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/ China Communications Services Corporation Limited /
Report of the Directors
Property Leasing Framework Agreement
Pursuant to the Property Leasing Framework Agreement, the rental charges of each property of the Company and
China Telecom Group leased by each party from another party are based on market rates. Rental charges are payable
monthly in arrears, except as otherwise agreed by parties, and are subject to review every three years by both
parties confirming after negotiations whether to adjust the rental charges and the amount of such adjustment.
Supplies Procurement Services Framework Agreement
Pursuant to the Supplies Procurement Services Framework Agreement, the comprehensive supplies procurement
services provided by the Company to China Telecom Group included procurement of imported telecommunications
supplies, domestic telecommunications supplies and domestic non-telecommunications supplies, including the
agency services provided by the Company (as an agent of supplies procurement) to China Telecom Group; sales of
telecommunications supplies manufactured by the Company; resale of supplies purchased from independent third
parties; management of biddings, verification of technical specifications, warehousing, transportation and installation
services. Pursuant to the Supplies Procurement Services Framework Agreement, the comprehensive supplies
procurement services provided by China Telecom Group to the Company included sales of telecommunications
supplies manufactured by China Telecom Group; resale of supplies purchased from independent third parties,
including the agency services provided by the China Telecom Group (as an agent of supplies procurement) to the
Company; warehousing, transportation and installation services.
Continuing Connected Transaction Agreement Between the Company and China
Telecom Corporation Limited
Strategic Cooperation Agreement
As disclosed in the Prospectus of the Company, we entered into a Strategic Cooperation Agreement dated 30
August 2006 with China Telecom Corporation Limited, a subsidiary of China Telecom, for a period of three years
commencing 1 January 2007 until 31 December 2009, renewable and extendable in geographical areas by mutual
agreement. The areas for strategic business cooperation between the parties shall include engineering related
services in connection with our design, construction, project supervision and management businesses; maintenance
and management services including but not limited to our network maintenance and facilities management; and
certain business process outsourcing services such as integrated information solutions and call centres; and
provision of applications, content and other services such as system integration and value-added services.
In connection with the acquisition of the Target Business from China Telecom in 2007, the Company entered
into a supplementary agreement to the Strategic Cooperation Agreement (the “2007 Supplementary Strategic
Agreement”) with China Telecom Corporation Limited to extend the geographic scope of cooperation between the
Company and China Telecom Corporation Limited to the 19 provinces (municipalities and autonomous regions) of our
primary service areas immediately following acquisition of the Target Business.
Pursuant to the Strategic Cooperation Agreement (as amended by the 2007 Supplementary Strategic Agreement),
in relation to the Company’s provision of engineering related services in design, construction, project supervision
and management businesses, provided that our terms and conditions for the provision of the engineering related
services are no less favourable than those offered by any independent third parties, China Telecom Corporation
Limited has undertaken that the relevant subsidiaries (and their successors) of China Telecom Corporation Limited
in the 19 provinces (municipalities and autonomous regions) shall spend an annual minimum amount of not less
than 10.6% of the total annual capital expenditure of the relevant wholly-owned provincial subsidiaries (and their
successors) of China Telecom Corporation Limited to purchase such services provided by the Company. In relation
to the Company’s provision of maintenance and management services including but not limited to our network
maintenance and facilities management businesses, provided that our terms and conditions for the provision of the
maintenance and management services are no less favourable than those offered by any independent third parties,
China Telecom Corporation Limited has undertaken that the relevant subsidiaries (and their successors) of China
Telecom Corporation Limited in the 19 provinces (municipalities and autonomous regions) shall spend an annual
minimum amount of not less than RMB1,780 million to purchase such services provided by the Company.