China Mobile (Hong Kong) (CHL)

Business Developments

In the first half of 2009, the Group enjoyed continued growth in its customer base, value-added business and voice usage volume, which were the driving forces of the steady growth in operating revenue. In the first half of the year, the net addition of new customers was 35.87 million, taking total customer number to 493 million. In June 2009, customers who used 3G network services reached 959 thousand. Our value-added business grew rapidly, continuing to increase its contribution to total revenue, accounting for 28.1 per cent. of the total revenue. For the six months ended 30 June 2009, the Group’s total voice usage volume reached 1,387.047 billion minutes and the average minutes of usage per user per month (MOU) was 490 minutes. Average revenue per user per month (ARPU) was RMB75.

We attach great importance to the development of the rural market and have implemented a standard integrated marketing program to increase resource utilization, lower the subscription threshold and reduce operational costs. By upgrading and enhancing our rural information platform, we continued to expand the business content of our “Agricultural Information Service”. We also supported the Government’s rural economy development strategy and actively participated in the Household Appliance Purchase Subsidy Program. We promoted the “Link-up Two Cities” roaming package to effectively expand the rural and migrant worker market. Our growing influence in the rural market helped to consolidate our competitive advantage. The rural market continued to contribute significantly to the expanding of our customer base and revenue growth.

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Table of Contents

Business Developments

While 2008 undoubtedly brought significant challenges, it also saw the Group attain achievements in many areas. Business development efforts brought in good prospects and favorable operating results.

The Group enjoyed continued growth in its subscriber base, value-added business and voice usage volume, which in turn became the driving force for operating revenue growth. The net increase in new subscribers per month was over 7.3 million, taking total subscriber number to 457 million. Our value- added business grew strongly, continuing to increase its contribution to total revenue. The gradual changes to the tariff structure drove the increase in voice usage volume, which contributed to the steady growth of our operating revenue. As at 31 December 2008, the Group’s total voice usage volume was 2,441.31 billion minutes and the average minutes of usage per user per month (MOU) was 492 minutes. Average revenue per user per month (ARPU) was RMB83.

In 2008, rural market development remained a focus for the Group. We followed a “lower ARPU, lower MOU, lower cost” strategy, pushed further into the rural market by implementing standard integrated marketing programs, increasing resource utilization, lowering our operating costs and the subscription threshold. We also leveraged our competitive advantages in terms of scale of operation, branding, sales channel and network.

By upgrading and optimizing the rural information platform, we expanded the business content of the “Agricultural Information Service” in alignment with the national policy of aiding the economic development and informatization of rural areas. Leveraging our competitive advantages, we have consolidated our leading position in the rural market. During the year the rural market continued to contribute significantly to the Group’s subscriber base and revenue growth.

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Our value-added business enjoyed rapid growth, its revenue increased 23.8 per cent. year-on-year, and accounted for 27.5 per cent. of the Group’s total operating revenue. SMS, Color Ring, MMS and WAP sustained robust growth. The number of subscribers of Wireless Music, Fetion and Mobile Paper continued to increase and have become a new engine for sustained revenue growth. The Group intends to follow its strategic product plan and continue to enhance product optimization and development, such as mobile video, mobile gaming and mobile e-business products, to ensure a steady stream of new offerings.

The Group also started to develop Mobile Market, a mobile platform on which we will work with our partners, including various applications providers, to offer a wide variety of applications to enhance our value-added business services and customer experience.

As the deployment and improvements to the TD-SCDMA network continue, China Mobile will work hard to develop and promote TD-SCDMA based wireless broadband business.

The Group also explored the corporate customer market. In 2008, further consolidating its “Mobile Information Expert” position, the Group widely promoted corporate informatization and industry- specific applications based on mobile terminals. We actively offered industry specific application solutions to expand the informatization application coverage of major sectors including government, agriculture, education and finance. This, coupled with a focus on service quality, fulfillment of customer requirements, as well as enhancing customer relationships, has led to an increase in corporate customer number, including a progress in multi-provincial and multi-national corporate customers. As of 31 December 2008, the Group’s corporate customer base reached 2.33 million accounts, providing a solid foundation for exploiting the full-service market in the future.

China Mobile is the world’s No. 1 mobile telecommunications operator in terms of subscriber base and enjoys a robust leadership in the 2G market. The existing scale of operations and competitive advantages provide a solid foundation for future development. In 2008, our network capability was continuously enhanced, with a total of 390,000 base stations and a population coverage rate of 98 per cent.. Our network management capability was further improved in 2008 and this has contributed to maintaining a world class network with wireless connection rate remaining at 99.2 per cent.. Our international roaming services have continued to expand. As of 31 December 2008, we offered GSM roaming services through 381 operators in 237 countries and regions and GPRS roaming services in 179 countries and regions around the world.

Business Developments

In the first half of 2008, the Group did its best when it came to dealing with the Sichuan earthquake and subsequent disaster relief. In the meantime, management and business development efforts showed good prospects, and operational results remained robust.

