6
     prior to that Quarter.

-------------------------------------------------------------------------------
                                                                             26

<PAGE>

Capacity Prepayment Agreement

Schedule 2 - Principles for determining Cash Surplus for a Quarter

1    For any Quarter:

     (a)  there will be taken to be a Cash Surplus if, and only if, the Quarter
          End Cash Balance ("ECB") exceeds the Quarter End Cash Requirement
          ("ECR"); and

     (b)  the amount of the Cash Surplus will be the amount, if any, by which
          the ECB exceeds the ECR.

2    For the purposes of these principles:

     (a)  "ECB" is all cash and cash equivalents of the REACH Group on a
          consolidated basis at the end of the Quarter.

     (b)  "ECR" is to be determined in accordance with the formula:

          "ECR" = (B + C + D + E + F + G + H + I + J)

          Where

          "B" = principal (excluding principal referred to in "C"(ii) below)
          and interest (including the total of amount payable, to the extent
          (if any) that it exceeds the total of amount receivable, under in
          each case interest rate swaps relating to the Facility) scheduled to
          be paid for Borrowed Money (including under the Facility) and
          payments under finance or capital leases, in each case, due within
          the next two Quarters but not including payments expressed always to
          be payable on demand.

          "C" = whichever is the greater of:

          (i)  US$50,000,000; and

         (ii)  indebtedness at the end of the Quarter up to US$100,000,000 of
               Borrowed Money which is unsecured and for an original and
               remaining tenor less than 12 months.

          "D" = budgeted and committed unbudgeted capital expenditure of REACH
          Group for the next two Quarters (and for the avoidance of doubt
          including capital expenditure that at the end of the Quarter has
          become owing and remains unpaid) but excluding reinvestment to be
          funded from the Disposal Proceeds Account and payments under finance
          or capital leases referred to in "B" above, and subject always in
          each case, to the budgeted and committed unbudgeted capital
          expenditure being in compliance with clause 12.8 of the Amended and
          Restated Facility Agreement and provided that if the second of the
          next two Quarters is the first Quarter of the next calendar year and
          no budget for capital expenditure has been set for that year, the
          value of "D" shall be the sum of:

-------------------------------------------------------------------------------
                                                                             27
<PAGE>

          (i)  the budgeted and committed unbudgeted capital expenditure
               (determined as provided above) of the REACH Group for the first
               of the next two Quarters; plus

         (ii)  US$50,000,000 or where the second of the next two Quarters is
               the Quarter ending on 31 March 2004, US$65,000,000 (or such
               lower amount as may have been advised by REACH to the Facility
               Agent).

          "E" = the sum at the end of the Quarter of:

          (i)  the amount standing to the credit of the Charged Account; plus

         (ii)  deposits up to an aggregate amount of US$40,000,000, securing
               operating licences, leases and other third party commitments.

          "F" = amounts payable by REACH Group in the next Quarter on account
          of Taxes.

          "G" = the sum of the amount at the end of the Quarter standing to the
          credit of the Disposal Proceeds Account which are Net Disposal
          Proceeds:

          (i)  from any Major Disposal held in accordance with clause 4.6 of
               the Amended and Restated Facility Agreement; and

         (ii)  from any other disposal of assets not being an Exempt Disposal.

          "H" = is the net balance of:

          (i)  the sum of:

               (A)  the Unused PCCW Credit Entitlement Balance; and

               (B)  the Unused Telstra Credit Entitlement Balance,

               in each case, at the beginning of the Quarter; less

         (ii)  the sum of:

               (A)  all amounts credited and applied pursuant to section 4
                    during the Quarter; and

               (B)  all amounts credited and applied pursuant to section 6
                    during the Quarter.

          "I" = amounts standing to the credit of the Shareholders Funding
          Account at the end of the Quarter.

          "J" = the amount of any Cash Sweep Proportion for any previous
          Quarter which has not been applied in prepayment of the Drawings in

-------------------------------------------------------------------------------
                                                                             28

<PAGE>

          accordance with clause 4.9 of the Amended and Restated Facility
          Agreement and which is credited to the Cash Sweep Account.

-------------------------------------------------------------------------------
                                                                             29

<PAGE>

Capacity Prepayment Agreement

Signing page

<TABLE>
                                            <C>     <C>
DATED: 15 April 2003

SIGNED by                                       )
                                                )
and                                             )      ............................................
                                                )      By executing this agreement the signatory
each as an authorised representative for        )      warrants that the signatory is duly
REACH NETWORKS HONG KONG LIMITED  in the        )      authorised to execute this agreement on
presence of:                                    )      behalf of REACH NETWORKS HONG KONG LIMITED
                                                )
                                                )
.............................................    )      ............................................
Signature of witness                            )      By executing this agreement the signatory
                                                )      warrants that the signatory is duly
.............................................    )      authorised to execute this agreement on
Name of witness (block letters)                 )      behalf of REACH NETWORKS HONG KONG LIMITED
                                                )

