China Unicom Hong Kong : Connected Transaction - Proposed Subscription of New Shares by Unicom BVI

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. In particular, this announcement does not constitute and is not an offer to sell or an invitation or a solicitation of any offer to buy or subscribe for any securities in Hong Kong, the United States of America or in any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

This announcement is not for release, publication or distribution, in whole or in part, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

CHINA UNICOM (HONG KONG) LIMITED

中國聯合網絡通信(香港)股份有限公司

(Incorporated in Hong Kong with limited liability)

The Board is pleased to announce that on 22 August 2017 (after trading hours), the Company and Unicom BVI, a controlling shareholder of the Company, entered into the Share Subscription Agreement pursuant to which Unicom BVI agreed to subscribe for a maximum of 6,651,043,262 Subscription Shares (the "Maximum Subscription Shares") at the Subscription Price of HK$13.24 per Subscription Share. The exact number of Subscription Shares to be subscribed by Unicom BVI will be determined upon completion of the non-public issuance of the shares of Unicom A Share Company to various investors, which was announced by Unicom A Share Company on 20 August 2017 (the "Unicom A Share Company Issuance"), by reference to the net subscription price received by Unicom A Share Company from the Unicom A Share Company Issuance. A further announcement will be made by the Company when the exact number of Subscription Shares has been determined.

The Maximum Subscription Shares represent approximately 27.77% of the total issued Shares of the Company as at the date of this announcement and 21.74% of the total issued Shares of the Company as enlarged by the issue of the Subscription Shares.

The Proposed Subscription is conditional upon the fulfilment of the following conditions: (a) the obtaining of the approval of the Independent Shareholders of the Company, (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subscription Shares, (c)

the approval of the Unicom A Share Company Issuance by the shareholders of Unicom A Share Company, (d) the approval of the Unicom A Share Company Issuance by State-owned Assets Supervision and Administration Commission of the State Council of the PRC and China Securities Regulatory Commission, (e) the approval of the transfer of shares in Unicom A Share Company by Unicom Group, details of which were included in the announcement of Unicom A Share Company dated 20 August 2017 (the "Share Transfer"), by State-owned Assets Supervision and Administration Commission of the State Council of the PRC, (f) the completion of the Unicom A Share Company Issuance and the Share Transfer and (g) the completion of the capital increase in Unicom BVI by Unicom A Share Company and Unicom Group for purpose of the Proposed Subscription. None of these conditions can be waived by the Company or Unicom BVI.

The maximum gross proceeds of the Proposed Subscription will be HK$88,059.81 million (equivalent to approximately RMB74,953.87 million) and will be paid to the Company in RMB. The maximum net proceeds of the Proposed Subscription, after deduction of relevant expenses, will be approximately HK$88,056.81 million (equivalent to approximately RMB74,951.32 million), representing a net issue price of approximately HK$13.24 (equivalent to approximately RMB11.27) per Subscription Share.

Assuming the Maximum Subscription Shares are issued, the Company intends to use the proceeds from the Proposed Subscription as follows: (a) approximately HK$46,777.96 million for upgrading the 4G network capabilities of the Company, (b) approximately HK$23,011.85 million for technology validation, enablement and launch of trial programs in relation to the 5G network, (c) approximately HK$2,728.01 million for developing innovative businesses and (iv) approximately HK$15,538.98 million for the repayment of bank loans. The use of proceeds will be proportionately adjusted if less than the Maximum Subscription Shares are issued pursuant to the Proposed Subscription.

The Proposed Subscription is part of the mixed ownership reform plan being implemented by Unicom Group. Through integrated planning on the mixed ownership reform plan, Unicom A Share Company actively introduced strategic investors which are engaged in businesses that are highly correlated with and complementary to the principal businesses of Unicom A Share Company and which reduced the state-owned shareholding in Unicom A Share Company, so as to progress with the mixed ownership reform. Through implementing the mixed ownership reform plan, Unicom A Share Company expects to further optimize its corporate governance in accordance with the market-oriented principles, focus on the development of its principal businesses, establish an innovative business model and further develop innovative businesses, so as to improve and enhance its overall efficiency and competiveness and to achieve its strategic goals.

In addition, following the completion on the Proposed Subscription, the Company's total assets and net assets will increase and its liabilities-to-assets ratio will decrease. Accordingly, the Company will be able to carry out more investment, financing and research and development activities. Upon the projects invested and developed using the proceeds received from the Proposed Subscription generating returns, the Company expects to increase its revenue and profitability, which in turn will contribute to the Company's long-term development.

