Guideline of Financial Reports for CPA Auditing and Certificating Type I Telecommunications Enterprises (June 21, 2007)

(Unofficial Translation)

1. The Guideline is enacted in accordance with Article 53 of Accounting System and Accounting Processing Principles of Type I Telecommunications Enterprises.
2. A Certified Public Accountant (hereinafter as "CPA")retained to certify the Operator's financial reports should comply with the Guideline in performing the audit. The matters not stipulated in the Guidelines shall be in accordance with the Generally Accepted Auditing Standards (hereinafter as "GAAS"), constituted by the Ministry of Finance and the legal person "Chinese Accounting Research and Development Foundation."
3. The CPA, when auditing financial reports, shall first verify the balances of all financial reports by cross checking them with the general ledgers. After observing, the balances of the general ledgers consistent with the respective account categories or subsidiary ledgers. Then the following audit procedures shall be performed:

(1)The audit of Operator's general financial reports (including Balance Sheet, Income Statement, Statement of Cash Flows, Statement of Change in Stockholder's Equity and note and appendix thereof)shall follow the corresponding Regulations of Auditing Financial Reports of CPA, enacted by the Ministry of Finance.

(2)The audit of separation financial reports (including Business Department Income Statement, Business Net Investment Statement, Business Income Statement, Valuation Statement of Intra-resources Use, Counting Statement of Network Element Unit Cost and Ledger Statement of Communication Facilities in telecommunications department and other business departments)of Operator shall follow the GAAS and undergo the required audit process, and assure the in confirm with the corresponding provisions of the Type I Telecommunication Enterprises, and Procedure Manual approved by the National Communications Commission(hereinafter referred to as the NCC).

4. CPA shall provide separate Independent Auditor's Report on the auditing of the general financial report of Operator and the accounting financial report of Operator. The audit report shall express the opinion about following matters:

(1)Whether or not the general financial report of the Operator properly reflects the financial position, Operation results and cash flows of the Operator.

(2)Whether the Operator require a separate accounting financial report in accordance with the provisions of Accounting System and Accounting Principles of Type I Telecommunication Enterprises and with the Procedure Manual of Telecommunications Accounting Process.

(3)Whether or not the assets, revenues, costs and expenses in the Operator's separate financial reports are disaggregated adequately and fairly represented.

(4)Whether or not the Operator changes in Accounting Procedures or Process are authorized by the NCC.

(5)Whether or not the internal control and internal audit of the Operator comply with the Guidelines of Financial Report of Type I Telecommunications Enterprises.

The format of the aforesaid Audit Reports of Separate Accounting Financial is as appendix 1.

Pursuant to Article 51 of the Guidelines for Accounting Systems and Procedures in Type I Telecommunications Enterprises, the Operator shall prepare the Procedure Manual, after being reviewed by the CPA, file the Manual to the NCC for examination. The format of the CPA's review report is as Appendix 2.

5. In addition to including the items required by GAAS, the audit report shall also include the following:

(1)Scope of audit and the title of the applicable laws in which the financial reports are issued under.

(2)Names of CPA firms and CPA in-charge.

6. The financial reports filed by the Operator to the NCC should be signed or stamped on each page by the Operator chairman, manager and the CPA in-charge of the Operator accordingly.
7. The amount of financial reports shall be based on amount determined by the CPA. Unless regulated by law or otherwise demanded by the Operator, the amount shall be reported to the nearest thousand, with the remaining digits to be rounded off.
8. The qualifications for the CPA in charge of auditing the Operator's financial reports shall meet the qualification stipulated standards set forth in Article 2, Article 4, Article 6, Article 8 and Article 10 of the Guidelines for CPA to Audit the Financial Reports of the Public Company, announced by the Ministry of Finance.
9. In performing an audit of an Operator's financial report, the CPA shall follow the Article 2 to Article 9, Article 11 to Article 15, Article 17 to Article 22, and Article 27 of the Regulations of Audit Financial Reports by CPA.
10. The Guideline shall come into effect upon the date of promulgation.

Appendix 1

Independent Auditor's Report

Xxx.(month)xx(date), xxxx(year)

Ref. (xx)xx No. xxxx

Attention: Board of Directors of Company A

　　This is in respect to Company A's Net Business Investment Statement dated December 31, XX and December 31, XX. In regards to the Income Statement of telecommunications business department and other non-telecommunications business department, the Valuation Statement of Intra-resources Usage, the Counting Statement of Network Element Unit Cost and Ledger Statement of Communication Facilities from January 1 to December 31, xxxx and from January 1 to December 31, yyyy, our CPA's have performed the required audit process, including examinations of accounting records in accordance with GAAS and the Guidelines of Financial Reports for CPA Auditing and Certificating Operator of NCC.

　　In our CPA's opinion, the above-mentioned financial statements are reported in accordance with the Type I Telecommunications Enterprises Accounting System and Accounting Process Standards of MOTC and the Accounting Procedure Manual approved by the NCC in accordance with Ref. (xx)xx No. xx on the date of xx(month)xx(date), xxxx, and the company's assets, revenue, costs and expenses have been separated reasonably and expressed adequately.

　　Company A has reported to the NCC for approval, major changes affecting the above-mentioned financial statements in the Accounting Procedure Manual, up to the date of Dec. 31 xxxx.

CPA's Firm

CPA: (Seal)

Appendix 2

CPA's Review Report of Accounting Procedure Manual of XXXX Telecommunications Ltd.

XXXX Telecommunications Ltd.:

　　Our CPA's have completed reviewing the Accounting Procedure Manual of your company.

　　The above-mentioned Accounting Procedure Manual has been prepared by your company, and our CPA's provide the following opinions in accordance with the result of our review.

　　According to the CPA's review, no violation of the provisions of Accounting Systems and Procedures in Type I Telecommunications Enterprises, related Guidelines and GAAS requires serious amendment or adjustment in the above-mentioned Accounting Procedure Manual. The related Guidelines mentioned above include: "Installation Guidelines of Accounting Subjects in Type I Telecommunications Enterprises ", "Installation Guidelines of Cost Share of Type I Telecommunications Enterprise Operator", "Practice Guidelines of Assets Separation in Type I Telecommunications Enterprises", "Practice Guidelines of 　Capital Cost Counting in Type I Telecommunications Enterprises", " Compilation Guidelines of Financial Report in Type I Telecommunications Enterprises " and "Guidelines of Financial Reports for CPA Auditing and Certificating Type I Telecommunications Enterprises".

　　The procedures listed in the Accounting Procedure Manual are sufficient to adequately separate the assets, revenues, costs and expenses, and can reasonably reflect your company's financial position, operation results and cash flow.

XX United CPA's Firm

                                                                                                                                                                                                            CPA:

xx(month)xx(date), xxxx