Administrative Regulations on Foreign Invested Telecommunications Enterprises
(Adopted on December 5, 2001 and effective as of January 1, 2002)

Article 1 These Regulations are hereby formulated in accordance with relevant foreign investment laws and administrative regulations and the Telecommunication Regulations of the People's Republic of China (hereinafter as the "Telecommunications Regulations"), in order to meet the needs for opening to the outside world in telecommunications industry, and promote the development of telecommunications industry.

Article 2 Foreign invested telecommunications enterprises refer to those enterprises as duly invested and established within the territory of the P.R.C. by the foreign investor(s) together with the Chinese investor(s) in the form of Chinese-foreign equity joint venture to engage in telecommunications business.

Article 3 Foreign invested telecommunications enterprises engaging in telecommunication business operation activities shall abide by stipulations of the Telecommunication Regulations, other relevant laws and regulations as well these regulations.

Article 4 Foreign invested telecommunications enterprises may be engaged in basic telecommunications business and value-added telecommunications business, and the provisions of Telecommunications Regulations should be followed in regard to the specific business classification.

Article 5 Registered Capital of Foreign invested telecommunications enterprises shall satisfy the following requirements:

(1) In order to engage in the basic telecommunications business nationwide, or in more than one province, autonomous region or municipality directly under the central government, the registered capital shall not be less than RMB 2 billion; in order to be engaged in value-added telecommunications businesses (within the same geographic scope), the registered capital shall not be less than RMB 10 million;

(2) In order to be engaged in the basic telecommunications business within one province, autonomous region or municipality directly under the central government, the registered capital shall not be less than RMB 200 million; in order to engage in value-added telecommunications businesses (within the same geographic scope), the registered capital shall not be less than RMB 1 million;

Article 6 The ultimate shareholding of the foreign investor(s) of a foreign invested telecommunications enterprise in the enterprise to engage in basic telecommunications business (excluding wireless paging business) shall not exceed 49 percent.

The ultimate shareholding of the foreign investor(s) of a foreign invested telecommunications enterprise in the enterprise to be engaged in value-added telecommunications business (including wireless paging business in the category of basic telecommunication business) shall not exceed 50 percent.

The respect of shareholding percentage of the Chinese investor(s) and foreign investor(s) in the foreign invested telecommunications enterprises during different periods shall be determined by the department in charge of information industry under the State Council according to relevant regulations.

Article 7 To be engaged in telecommunications business, foreign invested telecommunications enterprises shall have the qualifications for operation of either basic or value-added telecommunications business as stipulated by the Telecommunications Regulations in addition to satisfying the conditions provided by Articles 4, 5 and 6 hereof.

Article 8 The major Chinese investor to a foreign invested telecommunications enterprise to be engaged in basic telecommunications business shall satisfy the following conditions:

(1) Being a company duly established according to laws;
(2) Having capital and professional personnel necessary for engagement in relevant business activities;
(3) In compliance with the due and special industrial requirements set down by the department in charge of information industry under the State Council.

Article 9 The major foreign investor(s) to a foreign invested telecommunications enterprise to be engaged in basic telecommunications business shall satisfy the following conditions:

(1) Having an enterprise legal person status;
(2) Having obtained an operating permit for basic telecommunications business in the country or region where it is registered;
(3) Having capital and professional personnel necessary for engagement in relevant business activities;
(4) With sound performance and operating experiences in basic telecommunications business.

The major foreign investor to the foreign invested telecommunications enterprises mentioned in the preceding provision refer to the investor whose investment amount is the highest among all the foreign investor(s) and is no less than 30 percent of the total investment of all the foreign investor(s).

Article 10 The major foreign investor(s) to a foreign invested telecommunications enterprise to be engaged in value-added telecommunications businesses shall have sound performance and operating experiences in value-added telecommunications business.

