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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
1
/ China Communications Services Corporation Limited
45 Related parties
(continued)
(a) Transactions with CTC Group
(continued)
In connection with the Restructuring, the Company and CTC entered into a number of agreements
effect ive as at November 16, 2006 to take up the exist ing agreements signed between the
Predecessor Operations and CTC as set out in items (1), (2) and (3) below, together with a new
agreement governing the provision of headquarter management function by the Company as set out in
item (4). After the Company acquired the Target Business in 2007, these agreements were amended
by way of the 2008 Supplemental Agreement, pursuant to which the terms of the Agreements
were renewed to 31 December 2010. On 29 October 2009, the Company entered into the Supplies
Procurement Services Framework Agreement as set out in item (5) below. On 9 November 2010,
these agreements were amended by way of 2010 Supplement Agreement, pursuant to which the
terms of the Agreements were renewed to 31 December 2012. The terms of the principal agreements
impacting the results of operations of the Group are summarised as follows:
(1)
The Group has entered into agreements with CTC pursuant to which the Group provides
CTC Group wi th const ruct ion, design and project supervision and management for
telecommunications infrastructure projects. In addition, the Group has entered into information
technology service agreements with CTC pursuant to which the Group provides CTC Group
with telecommunications network support service, software and hardware development and
other IT related services. The amounts charged for these services are determined by reference
to market rates as reflected in prices obtained through a tender.
(2)
The Group has entered into facilities leasing agreements with CTC pursuant to which the Group
leases certain premises and other facilities to CTC Group, and vice versa. The rental charges are
based on market rate, with reference to amounts stipulated by local price bureau.
(3)
The Group has entered into operation support services agreements for facilities management,
advertising, conferencing, logistics, cultural, educational, hygiene and other community
services with CTC. In addition, the Group has entered into ancillary services agreements
with CTC. The ancillary services provided to CTC Group include repairs and maintenance of
telecommunications equipment and facilities and certain customer services. Pursuant to these
agreements, the Group charges CTC Group, and vice versa, for these services in accordance
with the following terms:
–
government prescribed price;
–
where there is no government prescribed prices but where there is a government
guided price, the government guided price will apply;
–
where there is neither a government prescribed price nor a government guided price,
the market price will apply; and
–
where none of the above is available, the pre is to be agreed between the relevant
parties, which shall be based on the cost incurred in providing the services plus a
reasonable profit margin.
(4)
The Group has entered into agreement with CTC pursuant to which the Group takes up the
role as headquarter management function to manage assets of the telecommunications
support business of provinces, municipalities and autonomous regions (“Centralised Services”)
including Ningxia, Tibet and any assets retained by CTC after the Restructuring and acquisition
of Target Business. The aggregate administrative costs incurred by the Group for the provision
of the centralised services are apportioned pro rata between the Group and CTC Group
according to the net asset ratio of each of the relevant party.