The Directors (excluding the independent non-executive Directors, whose view will be included in the letter of the Independent Board Committee to be included in the circular to be despatched to the Shareholders) consider that the terms of the Proposed Subscription are fair and reasonable, and in the interests of the Company and the Shareholders as a whole.

As at the date of this announcement, Unicom BVI holds 9,725,000,020 Shares, representing approximately 40.61% equity interest in the Company and therefore is a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the Proposed Subscription constitutes a connected transaction of the Company and is subject to reporting, announcement and independent shareholders' approval requirements under the Listing Rules.

The EGM will be convened to consider and, if thought fit, approve the Share Subscription Agreement and the Proposed Subscription, including the grant of a specific mandate for the allotment and issue of the Subscription Shares.

The Independent Board Committee comprising all the independent non-executive Directors, namely, Cheung Wing Lam Linus, Wong Wai Ming, Chung Shui Ming Timpson and Law Fan Chiu Fun Fanny, has been formed to advise the Independent Shareholders on the terms of the Proposed Subscription. ING Bank N.V., Hong Kong Branch has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the terms of the Proposed Subscription.

A circular containing, among other things, details of the Share Subscription Agreement and the Proposed Subscription, the recommendation of the Independent Board Committee to the Independent Shareholders, the letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders and notice of the EGM, is expected to be despatched to the Shareholders as soon as possible after the publication of this announcement.

1. INTRODUCTION

   The Company refers to the announcements issued by the Company on 10 October 2016, 30 November 2016, 5 April 2017, 24 July 2017, 9 August 2017, 16 August 2017 and 20 August 2017 in relation to the mixed ownership reform plan being implemented by Unicom Group.

   The Board is pleased to announce that on 22 August 2017 (after trading hours), the Company and Unicom BVI entered into the Share Subscription Agreement pursuant to which Unicom BVI agreed to subscribe for the Subscription Shares.

2. THE PROPOSED SUBSCRIPTION
3. The Share Subscription Agreement

The principal terms of the Share Subscription Agreement are set out below:

Date:	22 August 2017
Parties:	(a) The Company (as the issuer); and

(b) Unicom BVI (as the subscriber)
Subscription Shares:	Unicom BVI agreed to subscribe for a maximum of 6,651,043,262 Subscription Shares (the "Maximum Subscription Shares"). The exact number of Subscription Shares to be subscribed by Unicom BVI will be determined upon completion of the Unicom A Share Company Issuance, by reference to the net subscription price received by Unicom A Share Company from the Unicom A Share Company Issuance. The Maximum Subscription Shares represent approximately 27.77% of the total issued Shares of the Company as at the date of this announcement and 21.74% of the total issued Shares of the Company as enlarged by the issue of the Subscription Shares. The Subscription Shares, when allotted and issued pursuant to the Share Subscription Agreement, will rank pari passu in all respects with the then existing Shares. A further announcement will be made by the Company when the exact number of Subscription Shares has been determined.
Subscription Price:	HK$13.24 per Subscription Share, which represents: a premium of approximately 9.97% to the closing price of HK$12.04 per Share as quoted on the Stock Exchange as at the date of the Share Subscription Agreement; a premium of approximately 7.12% to the closing price of HK$12.36 per Share as quoted on the Stock Exchange on the Last Trading Date; a premium of 11.45% to the average closing price of approximately HK$11.88 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day; a premium of approximately 12.11% to the average closing price of approximately HK$11.81 per Share as quoted on the Stock Exchange for the last 10 consecutive trading days up to and including the Last Trading Day; and a premium of approximately 14.04% to the average closing price of HK$11.61 per Share as quoted on the Stock Exchange as quoted on the Stock Exchange for the last 20 consecutive trading days up to and including the Last Trading Day. Assuming the Maximum Subscription Shares are issued, the aggregate Subscription Price will be HK$88,059.81 million (equivalent to approximately RMB74,953.87 million). The parties have agreed that the aggregate Subscription Price will be paid to the Company in RMB at the exchange rate of HK$1.00:RMB0.85117.
Conditions Precedent:	The Proposed Subscription is conditional upon the fulfilment of the following conditions: (a) the approval of the Share Subscription Agreement and the transactions contemplated thereunder, including the grant of a specific mandate for