Article 11 For establishment of a foreign invested telecommunications enterprise to be engaged in basic telecommunications business or value-added telecommunications businesses in more than one province, autonomous region or municipal directly under the central government, the following documents shall be submitted by the major Chinese investor while application is made to the department in charge of information industry under the State Council:

(1) Project Proposal;
(2) Feasibility Study Report;
(3) Certification or relevant confirmation documents of the qualification of each investor to the joint venture as stipulated by Articles 8, 9 and 10 hereof;
(4) Certification or relevant confirmation documents of other qualifications required for engagement in basic or value-added telecommunications business as stipulated by the Telecommunications Regulations.

The department in charge of information telecommunications industry under the State Council shall review the relevant documents stipulated in the preceding provision as of the date of receiving the same. Reviewing of application for basic telecommunications business shall be finished within 180 days and decision shall be made either or not to grant an approval. Reviewing of application for value-added telecommunications business shall be finished within 90 days and decision shall be made either or not to grant an approval. Where the application is approved, the Written Opinions on Foreign-Invested Telecommunications Business Operation will be issued; where the application is rejected, a written notice will be issued to the applicant with explanations on the reasons for the rejection.

Article 12 Where the major Chinese investor is applying for establishment of a foreign invested telecommunications enterprise to be engaged in basic telecommunications business or value-added telecommunications businesses in more than one province, autonomous region or municipal directly under the central government according to the stipulations of Article 11 hereof, documents other than the feasibility study report may be submitted first depending on the actual situations, and the feasibility study report may be submitted after the department in charge of information industry under the State Council reviews and gives its preliminary approval by written notice; however, the feasibility study report shall not be submitted later than one year after the preliminary approval by written notice after reviewing, and the period between the submission date and the approval date shall not be calculated towards the time limit for approval.

Article 13 For establishment of a foreign invested telecommunications enterprise to be engaged in value-added telecommunications businesses within one province, autonomous region or municipal directly under the central government, the following documents shall be submitted by the major Chinese investor while application is made to the telecommunications administrative department of the province, autonomous region or municipality directly under the central government:

(1) Feasibility Study Report;
(2) Certification or relevant confirmation documents of the qualification as stipulated by Articles 10 hereof;
(3) Certification or relevant confirmation documents of other qualifications required for engagement in basic telecommunications business or value-added telecommunications business as stipulated by the Telecommunications Regulations.

The telecommunications administrative department of the province, autonomous region or municipality directly under the central government shall give their opinion within 60 days of receiving the application. Where the application is approved, the application shall be forwarded to the department in charge of information industry under the State Council; where the application is rejected, a written notice will be issued to the applicant with explanations on the reasons for the rejection.

The department in charge of information telecommunications industry under the State Council shall finish reviewing the application documents 30 days of receiving the same with the written approval by the telecommunications administrative department of the province, autonomous region or municipality directly under the central government, and decision shall be made either or not to grant an approval. Where the application is approved, the Written Opinions on Foreign-Invested Telecommunications Business Operation will be issued; where the application is rejected, a written notice will be issued to the applicant with explanations on the reasons for the rejection.

Article 14 The Project Proposal for the establishment of a foreign invested telecommunications enterprise shall mainly cover: the name and basic information of each party to the joint venture, the proposed investment amount, registered capital, investment ratio of each party, business types applied for and joint venture term and the like.

The Feasibility Study Report for the establishment of a foreign invested telecommunications enterprise shall mainly cover: the basic information of the proposed enterprise, service items, business projection, development plan, analysis of investment results, projected operating hours and the like.

Article 15 Where according to the relevant state stipulations, the investment project shall be subject to approval by the planning department under the State Council or the comprehensive economic administrative department under the State Council for establishment of foreign invested telecommunications enterprise, the department in charge of information industry under the State Council shall forward the application materials to the planning department under the State Council or the comprehensive economic administrative department under the State Council for approval prior to issuing the Written Opinions on Foreign-Invested Telecommunications Business Operation. In the event that the application materials are forwarded the planning department under the State Council or the comprehensive economic administrative department under the State Council for approval, the time limit for approval stipulated in Articles 11 and 13 hereof may be extended for 30 days.