SIGNED by                                       )
                                                )
and                                             )      ............................................
                                                )      By executing this agreement the signatory
each as an authorised representative for        )      warrants that the signatory is duly
REACH GLOBAL SERVICES LIMITED in the presence   )      authorised to execute this agreement on
of:                                             )      behalf of REACH GLOBAL SERVICES LIMITED
                                                )
                                                )
.............................................    )      ............................................
Signature of witness                            )      By executing this agreement the signatory
                                                )      warrants that the signatory is duly
.............................................    )      authorised to execute this agreement on
Name of witness (block letters)                 )      behalf of REACH GLOBAL SERVICES LIMITED
</TABLE>

-------------------------------------------------------------------------------
                                                                             30

<PAGE>

<TABLE>
<S>                                             <C>   <C>
SIGNED by                                       )
                                                )
as an authorised representative for PCCW-HKT    )
TELEPHONE LIMITED in the presence of:           )
                                                )
                                                )
.............................................    )
Signature of witness                            )      ............................................
                                                )      By executing this agreement the signatory
.............................................    )      warrants that the signatory is duly
Name of witness (block letters)                 )      authorised to execute this agreement on
                                                )      behalf of PCCW-HKT TELEPHONE LIMITED

SIGNED by

as authorised representative for TELSTRA CORPORATION LIMITED, in the presence of:

.............................................
Signature of witness

.............................................
Name of witness (block letters)
)
)
)
)
)
)
)
)
)
)
)
)

.............................................
By executing this agreement the signatory states that the signatory is duly authorised to execute
this agreement on behalf of TELSTRA CORPORATION LIMITED
</TABLE>

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                                                                             31

<PAGE>

<TABLE>
<S>                                            <C>     <C>

SIGNED by                                       )
                                                )
and                                             )      ............................................
                                                )      By executing this agreement the signatory
each as an authorised representative for        )      warrants that the signatory is duly
REACH LTD. in the presence of:                  )      authorised to execute this agreement on
                                                )      behalf of REACH LTD.
                                                )
.............................................    )
Signature of witness                            )      ............................................
                                                )      By executing this agreement the signatory
.............................................    )      warrants that the signatory is duly
Name of witness (block letters)                 )      authorised to execute this agreement on
                                                )      behalf of REACH LTD.

SIGNED by                                       )
                                                )
as an authorised representative for PCCW        )
LIMITED in the presence of:                     )
                                                )
                                                )
.............................................    )
Signature of witness                            )      ............................................
                                                )      By executing this agreement the signatory
.............................................    )      warrants that the signatory is duly
Name of witness (block letters)                 )      authorised to execute this agreement on
                                                )      behalf of PCCW LIMITED

SIGNED by                                       )
                                                )
and                                             )      ............................................
                                                )      By executing this agreement the signatory
each as an authorised representative for        )      warrants that the signatory is duly
REACH FINANCE LIMITED in the presence of:       )      authorised to execute this agreement on
                                                )      behalf of REACH FINANCE LIMITED
                                                )
.............................................    )
Signature of witness                            )      ............................................
                                                )      By executing this agreement the signatory
.............................................    )      warrants that the signatory is duly
Name of witness (block letters)                 )      authorised to execute this agreement on
                                                )      behalf of REACH FINANCE LIMITED
</TABLE>

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                                                                             32

<PAGE>

 Mallesons Stephen Jaques

                         Capacity Prepayment Agreement

                              Dated 15 April 2003

                        Reach Networks Hong Kong Limited
                         Reach Global Services Limited
                           PCCW-HKT Telephone Limited
                          Telstra Corporation Limited
                                   Reach Ltd
                                  PCCW Limited

                            Mallesons Stephen Jaques
                                    Level 28
                                     Rialto
                               525 Collins Street
                               Melbourne Vic 3000
                               T +61 3 9643 4000
                               F +61 3 9643 5999
                                DX 101 Melbourne

<PAGE>

Capacity Prepayment Agreement

Contents

--------------------------------------------------------------------------------
1        Interpretation                                                      3
-------------------------------------------------------------------------------
2        Quarter End Cash Surplus                                            4
-------------------------------------------------------------------------------
3        PCCW and HKTC                                                       9
-------------------------------------------------------------------------------
4        Application of PCCW CP Balance                                     10
-------------------------------------------------------------------------------
5        Telstra                                                            11
-------------------------------------------------------------------------------
6        Application of Telstra CP Balance                                  12
-------------------------------------------------------------------------------
7        Operational                                                        13
-------------------------------------------------------------------------------
8        Conditions Precedent                                               16
-------------------------------------------------------------------------------
9        Costs                                                              16
-------------------------------------------------------------------------------
10       Notices                                                            16
-------------------------------------------------------------------------------
11       Variation and Waiver                                               18
-------------------------------------------------------------------------------
12       Third Party Rights                                                 18
-------------------------------------------------------------------------------
13       Governing Law                                                      18
-------------------------------------------------------------------------------
14       Counterparts                                                       18
-------------------------------------------------------------------------------
15       General                                                            18

Schedule 1 - Definitions                                                    21

Schedule 2 - Principles for determining Cash Surplus for a Quarter          27Exhibit 4(bb)

