CHINA MOBILE ANNUAL REPORT 2001

ADDRESS FROM CORPORATE HEAD

■As the first year in the century, 2001 is also the first complete year witnessing the independent operations of our group corporation. In the past year, facing the increasingly intensive market competition, under the guidance of the Deng Xiaoping’s Theory and the significant view of “three representatives”, the correct leadership of Central Commission of the Party and State Council, the direct instruction of SOESPO and the Ministry of Information Industry, and effective supervision of the Supervisory Board, pivoted by the strategic target of creating a first-class communication enterprise in the world, the mobile communication enterprises at all levels pushed forward the development with innovation, pushed forward the management with reform, pushed forward the service with management to overcome various difficulties and achieved outstanding success and realized a good beginning of the development of tenth five-year plan.

■As the year of inheriting the past and ushering in the future, the year of 2002 will be of great importance for China Mobile to reach the development targets of tenth five-year plan. Sticking to the guidance of Deng Xiaoping’s Theory, China Mobile will implement the essence of the fifth and sixth plenary meeting and economic work conference of central government, comply with the requirements of “three representatives” and continue to focus on communications development, and base on creating greater value and lay stress on priority of service and business to invent high quality network, offer satisfactory service, deepen the reform of operation mechanism, improve corporate management, promote the core competitive edge further, push forward the sustainable healthy development of China Mobile and lay a solid foundation for becoming a first-class communications operator in the world.

BRIEF OF DEVELOPMENT IN 2001

COMPREHENSIVE STRENGTH

The annual business turnover reached RMB 134.68 billion, which is 17.5% more than that of last year; total profits increased by 42.1%; the assets totaled RMB 327.4 billion; asset-debt rate reduces to 26.1%; productivity rate of whole staff soared up to RMB 1,556,000 and increased by 28.9%; average number of subscribers served by each employee achieved 990; mobile communication service capacity of western area was improved significantly; the career-carving program of monternet was widely accepted by the circle of tele-communication industry, which was joined by 313 service providers. 150 among them have already started the operations with the subscribers totaling over one hundred million, which made us become the leading mobile communications operator of network coverage and subscriber numbers in the world.

Users in past years (10 thousand)

MARKETING SERVICE

The whole year witnessed the addition of 38,020,000 new  subscribers. Our marketing network consisting of 3400 self-run offices and 110,000 sales agencies spreads over the country. Such strategic business as toll package was designed; integrated service catering to the need of industrial subscribers was initiated; MVPN was pioneered; high-value marketing service yielded outstanding results; the off-net rate of high-value subscribers is maintained at low level; Monternet appears a good development tendency; GPRS was put into trial commercial operation with the communication volume reached 25.5GB; short message operations grow fast and annual communication volume based on short message platform amounted to 15.9 billion pieces; 2.5 million analog mobile communication subscribers switched over or quit the net successfully.

INFRASTRUCTURE

RMB 84.86 billion was invested in the fixed assets in the whole year; mobile communication switching network capacity was increased to add over 60 million subscribers and the subscriber number reached one hundred and fifty-nine million; 25000 new base stations were set up and the number of total stations became 77000; 1,459,000 voice channels were added to make the total number reach 4,380,000; the upgrading from basic business net to intelligent net was accomplished; centralization retrofit of support system was finished basically and net management system and tolling system on provincial basic were formed; business operation support system (BOSS) has taken shape; GPRS net covers 237 local mobile nets of all the provinces (region and city) across the country; 260 local transmission nets are set up basically; three international entrance of Beijing, Shanghai and Guangzhou were established and put into operation, which operates 70% of international calls made by subscribers of China Mobile.

NETWORK QUALITY

Network construction was organized over the whole country to solve the problem of the network coverage of such key areas as highway, scenery spots and hotel & restaurants effectively and improve the overall capacity and level of the net. Safety of the network took on a good appearance and network quality proved better than that of last year. In the entire year, average 63.7% of coming long-distance calls were put through and 99.6% for wireless calls. Rate of miss of calls of voice channel claims as low as 0.38%. The mobile communication priority tasks of such significant activities as the 9^th informal conference of leaders of APEC, 21^st World University Sports Meeting and 9^th National Sport Meeting were completed outstandingly.

COOPERATION AND EXCHANGE

Participated in international cooperation actively; joined International Telecom Union and got the memebership of ITU-T and ITU-R to improve the international influence and position further; abode by Telecom Protocol strictly; enhanced management of mutual link and communication and signed multiple internet linking & settlement agreements; provided substantial support to put-into-operation of new nets of competitions from the overall point of view; international rental roaming with US, Japan and South Korea was put-into-operation and international roaming business spread to 152 operation providers of 90 countries and regions.

