China Telecom Corporation Limited
(A joint stock limited company incorporated in the People's Republic of China with limited liability)

On 23 December 2013, China Telecom held its annual work conference for 2014 in Beijing. The themes of this conference included further liberalising the mindsets of all staff, speeding up reform, enlarging co-operation and enhancing efficiency. By promoting "De-telecom", "Market-orientation and Differentiation" and "Three New Roles", the Company would strive for breakthrough in corporate transformation and lay down a strong foundation of new China Telecom.

Mr. Shang Bing, Vice Minister of the Ministry of Industry and Information Technology, attended the conference and made important directional pronouncements. Also attending the meeting was Mr. Gao Fengtao, Chairman of China Telecom Supervisory Committee of State Council. Mr. Wang Xiaochu, Chairman of China Telecom, addressed the participants while Mr. Yang Jie, President of China Telecom presented the work report.

Four key points raised by Mr. Shang Bing

During the conference, Mr. Shang spoke highly of China Telecom's work in 2013. He opined that the Company was able to make a strategic move of "Market-orientation" and "Differentiation" in the wake of a fierce and complicated competitive environment, leveraging dual-leadership in innovation and service to promote dual-enhancement in scale and efficiency. In particular, China Telecom was able to walk its own path in corporate transformation and development, attaining new achievements in customer service, enhancing operating efficiency and building up a good image in its fulfilment of corporate social responsibility.

After a thorough analysis of the current situation, challenges and opportunities of China's information and communications industry, Mr. Shang made four requests for the work in 2014:

1. To intensify corporate reform, building on modern corporate system and enhancing core competitiveness in line with the strategic deployment of the Ministry of Industry and Information Technology.
2. To continuously intensify corporate transformation and speed up basic infrastructure construction and further upgrades, while promoting the integrated development of the fundamental services and new industry applications with a view to fostering a favourable industry ecosystem and fully supporting the social and economic informatisation.
3. To maintain market order and strictly uphold rational competitive behavior, serving customers in first priority with all hearts throughout the whole process and safeguarding consumer rights.
4. To bolster network information security by diligently implementing the telephone customer real name registration system and protecting the privacy of customer personal information while coordinating with relevant authorities to regulate the dissemination of objectionable information over the network to ensure a secure and reliable network environment.

2013 remarkable achievements

During the conference, the Company's work in 2013 was summarised as "enhanced scale expansion and operational efficiency through dual-leadership in innovation and services". The strategic transformation leveraging "De-telecom, Market-orientation and Differentiation" has produced remarkable results.

1. Continued scale development improved competitiveness

During the year, there was a steady expansion in China Telecom's subscriber scale. Up to November, 3G subscribers surpassed 100 million, with a net addition of 24.85 million in mobile subscribers in the period. Wireline broadband subscribers also saw a net addition of 9.31 million. The number of local access lines in services reached 150 million. Overall, China Telecom was able to keep its growth momentum in revenue with increasing market share and further optimised business structure.

2. De-telecom, market-orientation and differentiation drove innovation and vitality

The Company developed new internet initiatives via a joint venture with Netease aiming to build an Internet portal. Turnover of payment business jumped 238 per cent in the period. Also the data traffic from Internet application product centres saw rapid growth. The Company's incubation system was further optimised following the completion of a new incubator centre in Guangzhou. The commencement of operation of the new cloud centre in Inner Mongolia and construction of a new cloud centre in Guizhou contributed to the formation of the "4+2" cloud data centre deployment. The Company's ICT operation covered eight industries with 16 industry application bases. The international operating company achieved the export of the Company's scale network operational capability while the Company's overseas virtual network operation covered 27 countries. Sub-dividing performance evaluation units were also implemented comprehensively during the period.