                                                                 CONFORMED COPY

                               SUBORDINATION DEED

                              dated 15 April 2003

                                      for

                                  PCCW LIMITED
                               as Junior Creditor

                                      and

                              JPMORGAN CHASE BANK
                              as Security Trustee

                                      and

                        REACH NETWORKS HONG KONG LIMITED

                                   Linklaters

                                  Ref: PXF/SCH

<PAGE>

                                           CONTENTS
CLAUSE                                                                      PAGE

1.          Definitions and Interpretation.....................................1
2.          Undertakings of the Debtor.........................................2
3.          Undertakings of the Junior Creditor................................2
4.          Subordination and Turnover of Payments.............................3
5.          Subordination Events...............................................4
6.          Treatment of Distributions.........................................5
7.          Enforcement by the Junior Creditor.................................5
8.          Voting.............................................................6
9.          Consents...........................................................7
10.         Representations and Warranties.....................................7
11.         Information........................................................8
12.         Protection of Subordination........................................8
13.         No Rights in Favour of the Junior Creditor or the Debtor..........10
14.         Power of Attorney.................................................10
15.         Changes to the Parties............................................10
16.         Set-off and Interest..............................................11
17.         Amendments, Waivers, Consents and Determinations..................12
18.         Notices...........................................................11
19.         Miscellaneous.....................................................12
20.         Indemnities.......................................................12
21.         Governing Law and Jurisdiction....................................13

                                     (i)
<PAGE>

THIS DEED is made on 15 April 2003 between:

(1)  PCCW LIMITED (the "Junior Creditor")

(2)  JPMORGAN CHASE BANK as security trustee for the Senior Creditors (as
     defined below) (the "Security Trustee") and

(3)  REACH NETWORKS HONG KONG LIMITED (the "Debtor").

Background

(A)  The Junior Creditor has agreed that, subject to the terms and conditions
     of this Deed, the Junior Debt shall be subordinated in right of payment to
     the Senior Debt (as defined below).

(B)  The Board of Directors of the Junior Creditor is satisfied that entering
     into this Deed is for the purposes and for the benefit of the Junior
     Creditor and its business.

(C)  The parties to this Subordination Deed intend that it shall take effect as
     a deed.

(D)  Telstra Corporation (the "Other Junior Creditor") and each of Reach Global
     Services Limited and REACH Ltd. (each an "Other Debtor") has executed or
     will execute a subordination deed with substantially similar terms
     (subject to any necessary changes) in respect of the CPP Agreement, the
     AJC Indemnity Agreement or the Telstra Transfer Agreement, as the case may
     be (each an "Other Debtors' Junior Debt").

It is agreed as follows:

1.   DEFINITIONS AND INTERPRETATION

1.1  Definitions
     In this Deed, terms defined and references construed in the Senior Credit
     Agreement and the CPP Agreement shall have the same meaning and
     construction and, except to the extent that the context requires
     otherwise:

     "Delegate" has the meaning given to it in the Floating Charge executed by
     the Debtor

     "Junior Debt" means all liabilities of the Debtor to the Junior Creditor
     under the CPP Agreement (whether in respect of the PCCW Prepayment, the
     Outstanding PCCW CP Balance or otherwise)

     "Receiver" has the meaning given to it in the Floating Charge executed by
     the Debtor

     "Senior Credit Agreement" means the syndicated term loan facility
     agreement dated 12 January 2001 as amended and restated by an Amendment
     and Restatement Agreement dated on or about the date of this Deed between,
     among others, the Borrower, REACH Ltd. and the Security Trustee

     "Senior Creditors" means the Finance Parties as defined in the Senior
     Credit Agreement

     "Senior Debt" means the indebtedness of the Obligors to the Senior
     Creditors under or in connection with the Senior Finance Documents

     "Senior Debt Discharge Date" means the first date on which all Senior Debt
     has been fully and irrevocably paid or discharged and no further Senior
     Debt is capable of becoming outstanding

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<PAGE>

     "Senior Finance Documents" means the Transaction Documents as defined in
     the Senior Credit Agreement

     "Subordination Event" means an event described in clause 5 (Subordination
     Events).

1.2  Headings
     Headings shall be ignored in construing this Deed.

1.3  No Charge
     Nothing in clause 4 (Subordination and Turnover of Payments) is intended
     to create a charge or other security interest.

2.   UNDERTAKINGS OF THE DEBTOR

     Except with the consent of the Security Trustee:

2.1  No Payments
     The Debtor shall not pay, prepay, repay or make any distribution in
     respect of, or purchase or acquire, any Junior Debt in cash or in kind
     except, until the occurrence of a Subordination Event, applications,
     credits and Authorised PCCW CP Reductions in accordance with sections 3
     and 4 of the CPP Agreement.

2.2  REACH Group
     The Debtor shall ensure that none of the members of the REACH Group
     purchases or acquires any Junior Debt.

2.3  No Set-off
     The Debtor shall not exercise any set-off against any Junior Debt except,
     until the occurrence of a Subordination Event, applications, credits and
     Authorised PCCW CP Reductions in accordance with sections 3 and 4 of the
     CPP Agreement.

2.4  No Security Interest
     The Debtor shall not, and shall ensure that no other member of the Reach
     Group shall, create or have outstanding any Security Interest over any of
     its assets for, or any guarantee for, or in respect of, any Junior Debt.