　　International Roaming Services Reach Five Continents
　　Countries and Regions:90
　　Operators:152

CORPORATE MANAGEMENT

Drafting and improvement of rules and regulations, some of subsidiaries becoming listed and implementation of international management system contributed to the improvement of management level of the group; laid stress on the research of such important subjects as corporate development strategy and adjusted internal organization structure duly to meet the development requirements of the group; polish up financial management system, reinforce the governance of accounting and capital operations, improve the levels of check & calculations and settlements, emphasize on the control of cash flow direction and capital control system has taken shape; promote the management of revenue and cost payment on has basis of unit of provincial subsidiaries; entrust independent professional agencies to carry out half-yearly audit of 18 non-listed subsidiaries; office automation has taken effect and work efficiency got improved; inspection and investigation was made on the subsidiaries not engaged in communication industry to make clear their development directions and management policies; clearing up and consolidation work starts.

HUMAN RESOURCE

Various measures were taken to further human resource reform and enhance the motivation and vitality of corporate development; both the headquaters and provincial subsidiaries strengthened the appraisal of senior and middle management; reform of three systems achieved material progress; position competition were executed actively and staff were employed from the society; valuable trial in affracting high profile employees was conducted; regulation of salary based on performance was drafted and the payment system of salary based on duty was implemented.

SPIRITUAL CIVILIZATION

The essence of Jiang Zemin’s “July-1^st Address” was studies carefully and the paramount view of “three representatives” was implemented consciously; China Mobile organized profoundly the study and education activities of “three persistence” among the leadership and employees and all the provincial subsidiaries carried out special democratic meetings focusing on “three persistence”; stress was laid on fostering of party atmosphere and clean administration by conducting various kinds of warning education activities and reinforcing prevention of corruption from the sources; construction of labor union organization was emphasized and the labor union of China Mobile was set up and the unions at all levels laid stress on the duty fulfilling to push forward the overall progress of the enterprises; one provincial subsidiary was awarded the title of National Labor’s Day Prize” and 37 organizations won the titles of “National Youth Civilization Model”.

STAFF LIFE

Focusing corporate development, the organizations of the Party, Administration, Union and League of Youth organized various activities to further enrich the life of staff.

 MEMORABILIA IN 2001

■On Jan. 19^th, China Mobile signed a framework agreement of cooperation over the country with Beijing Hualian Comprehensive Supermarket Ltd. Of Hualian Group in Beijing.

■On Feb. 20^th, Li Mofang, Chief Engineer on China Mobile, was honored with “GSM Union Outstanding Contribution Prize” in the annual award ceremony of 6^th GSM Conference held in Canne of France.

■Since mid-night of Feb. 21^st, China Mobile made structural adjustment of tolls of original long-distance calls of domestic, international, Hong Kong, Macao and Taiwan in line with relevant instructions of agency at higher level.

■On March 1^st, the Delegation made up of Chongqing Mobile Communications Corporation’s staffs won gold medal of National Telecom Regulation Knowledge Competition.

■Since March 21^st, China Mobile presented “Package Toll” program of “GoTone” mobile phone service after the approval of competent authority.

■On April 20^th, Zhang Chenshuang was appointed as the Vice President of China Mobile.

■From May 28^th to 29^th, 5^th National GSM Annual Conference hosted by China Mobile was held in Beijing.

■On June 10^th, Website of China Mobile was restructured overall.

■On June 30^th, China Mobile terminated international and domestic calls and roaming service of analog mobile phone net subscribers in compliance with instructions of higher authorities.

■On July 1^st, in compliance with instruction of higher authorities China Mobile took off net entrance fee and additional fee of mobile phone.

■On July 9^th, GPRS of China Mobile was put into trial commercial operation.

■On July 10^th, China Mobile was listed in Global 500 Powers by Fortune of US.

■On August 10^th, China Mobile was granted the title “the only one nominated mobile communications operator of 21^st World University Sports Meeting” by the organization committee of 21^st World University Sports Meeting.

■On Sep. 14^th, Guangzhou International Bureau of China Mobile realized successful net interface, which signaled the formal put-into-operation of first international telecom entrance & exit bureau of China Mobile.

■On Nov. 1^st, China Mobile initiated “Overall Net Quality Activity”.

■On Nov. 7^th, 1^st Delegate Conference of Union of China Mobile was held in Beijing and 150 delegates from 31 provincial mobile enterprises over the country were present.

■On Nov. 14^th, China Mobile and China Unicom signed “Mutual Link and Settlement Agreement between Networks of China Mobile and China Unicom”.

■On Nov. 26^th, the one hundred millionth subscriber representative appreared in Beijing, which indicated that China Mobile has grown into the mobile communications operator with No.1 of subscribers in the world.

■On Dec. 21^st, China Mobile announced to support OMA initiated by leading mobile communications operators and terminal manufacturers.

■On Dec. 31^st, China Mobile closed analog mobile net and stopped analog mobile phone service.

DEVELOPMENT TARGETS OF 2002

The primary development targets of China Mobile are:

■Business turnover surpass RMB 148.8 billion.

■Add 30 million lines of capacity of GSM Exchanger and total reaches 190 million lines; actual installation rate of exchange of whole net reaches 75%.

■Increase 33 million new subscriber.

■Average subscriber satisfaction exceeds 60% and strives to reach 75% and international advanced level within 3 years high-level subscriber satisfaction rate reach 75%.

■Average long-distance coming call put-through rate reaches 58% and wireless put-through rate reaches 98.5%; call miss rate of voice channel is lowered than 1%.