China Communications Services Corporation Limited Annual Report 2015
158
NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
42. RELATED PARTIES
(continued)
(a) Transactions with CTC Group and other related parties
(continued)
In connection with the Restructuring, the Company and CTC entered into a number of agreements effective as at
November 16, 2006 to take up the existing agreements signed between the Predecessor Operations and CTC as set
out in items (i), (ii) and (iii) below, together with a new agreement governing the provision of headquarter
management function by the Company as set out in item (iv). 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 (v) 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. On 14 November 2011, the Company announced to propose the increase of
annual caps for service charges payable to CTC Group under the Supplies Procurement Services Framework
Agreement to RMB2,100 million and RMB2,600 million respectively, for the two years ended 31 December 2011 and
2012. On 20 September 2012, the Company announced to propose the increase of annual caps for the service
charges receivable by the Company from CTC Group and the service charges payable by the Company to CTC Group
under Operation Support Services Framework Agreement for the year ended 31 December 2012 to RMB2,300 million
and to RMB600 million, respectively, and the annual cap for the service charges receivable by the Company from CTC
Group under the Supplies Procurement Services Framework Agreement for the year ended 31 December 2012 to
RMB4,400 million, and signed Supplement Agreements which extended the expiry date of all agreements to 31
December 2015 and increased annual caps of several framework agreements. On 29 September 2015, the Company
announced to propose the increase of annual caps for the service charges receivable by the Company from CTC
Group under Engineering Framework Agreement for the year ended 31 December 2015 to RMB24,000 million, and
the annual cap for the service charges payable by the Company to CTC Group under Operation Support Service
Framework Agreement for the year ended 31 December 2015 to RMB800 million, and signed agreements which
extended the expiry date of all agreements to 31 December 2018 and increased annual caps of several framework
agreements.
According to these Supplement Agreements for the year ended 31 December 2015, (i) the annual cap for the service
charges receivable by the Company from CTC Group under the Engineering Related Services Framework Agreement
was RMB24,000 million; (ii) the annual cap for the service charges receivable by the Company from CTC Group under
the Ancillary Telecommunications Services Framework Agreement was RMB11,000 million; (iii) the annual caps for
the service charges receivable by the Company from CTC Group and the service charges payable by the Company to
CTC Group under the Operation Support Services Framework Agreement were RMB3,000 million and RMB800
million; respectively (iv) the annual caps for the service charges receivable by the Company from CTC Group and the
service charges payable by the Company to CTC Group under the IT Application Services Framework Agreement
were RMB2,300 million and RMB490 million respectively ; (v) the annual cap for the service charges receivable by the
Company from CTC Group under the Centralised Services Framework Agreement was RMB420 million; (vi) the
annual caps for the service charges receivable by the Company from CTC Group and the service charges payable by
the Company to CTC Group under the Property Leasing Services Framework Agreement were RMB166 million and
RMB180 million respectively; (vii) the annual caps for the service charges receivable by the Company from CTC Group
and the service charges payable by the Company to CTC Group under the Supplies Procurement Services Framework
Agreement were RMB5,600 million and RMB4,100 million respectively. The terms of the principal agreements
impacting the results of operations of the Group are summarised as follows:
(i)
The Group has entered into agreements with CTC pursuant to which the Group provides CTC Group with
construction, 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.