2.5  No Amendment
     The Debtor shall not amend, vary, waive, release or supplement any
     provision of the CPP Agreement, except to the extent permitted by the
     Senior Credit Agreement.

2.6  No Other Action
     Except as permitted by this Deed, the Debtor shall not take or omit to
     take any action whereby the ranking and/or subordination contemplated by
     this Deed may be impaired.

3.   Undertakings of the Junior Creditor

     Except with the consent of the Security Trustee:

3.1  No Payment
     The Junior Creditor will not demand or receive payment, prepayment,
     repayment or any distribution in respect of any Junior Debt in cash or in
     kind or apply any money or property in or

                                       2
<PAGE>

     towards discharge of any Junior Debt except, until the occurrence of a
     Subordination Event, applications, credits and Authorised PCCW CP
     Reductions in accordance with sections 3 and 4 of the CPP Agreement.

3.2  No Set-off
     The Junior Creditor will not exercise any set-off against any Junior Debt
     except, until the occurrence of a Subordination Event, applications,
     credits and Authorised PCCW CP Reductions in accordance with sections 3
     and 4 of the CPP Agreement.

3.3  No Security Interest
     Except as permitted by this Deed, the Junior Creditor will not permit to
     subsist or receive any Security Interest or guarantee for, or in respect
     of, any Junior Debt.

3.4  No Other Action
     Except as permitted by this Deed the Junior Creditor will not take or omit
     to take any action whereby the ranking and/or subordination contemplated
     by this Deed may be impaired.

3.5  No Amendment
     The Junior Creditor will not amend, vary, waive, release or supplement any
     provision of the CPP Agreement, except to the extent permitted by the
     Senior Credit Agreement.

3.6  No Negotiable Instrument
     The Junior Creditor will not permit any Junior Debt to be evidenced by a
     negotiable instrument unless that instrument is endorsed with a
     recognition of this subordination or is deposited with the Security
     Trustee.

3.7  No Cancellation
     The Junior Creditor will not cancel, assign or otherwise transfer any
     Junior Debt or any commitment to provide any Junior Debt.

4.   SUBORDINATION AND TURNOVER OF PAYMENTS

4.1  Subordination
(a)  The Junior Creditor hereby irrevocably covenants in favour of the Security
     Trustee for the benefit of the Senior Creditors that the Junior Debt
     shall, from the occurrence of a Subordination Event, be subordinated and
     subject in right of payment to the prior payment in full of all Senior
     Debt and accordingly, from the occurrence of a Subordination Event, the
     Senior Creditors shall be entitled to receive payment in full of the
     Senior Debt before the Junior Creditor shall be entitled to receive any
     payment on account of the Junior Debt or any part of it.

(b)  The Junior Creditor and the Debtor undertake that, notwithstanding
     anything to the contrary contained in any agreement or other document
     constituting or evidencing the Junior Debt, the Junior Debt shall not
     (except as provided in paragraph (c) below), from the occurrence of a
     Subordination Event until the Senior Debt Discharge Date, be due or owing
     or capable of becoming or being declared due or payable.

(c)  It is recognised that

     (i)  a notice may be issued in accordance with clause 7.1(a)
          (Acceleration); and

                                       3
<PAGE>

     (ii) under the terms of the CPP Agreement, following the occurrence of a
          Relevant Event (as defined in the CPP Agreement) (and subject, in
          certain cases, to the notice period in clause 2.3 (c)(ii) of the CPP
          Agreement) the Junior Debt may be expressed to become due and payable

     but these will, until the Senior Debt Discharge Date, be subject to the
     prior interest of the Senior Creditors and to the subordination under this
     clause 4 and the other terms of this Deed.

4.2  Trust and Turnover
     If, at any time after a Subordination Event has occurred until the Senior
     Debt Discharge Date, the Junior Creditor receives a payment of the kind
     described in clause 4.3 (Non-Permitted Payments), the Junior Creditor
     will:

     (a)  notify the Security Trustee of such receipt,

     (b)  hold any payment so received on trust for the Senior Creditors in a
          separate account, and

     (c)  pay and distribute any payment so received, or (in the case of a
          set-off) pay an equivalent amount, on demand, to the Security Trustee
          for application in or towards the Senior Debt in accordance with the
          Senior Credit Agreement as the Security Trustee sees fit and until
          the Senior Debt Discharge Date.

4.3  Non-Permitted Payments
     The payments to which clause 4.2 (Trust and Turnover) refers are as
     follows:

     (a)  receipt by the Junior Creditor of a payment (including by way of
          set-off) or distribution in cash or in kind of, or on account of, any
          Junior Debt

     (b)  receipt by the Junior Creditor (including by way of set-off) of the
          proceeds of enforcement of any Security Interest, or payment under
          any guarantee, for any Junior Debt or

     (c)  the making by the Debtor or any member of the REACH Group of any
          payment or distribution, in cash or in kind, on account of the
          purchase or any acquisition of any Junior Debt.

5.   SUBORDINATION EVENTS

     Each of the following is a Subordination Event:

5.1  Acceleration of Senior Debt
     The giving of a notice of a declaration by the Facility Agent in
     accordance with clause 13.2 (Consequences of default) of the Senior Credit
     Agreement.