3. Further enhanced management bolstered overall network efficiency

The Company continued to improve its efficiently-centralised management initiatives in multiple aspects. The IT system supported multi-media customer service, achieving one-point access to whole network services. The Company strengthened risk control and efficacy monitoring in order to mitigate legal risks. China Telecom promoted technology innovation by leading the completion of five projects of International Telecommunication Union standards, establishing the first national key laboratory - mobile internet security national engineering laboratory - in its corporate history.

4. Customer satisfaction enhanced

Customer satisfaction is achieved through tackling junk messages, "three compulsories" (compulsory subscription, compulsory termination and compulsory bundling) and improving broadband service quality. During the year, the Company set up customer service support centre, while launching various Internet service supports, such as "e-Surfing" mobile customer service and "YiChat" customer service, all of which contributed to not just its No.1 status in terms of 3G service satisfaction, but also the enhancement in the passing rate of customer average broadband access speed and customer satisfaction, as well as drop in customer appeal and complaint rates.

5. Fulfilled corporate social responsibility with enhanced social influence

In 2013, China Telecom actively fought against natural disasters such as earthquake, typhoons and flooding, and promptly resumed telecom service in the affected areas. During the year, the Company sent 118,600 person-times for emergency service, rendering 27,500 emergency rides, 1,300 rounds of emergency telecom equipment use and 4.2 billion short messages on charity. The Company provided communication services for a series of important national events and conferences including the launch of Shenzhou 10, National Sports Games, Asian Youth Games, and Euroasia Expo. It also actively implemented network interconnection optimization and sought continued improvement in the quality of transmission over the internet backbone. Efforts were also spent on protecting national and individual information security by perfecting an information security mechanism and tiered management system. The Company adopted energy conservation and emission reduction measures, saving 1.08 billion electricity units. It also engaged in projects for fighting poverty in provinces like Tibet and Xinjiang. China Telecom's ranking in "Fortune Global 500" jumped 39 notches, while it has also been internationally conferred as "Asia's Most Honoured Company" and "Best Managed Company in Asia".

Grasping five tasks in 2014

At the conference, it was noted the national strategy of promoting information consumption will certainly stimulate great demand in all areas of information consumption. In the wake of this new situation, all levels of China Telecom enterprise must hold on the "Three New Roles" strategy and "re-creation of new China Telecom" vision. With this objective in mind, we should raise our sensitivity and energy, grasping the three key areas of "reform and innovation, open co-operation, improvement in quality and efficiency" to change the way of corporate development, enhance the approaches of customer acquisition, enlarge the area for value creation, and continuously improve our four core capabilities in innovation, service, efficiently-centralised management and operation, and hence strengthening our competitiveness.

In 2014, China Telecom would concentrate its efforts in five areas:

1. Change the way to serve customers and expand the scale of fundamental service. The Company should adopt proactive operating strategy, promoting scale development of its fundamental business, speeding up 4G commercialisation, and strengthening 4G, 3G and broadband service integration. In addition, it should focus on customer touch points to raise customer satisfaction, further implementing sub-dividing performance evaluation units while enhancing strategic business unit management and speeding up overseas market development.
2. Expand the scope of information service and step up emerging business development. The Company should improve its data traffic operation, and expedite the construction of intelligent pipeline. In addition, it should speed up the development of Internet applications, industry informatisation applications, cloud computing and big data, and set up a sound alienation system for emerging businesses.
3. Strengthen open co-operation that contributes to the prosperity of the industry ecosystem. Leveraging the accelerating trend of "coopetition", the Company will embark extensively business and investment collaboration in the areas of emerging and fundamental service areas. It will also actively explore establishing hybrid economy units, jointly developing the market to achieve win-win situation, and raising the investment efficiency of state-owned and private-run enterprises.
4. Enhance operation efficiency and effectiveness through continuously deepening precision management in the areas of customer service, network operation management, purchasing, IT support and investment.
5. Boost support and assurances as a way to foster healthy corporate development. The Company will carry out anti-corruption practices and promote integrity, sticking diligently to all sorts of precaution measures, actively fulfilling social responsibility and creating a sound environment for corporate development.

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