Article 16 For establishment of a foreign invested telecommunications enterprise to be engaged in basic telecommunications business or value-added telecommunications businesses in more than one -province, autonomous region or municipal directly under the central government, the contract and articles of association for the proposed foreign invested telecommunications enterprise shall be submitted by the major Chinese investor to the department in charge of foreign trade and economic under the State Council by virtue of the Written Opinions on Foreign-Invested Telecommunications Business Operation; to be engaged in value-added telecommunications businesses within one -province, autonomous region or municipal directly under the central government, the contract and articles of association for the proposed foreign invested telecommunications enterprise shall be submitted by the major Chinese investor to the department in charge of foreign trade and economic of the province, autonomous region or municipal directly under the central government by virtue of the Written Opinions on Foreign-Invested Telecommunications Business Operation.

The department in charge of information telecommunications industry under the State Council and the province, autonomous region or municipal directly under the central government shall finish reviewing the contract and articles of association of the proposed foreign invested telecommunications enterprises 90 days of receiving the same, and decision shall be made either or not to grant an approval. Where the application is approved, the Approval Certificate for Foreign Investment Enterprises will be issued; where the application is rejected, a written notice will be issued to the applicant with explanations on the reasons for the rejection.

Article 17 The major Chinese investor to the foreign invested telecommunications enterprise will complete the procedures to obtain Operating Permit for Telecommunications business with the department in charge of information telecommunications industry under the State Council by virtue of the Approval Certificate for Foreign Investment Enterprises.

The major Chinese investor to the foreign invested telecommunications enterprise will complete the enterprise registration procedures for foreign invested telecommunications enterprise with the administration of industry and commerce by virtue of the Approval Certificate for Foreign Investment Enterprises and Operating Permit for Telecommunications Business.

Article 18 Cross-border telecommunications business operated by a foreign invested telecommunications enterprise shall be subject to the approval by the department in charge of information telecommunications industry under the State Council conducted through international telecommunications import/export bureau approved to be established by the department in charge of information telecommunications industry under the State Council.

Article 19 With respect to any violation of Article 6 of these Regulations, the department in charge of information telecommunications industry under the State Council shall demand rectification within a certain time limit and impose a fine of RMB100,000 to RMB500,000; in the event that the violation is not rectified within the time limit, the department in charge of information telecommunications industry under the State Council shall have the Operating Permit for Telecommunications Business revoked and the original department in charge of foreign trade and economic issuing the Approval Certificate for Foreign Investment Enterprises shall have the Approval Certificate for Foreign Investment Enterprises revoked.

Article 20 With respect to any violation of Article 18 of these Regulations, the department in charge of information telecommunications industry under the State Council shall demand rectification within a certain time limit and impose a fine of RMB200,000 to RMB1,000,000; in the event that the violation is not rectified within the time limit, the department in charge of information telecommunications industry under the State Council shall have the Operating Permit for Telecommunications Business revoked and the original department in charge of foreign trade and economic issuing the Approval Certificate for Foreign Investment Enterprises shall have the Approval Certificate for Foreign Investment Enterprises revoked.

Article 21 Where approval for establishment of foreign invested telecommunications enterprise is acquired by fraudulent methods of providing false or fake qualification certification or confirmation documents, this approval will be invalid and the department in charge of information telecommunications industry under the State Council shall impose a fine of RMB200,000 to RMB1,000,000; have the Operating Permit for Telecommunications Business revoked and the original department in charge of foreign trade and economic issuing the Approval Certificate for Foreign Investment Enterprises shall have the Approval Certificate for Foreign Investment Enterprises revoked.

Article 22 Where the foreign invested telecommunications enterprise infringe upon the Telecommunications Regulations or other relevant laws and administrative regulations during its operation of telecommunications business, penalties shall be imposed by the relevant authorities.

Article 23 Where the telecommunications enterprise within the territory of China intends to go listed outside China, it shall be subject to examination by the department in charge of information telecommunications industry under the State Council and to approval according to relevant state stipulations.

Article 24 Where companies and enterprises from the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region invest in and operate telecommunications business in majorland China, these Regulations shall apply.

Article 35 These Regulations shall take effect as of January 1, 2002.