5.2  Termination of ISA
     An ISA is terminated without the written consent of the Facility Agent in
     accordance with the Senior Credit Agreement or an event (however
     described) has occurred which will cause any acceleration of repayment of
     any Junior Debt to the Junior Creditor or payment of any amounts owing
     under any Other Debtors' Junior Debt to the Other Junior Creditor except,
     as appropriate, until the occurrence of any other event or circumstance
     which would constitute a Subordination

                                       4
<PAGE>

     Event, applications, credits, Authorised PCCW CP Reductions in acordance
     with sections 3 and 4 of the CPP Agreement, Authorised Telstra CP
     Reductions in accordance with sections 5 and 6 of the CPP Agreement and
     payments or set-off in accordance with the Telstra Transfer Agreement or
     the AJC Indemnity Agreement.

5.3  Relevant Event
     An event occurs or circumstance arises (other than anything described in
     sub-clause 5.1 and 5.2) which is a "Relevant Event" under the CPP
     Agreement.

5.4  Insolvency
     An event occurs in relation to Reach Networks Hong Kong Limited, Reach
     Global Services Limited or Reach Ltd. which is an Event of Default under
     clause 13.1(h) (Insolvency) of the Senior Credit Agreement.

6.   TREATMENT OF DISTRIBUTIONS

6.1  Realisation
     If the Security Trustee receives any distribution otherwise than in cash
     in respect of the Junior Debt from the Debtor or any other source, it may
     deal with and/or apply the distribution as it sees fit. The Senior Debt
     shall not be reduced by the distribution until and except to the extent
     that any net realisation proceeds are applied towards the Senior Debt.

6.2  Transfer of distributions
     The Junior Creditor will at its own expense do all such things as the
     Security Trustee may reasonably require as being necessary or desirable to
     transfer to the Security Trustee all payments and distributions which must
     be turned over to the Security Trustee or held on trust for the Senior
     Creditors, including endorsements and execution of formal transfers, and
     will pay all reasonable costs and stamp duties in connection therewith.

6.3  Failure of trust
     If a trust in favour of, or a holding of property for, the Senior
     Creditors under this Deed is invalid or unenforceable, the Junior Creditor
     will pay and deliver to the Security Trustee an amount equal to the
     payment, receipt or recovery in cash, or in kind, which the Junior
     Creditor would otherwise have been bound to hold on trust for or as
     property of the Senior Creditors.

7.   ENFORCEMENT BY THE JUNIOR CREDITOR

7.1  Junior Creditor not to take enforcement action
     On the occurrence of a Subordination Event until the Senior Debt Discharge
     Date, except with the written consent of the Security Trustee the Junior
     Creditor will not:

(a)  Acceleration

     declare any Junior Debt to be due or payable except that the Junior
     Creditor may issue a notice under clause 2.3 (c) of the CPP Agreement
     following the occurrence of a Relevant Event but only if:-

                                       5
<PAGE>

     (i)  that notice acknowledges that the Junior Debt is subordinated by the
          terms of this Deed; and

    (ii)  that notice does not require any payment to be made to or for the
          account of the Junior Creditor except where these sums are to be paid
          directly to the Security Trustee in accordance with this Deed;

     nor in any other way ask, demand, sue or prove for, take or receive,
     directly or indirectly, whether by exercise of set-off, counterclaim or in
     any other manner, payment of any Junior Debt.

(b)  No Attachment

     enforce any Junior Debt by way of attachment, set-off, execution or
     otherwise;

(c)  No Creditor Process

     sue for, or institute any process (including an injunction, specific
     performance, garnishment, execution or levy, whether before or after
     judgment) against the Debtor or its assets in respect of, any obligation
     (whether or not for the payment of money) owing to it in respect of any
     Junior Debt; or

(d)  No Insolvency Proceedings

     initiate or support or take any steps with a view to any winding-up
     proceedings or any voluntary arrangement or assignment for the benefit of
     creditors or any similar proceedings involving the Debtor or its assets,
     whether by petition, convening a meeting, voting for a resolution or
     otherwise.

7.2  Authority to Security Trustee to enforce
     The Junior Creditor irrevocably authorises and empowers the Security
     Trustee, at any time after a Subordination Event has occurred, to ask,
     demand, sue or prove for, take and receive, in the name of such Junior
     Creditor or otherwise, all amounts payable to the Junior Creditor by way
     of Junior Debt, and undertakes at the request of the Security Trustee to
     take all such action and to execute all such documents as the Security
     Trustee may reasonably require in order to enable the Security Trustee to
     recover the Subordinated Indebtedness.

8.   VOTING

8.1  Voting Rights
     On the occurrence of a Subordination Event, the Security Trustee may (and
     is hereby authorised to) exercise all powers of convening meetings, voting
     and representation in respect of the Junior Debt and the Junior Creditor
     shall promptly execute and/or deliver to the Security Trustee such forms
     of proxy and of representation as it may require with a view to enabling
     such person as it may select to exercise those rights.

8.2  Exercise by the Junior Creditor
     On the occurrence of a Subordination Event, if and to the extent that the
     Security Trustee is not entitled to exercise a power conferred by clause
     8.1 (Voting Rights) the Junior Creditor:

     (a)  will exercise the power as the Security Trustee directs and

                                       6
<PAGE>

     (b)  will not exercise it so as to impair this subordination.