The Group enjoyed continued rapid growth in its subscriber base, value-added business and voice usage volume. The net increase of new subscribers per month topped 7.5 million, taking total subscriber number to 415 million. Our value-added business grew strongly, continuing to increase its contribution to overall revenue. After the gradual changes to the tariff structure and the roaming tariff scheme, our operational revenue sustained steady growth. For the six months ended 30 June 2008, the Group’s total voice usage volume reached 1,160.474 billion minutes and the average minutes of usage (MOU) was 496 minutes. Average revenue per user per month (ARPU) was RMB84.

In the first half of 2008, the Group followed a “lower APRU, lower MOU, lower cost” strategy to target the unique requirements of customers in rural areas. We also lowered the subscription threshold as well as the operation costs, implementing a national sales program with united theme in cities and villages. In addition we also expanded the business content of the “Agricultural Information Service”, further extending our rural market. Leveraging our advantages we have consolidated our leading position in the rural market, which continued to contribute significantly to developing the Group’s subscriber base and growing revenue.

Our value-added business enjoyed strong revenue growth and accounted for 27.0 per cent. of the Group’s total operating revenue.

The mobile music business flourished, with membership of the wireless music club reaching 80.83 million as at 30 June 2008. Our “Mobile Paper” news and information business also developed rapidly, with the number of paying subscribers growing to over 40.24 million. It is clear that the mobile phone is becoming a vibrant form of media, and drive for rapid revenue growth.

Our “Fetion” instant messaging service has captured 111.81 million subscribers and jumped to 3rd place in mainland China’s Instant Messaging market. At the same time, the Group continued to strengthen product development, creating a variety of products such as the 12580 Integrated Information Service, 139 Mailbox, Mobile Games to name just a few to enhance the multi- functionality of the mobile phone. A solid value-added business product development structure is now in place to provide an engine for future business growth.

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The Group has also further explored the corporate customer market. In the first half of 2008, we enhanced our corporate customer development and further improved corporate customer relations to increase customer loyalty.

We also actively promoted industry specific application solutions to increase the informatization application coverage of major industry sectors including agriculture, education and commerce. With the Government’s strong focus on the development of e-commerce and informatization for SMEs, we offered custom-made solutions for different enterprises, and brought mobile informatization into their production and management processes. As of 30 June 2008, our corporate customer base had reached 2.39 million companies and provided a solid foundation for full-service telecommunications market in the future.

We are the world’s No. 1 mobile telecommunications operator in terms of network scale and subscriber base. In the first half of 2008, our network capability was further enhanced through a steady network upgrade as well as further development of centralized network operations and maintenance. We maintained our world class network quality with wireless connection rate remaining at 99.2 per cent.

Our international roaming services have continued to expand. As of 30 June 2008, we offered GSM roaming services through 370 operators in 237 countries and regions and GPRS roaming services in 168 countries and regions around the world.

Business Developments

During 2007, the Group enjoyed continued growth in a number of areas, including new customers, new business and new voice usage. These have, in turn, provided momentum for our financial performance.

Our subscriber base continued to expand and value-added data services were popular among customers, further optimizing our revenue structure. In addition, we successfully promoted informatization and industry specific application solutions to corporate customers.

We have steadily proceeded with tariff adjustments to meet regulatory requirements and market demand. This has enabled the Group to fulfill customer requirements while stimulating voice usage volume. The last year has seen steady growth not only in voice usage volume but also overall revenue.

As at 31 December 2007, the total number of subscribers had reached 369.339 million, with a net increase of 68.107 million subscribers — the average monthly net addition exceeded 5.67 million. Total voice usage volume reached 1,818.89 billion minutes and average minutes of usage per user per month (MOU) was 455 minutes. Average revenue per user per month (ARPU) was maintained at RMB89.

Taking advantages of our strong brand name, premium network, extensive sales and services channel, as well as improved utilization of resources through integrated sales, the Group further developed the rural market in 2007. Leveraging our nation-wide unified information platform, we provide updates on agricultural market information and labor market opportunities, these services have been welcomed by our rural customers. This not only helped to increase customer loyalty, but also promoted informatization in rural areas. The rural market has become an important source of new customers and an engine for revenue growth.

During the last year our value-added business enjoyed strong growth, revenue of which accounted for 25.7 per cent. of the Group’s total operating revenue. “Color Ring”, WAP and MMS businesses continued positive growth and other value added services also grew rapidly. The mobile music business gained great popularity, with the “Wireless Music Club” senior members reaching 35.46 million at the end of 2007. Our Mobile Paper news and information service had 23.55 million paying subscribers and the “Fetion” instant messaging service captured more than 12.81 million active subscribers at the end of 2007. We intend to continue providing innovative value-added services based on carefully defined strategic plan and build a good product development structure and momentum for future growth.

At the same time, we actively developed the corporate customer market, promoting informatization and industry specific application solutions to corporate customers. In 2007, we enhanced our corporate customer operation system, improved our integrated operation capability, expanded our corporate customer base and further enhanced our corporate customer relation. We also extended our product and service area: besides further promoting the Agricultural Information Service, Campus Information

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Service and Police Information Service, we introduced new Financial Information Express and Trade & Business Express. As at the end of 2007, our corporate customer base had reached 2.12 million companies and provided a solid foundation for our future business growth.