9.   CONSENTS

9.1  No Objection
     The Junior Creditor shall not have any remedy against the Debtor or any
     Senior Creditor by reason of the entry by any of them into any Transaction
     Document, or any other agreement between any Senior Creditor and the
     Debtor, or any waiver or consent, or any requirement or condition imposed
     by or on behalf of any Senior Creditor on the Debtor under any Transaction
     Document, or such other agreement, which violates the CPP Agreement and
     results in the Junior Debt becoming immediately due or payable. The Junior
     Creditor may not object to any such matter by reason of any provision of
     the CPP Agreement.

9.2  Waivers
     Any waiver or consent by or on behalf of any or all of the Senior
     Creditors under any Senior Finance Document (including any waiver of any
     breach or default or condition precedent, and any consent to any extension
     of availability of the Senior Debt) will be deemed also to have been given
     by the Junior Creditor (on the same terms and conditions, with appropriate
     changes) if any transaction or circumstance would, in the absence of that
     waiver or consent by the Junior Creditor, violate or contravene the CPP
     Agreement or results in the Junior Debt becoming immediately due or
     payable.

10.  REPRESENTATIONS AND WARRANTIES

     The Debtor and the Junior Creditor jointly and severally represents and
     warrants to and for the benefit of the Security Trustee as follows:

     (a)  Status: It has been incorporated in accordance with the laws of its
          place of incorporation and is validly existing under those laws.

     (b)  Powers: It has the power to enter into the CPP Agreement and this
          Deed and comply with its obligations under each of them.

     (c)  Authority and Authorisations: It has in full force and effect the
          material authorisations necessary for it to enter into the CPP
          Agreement and this Deed, to comply with its obligations and exercise
          its rights under each of them and to allow them to be enforced.

     (d)  Non-Violation etc.: The CPP Agreement and this Deed do not contravene
          its constitutional documents or contravene in a material respect any
          law or obligation by which it is bound or to which its assets are
          subject which in any case would or would be reasonably likely to have
          a Material Adverse Effect, or cause a limitation on its powers or the
          powers of its directors to be exceeded or (except as provided in any
          Transaction Documents) result in the existence of, or oblige it to
          create, any Security Interest over its assets.

     (e)  Obligations Binding: Its obligations under the CPP Agreement and this
          Deed are valid and binding and are enforceable against it in
          accordance with their terms subject to any applicable bankruptcy,
          insolvency, reorganisation, liquidation or other similar laws or

                                       7
<PAGE>

          regulations affecting creditor's rights generally and the general
          principles of equity or as referred to in the Opinions.

     (f)  Solvency: It is not Insolvent.

11.  INFORMATION

     The Junior Creditor will promptly notify the Security Trustee of the
     occurrence of any event which would result in the Junior Debt becoming
     immediately due or payable under the CPP Agreement.

12.  PROTECTION OF SUBORDINATION

12.1 Continuing Subordination
     The subordination provisions in this Deed shall:

     (a)  remain in full force and effect by way of continuing subordination;
          and

     (b)  not be affected in any way by any settlement of account (whether or
          not any Senior Debt remains outstanding) or other matter or thing
          whatsoever,

     until the Senior Debt Discharge Date.

12.2 Subordination Unaffected
     Without prejudice to the generality of clause 12.1 (Continuing
     Subordination), neither the subordination in this Deed nor the obligations
     of the Junior Creditor shall be affected in any way by:

     (a)  any time, indulgence, concession, waiver or consent given to, or
          composition with, the Debtor, an Other Debtor or any other person,
          whether by the Security Trustee or any other person

     (b)  any amendment to or change in any Security Interest, guarantee or
          indemnity, or the terms of any of the Junior Debt, the Other Debtors'
          Junior Debt or the Senior Debt

     (c)  the making or absence of any demand for payment of any of the Junior
          Debt, the Other Debtors' Junior Debt or the Senior Debt on the Debtor
          or any Other Debtor or any other person, whether by the Junior
          Creditor, the Other Junior Creditor, the Security Trustee or any
          other person

     (d)  the enforcement or absence of enforcement of any Security Interest,
          guarantee or indemnity or any rights under the Junior Debt, any Other
          Debtors' Junior Debt or the Senior Debt

     (e)  the taking, existence or release of any other Security Interest,
          guarantee or indemnity

     (f)  the winding-up of the Debtor, any Other Debtor, the Other Junior
          Creditor or any other person, or any step being taken for any such
          winding-up or

     (g)  the illegality, invalidity or unenforceability of, or any defect in,
          any provision of any agreement or document relating to the Junior
          Debt, any Other Debtors' Junior Debt or the Senior Debt or any
          Security Interest, guarantee or indemnity (including the CPP

                                       8
<PAGE>

          Agreement or any Transaction Document) or any of the rights or
          obligations of any of the parties under or in connection with any
          such document or any Security Interest, guarantee or indemnity
          (including the CPP Agreement or any Transaction Document).

12.3 Immediate recourse
     The Junior Creditor waives any right it may have of requiring any Senior
     Creditor to proceed against or enforce any other right or security or
     claim payment from any person before claiming the benefit of this Deed.

12.4 Exercise of the Junior Creditor's Rights
     On the occurrence of a Subordination Event until the Senior Debt Discharge
     Date,

     (a)  any rights of the Junior Creditor, by reason of the performance or
          enforcement of any of its obligations under clause 4 (Subordination
          and Turnover of Payments) or 6 (Treatment of Distributions), or any
          other provision of this Deed, to be indemnified by any person, to
          prove in respect of any liability in the winding-up of any person or
          to take the benefit of or enforce any Security Interest, guarantees
          or indemnities, shall be exercised and enforced only in such manner
          and on such terms as the Security Trustee may require and

     (b)  any amount received or recovered by the Junior Creditor (i) as a
          result of any exercise of any such rights or (ii) in the winding-up
          of any such person shall be held in trust for and immediately paid to
          the Security Trustee.

12.5 Discharge
     The Debtor hereby irrevocably waives any right to appropriate any payments
     to, or other sum received, recovered or held by, the Security Trustee in
     or towards discharge of a particular part of the Senior Debt and agrees
     that the Security Trustee shall have the exclusive right to appropriate
     any such payment or other sum in accordance with this Deed.

12.6 Reinstatement
     Without prejudice to clause 13.1 (Preservation of Junior Debt), if any
     payment by the Junior Creditor or the Debtor or any discharge given by a
     Senior Creditor (whether in respect of the obligations of any Obligor or
     any security for those obligations or otherwise) is avoided or reduced for
     any reason including, without limitation, as a result of insolvency,
     breach of fiduciary or statutory duties or any similar event:

     (a)  the liability of the Junior Creditor or the Debtor (as the case may
          be) shall continue as if the payment, discharge, avoidance or
          reduction had not occurred; and

     (b)  each Senior Creditor shall be entitled to recover the value or amount
          of that security or payment from the Junior Creditor or the Debtor
          (as the case may be) as if the payment, discharge, avoidance or
          reduction had not occurred.

12.7 Suspense Accounts
     Any amount received or recovered by any Senior Creditor, any Receiver or
     any Delegate in exercise of its rights under this Deed may be credited to
     an interest bearing suspense account. That amount may be kept there (with
     any interest earned being credited to that account) until the

                                       9
<PAGE>

     Senior Creditors are satisfied that all the Senior Debt has been
     discharged in full and that all facilities which might give rise to Senior
     Debt have terminated.

13.  NO RIGHTS IN FAVOUR OF THE JUNIOR CREDITOR OR THE DEBTOR

13.1 Preservation of Junior Debt
     As between the Debtor and the Junior Creditor only, the Junior Debt shall
     remain owing or due and payable in accordance with the terms of the CPP
     Agreement and shall not be reduced or discharged by any payment to which
     clause 4.2 (Trust and Turnover) applies.

13.2 No Rights
     Neither the Debtor nor the Junior Creditor shall have any rights under
     this Deed. None of the undertakings in this Deed by the Senior Creditors
     are given to or for the benefit of the Debtor or the Junior Creditor.

13.3 No Liability
     No Senior Creditors will be liable to the Junior Creditor:

     (a)  for the manner of exercise or for any non-exercise of the powers of
          any or all of the Senior Creditors under this Deed or

     (b)  for failure to collect or preserve the Junior Debt.

14.  POWER OF ATTORNEY

14.1 Appointment
     By way of security for their obligations, the Junior Creditor irrevocably
     appoints the Security Trustee as its attorney, upon the occurrence of a
     Subordination Event until the Senior Debt Discharge Date, to do anything
     which it:

     (a)  has authorised the Security Trustee to do under this Deed and

     (b)  is required to do by this Deed but has failed to do.

14.2 Delegation
     The Security Trustee may delegate the power of attorney in clause 14.1
     (Appointment).

15.  Changes to the Parties

15.1 Successors and assigns
     This Deed is binding on the successors and permitted assigns of the
     parties to it. Any reference to any party shall be construed accordingly.

15.2 Debtor
     The Debtor may not assign or transfer any or all of its rights (if any) or
     obligations under this Deed.

15.3 The Junior Creditor
     The Junior Creditor will not at any time until the Senior Debt Discharge
     Date (except with the written consent of the Security Trustee which, prior
     to the occurrence of a Subordination Event, will not be unreasonably
     withheld or delayed):

                                      10
<PAGE>

     (a)  except as permitted by this Deed, assign, novate, transfer or dispose
          of, or create or permit to subsist any security (fixed or floating)
          over, or declare or create any trust of, any or all of the Junior
          Debt owing to it or its proceeds or any interest in the Junior Debt
          or its proceeds, or any other rights or obligations under the CPP
          Agreement, or any security therefor, or its commitment to provide the
          Junior Debt to or in favour of any person

     (b)  subordinate any or all of the Junior Debt or its proceeds to any sums
          owing by the Debtor to any person other than to the Security Trustee
          for the benefit of the Senior Creditors

     and, where the Security Trustee has given its consent, only where that
     person agrees with the parties to this Deed that it is bound by all the
     terms of this Deed in the same capacity as the Junior Creditor.

15.4 Senior Creditors
     Any Senior Creditor may assign, novate, transfer or otherwise dispose of
     all or any of its rights under this Deed in accordance with and subject to
     the restrictions contained in the Senior Credit Agreement.

16.  SET-OFF AND INTEREST

16.1 Set-Off
     The Debtor and the Junior Creditor authorises the Security Trustee to
     apply (without prior notice) any credit balance (whether or not then due)
     to which it is at any time beneficially entitled on any account and any
     sum held to its order by and/or any liability to it of, any office of the
     Security Trustee in or towards satisfaction of all or any part of their
     respective liabilities under this Deed which are due and unpaid and, for
     that purpose, to convert one currency into another.

16.2 Interest
     In respect of any liability under this Deed of the Debtor or the Junior
     Creditor which it does not discharge when due, it shall pay to the
     Security Trustee on demand interest at the Default Rate calculated day by
     day from (and including) the due date of the relevant liability until (and
     excluding) full payment or discharge (both before and after judgment).

17.  AMENDMENTS, WAIVERS, CONSENTS AND DETERMINATIONS

17.1 Amendments, Waivers and Consents
     Any provision of this Deed may be amended, supplemented or novated only in
     accordance with the Senior Credit Agreement.

17.2 Determinations
     Any determination by any Senior Creditor under this Deed shall be
     conclusive save for manifest error.

                                      11
<PAGE>

18.  NOTICES

     Clause 29 (Notices) of the Senior Credit Agreement shall apply to this
     Deed. The administrative details of the Junior Creditor are as follows:

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

     Fax:          852 2962 5725
     Telephone:    852 2883 6615
     Attention:    Company Secretary

19.  MISCELLANEOUS

19.1 Counterparts
     This Deed may be executed in any number of counterparts.

19.2 Perpetuity Period
     The perpetuity period for each trust created by this Deed shall be 80
     years.

19.3 Withholding
     The terms of clause 8 (Withholding Tax) of the Senior Credit Agreement
     shall apply, with any necessary amendments, to any sums payable by the
     Debtor or the Junior Creditor under this Deed.

19.4 Provisions in the Senior Credit Agreement
     Clauses 30.7 (Partial exercising of rights), 30.10 (Remedies cumulative)
     and 30.14 (Partial invalidity) of the Senior Credit Agreement shall apply
     to this Deed.

20.  INDEMNITIES

20.1 Extent of Discharge
     Clause 5.2 (Currency of payment) of the Senior Credit Agreement shall
     apply to any sum payable by the Debtor or the Junior Creditor under this
     Deed.

20.2 Currency Indemnity
     Clause 14.5 (Currency conversion on judgment debt) of the Senior Credit
     Agreement shall apply to any sum due from the Debtor or the Junior
     Creditor under this Deed.

20.3 Indemnities Separate
     Each indemnity in this Deed:

     (a)  constitutes a separate and independent obligation from the other
          obligations in this Deed

     (b)  shall give rise to a separate and independent cause of action

                                      12
<PAGE>

     (c)  shall apply irrespective of any indulgence granted by the Security
          Trustee and

     (d)  shall continue in full force and effect despite any judgment, order,
          claim or proof for a liquidated amount in respect of any liability
          under this Deed or any other judgment or order.

21.  GOVERNING LAW AND JURISDICTION

21.1 Governing Law
     This Deed shall be governed by and construed in accordance with the laws
     of England.

21.2 Jurisdiction
     Any proceedings relating to a dispute which arises out of or in connection
     with this Deed ("Proceedings") shall be brought in the courts of England,
     save the Security Trustee may also bring Proceedings, whether or not
     concurrently with other Proceedings, in any other courts which would have
     jurisdiction but for this clause 21.2 and, for the benefit of the Senior
     Creditors, each of the Debtor and the Junior Creditor submits to the
     jurisdiction of each such court.

21.3 Venue
     For the benefit of the Senior Creditors, each of the Debtor and the Junior
     Creditor irrevocably waives any objection which it may at any time have to
     the laying of the venue of any Proceedings in any court referred to in
     this clause 21 and any claim that any such Proceedings have been brought
     in an inconvenient forum.

                                      13
<PAGE>

In witness whereof this Deed has been duly executed as a deed on the date
stated at the beginning.

)THE COMMON SEAL of
)PCCW LIMITED
)was affixed in the presence of:

                                                                          C.S.
ALEXANDER ANTHONY ARENA (sd.)
---------------------------------------------------------
Director

FIONA NOTT (sd.)
---------------------------------------------------------
Director/Secretary

)THE COMMON SEAL of
)REACH NETWORKS HONG KONG LIMITED
)was affixed in the presence of:

MICHAEL JOHN LONERGAN (sd.)                                               C.S.
-------------------------------------------------------------
Director

FIONNUALA ELIZABETH MAEV SULLIVAN (sd.)
-------------------------------------------------------------
Director

SIGNED by LETITIA CHAU for
and on behalf of JPMORGAN CHASE BANK
in the presence of:

                                                            LETITIA CHAU (sd.)
                                                            --------------------
                                                            Authorised signatory

SUSANA CHAN (sd.)

                                      14

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