China Unicom Hong Kong : Key Financial and Performance Indicators for the First Quarter of 2018

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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)

(Stock Code: 0762)

Key Financial and Performance Indicators for the First Quarter of 2018

In the first quarter of 2018, the Group continued to deepen the Focus Strategy, promote growth, control costs and reform mechanism. Its profitability continued to improve significantly. The key unaudited financial data in the period were as follows:

• - Overall service revenue amounted to RMB 66,609 million, up by 8.4% year-on-year.

• - Mobile service revenue amounted to RMB 41,511 million, up by 11.6% year-on-year.

• - Fixed-line service revenue amounted to RMB 24,617 million, up by 3.4% year-on-year.

• - Revenue from industrial Internet business amounted to RMB 5,876 million, up by 36.0% year-on-year.

• - EBITDA amounted to RMB 23,909 million, up by 14.0% year-on-year.

• - The profit attributable to the equity shareholders of the Company amounted to RMB 3,005 million, up significantly by 248.7% year-on-year.

Going forward, the Group will further implement the policy requirements of the State regarding network speed upgrade and tariff reduction. Meanwhile, the Group will also continue to deepen the strategy of Focus, Innovation and Cooperation, vigorously accelerate Internet-oriented operation, forcefully push ahead in-depth synergetic business cooperation with strategic investors, speed up improvement in innovative capability and deepen system and mechanism reforms to raise vibrancy and efficiency, striving to start a new era for its innovative development.

To enable shareholders, investors and the general public to better appraise the operational performance of the Group, the board of directors (the "Board") of China Unicom (Hong Kong) Limited (the "Company", together with its subsidiaries, the "Group") announces certain selected unaudited key financial and performance indicators of the Group for the first quarter of 2018.

Financial Data (Extracted from financial records prepared in accordance with International Financial Reporting Standards and Hong Kong Financial Reporting Standards)

Unit: RMB millions

For the three months ended 31 March

Note 1: The Group adopted IFRS/HKFRS 15 "Revenue from contracts with customers" and IFRS/HKFRS 9 (2014) "Financial Instruments" from 1 January 2018. For IFRS/HKFRS 15, the Group elected to use the cumulative effect transition method which resulted in an increase of the opening balance of retained profits at 1 January 2018 by approximately RMB1.8 billion. The Group applied IFRS/HKFRS 9 (2014) retrospectively and has taken the advantage not to restate the comparative information for prior periods with respect to the classification and measurement requirements, which resulted in a decrease in the opening balance of retained profits at 1 January 2018 by approximately RMB0.8 billion.

Business Data

In the first quarter of 2018, the Group continued to deepen the Focus Strategy, promote growth, control costs and reform mechanism. Its profitability continued to improve significantly. The Group actively promoted the mobile business model transformation and enhanced the quality of new subscribers through innovating products and marketing models. Using a low cost and subsidy model for expanding subscriber base, the Group achieved accelerated growth in mobile service. In the first quarter of 2018, the Group's mobile billing subscribers registered a net addition of 9.78 million as compared to the end of last year, reaching a total of 294 million. Mobile billing subscriber ARPU was RMB 47.9, up by 2.6% year-on-year. Within that, 4G subscribers registered a net addition of 19.33 million, reaching a total of 194 million. Mobile service revenue amounted to RMB 41,511 million, up by 11.6% year-on-year.

In the first quarter of 2018, the Group actively promoted the scale development of innovative services, striving to offset the decline in fixed-line voice revenue and the competitive pressure on the fixed-line broadband market. Revenue from industrial Internet business amounted to RMB 5,876 million, up by 36.0% year-on-year. Facing intense competition in the broadband market, the Group further optimised product offerings, strengthened operation and services, and stimulated the sales vibrancy of front-line staff to constantly enhance the differentiated competitive advantages of its broadband business, leveraging video offering, integrated products and e-commerce channels. The number of fixed-line broadband subscribers reached 78.06 million, representing a net addition of 1.52 million as compared to the end of last year, but the fixed-line broadband access ARPU decreased year-on-year. Fixed-line service revenue amounted to RMB 24,617 million, up by 3.4% year-on-year. Overall service revenue amounted to RMB 66,609 million, up by 8.4% year-on-year.

In the first quarter of 2018, the Group proactively deepened the reform of incentive systems and strengthened performance-based incentives while at the same time appropriately increasing the compensation for front-line staff to lift vibrancy and drive the mutual growth of corporate and employee returns. Employee benefit expenses increased by 21.2% year-on-year. Due to the substantial reduction in interest-bearing debts, finance costs decreased by 56.1% year-on-year during the period. In the first quarter of 2018, benefitting from the robust service revenue growth and effective costcontrol, EBITDA amounted to RMB 23,909 million, up by 14.0% year-on-year. EBITDA as a percentage of service revenue was 35.9%. The profit attributable to the equity shareholders of the Company amounted to RMB 3,005 million, up significantly by 248.7% year-on-year.

Going forward, the Group will seize firmly the brand new opportunities brought by industry development and mixed-ownership reform, and nurture new DNA, new governance, new operation, new energy and new ecology. The Group will further implement the policy requirements of the State regarding network speed upgrade and tariff reduction. Meanwhile, the Group will also continue to deepen the strategy of Focus, Innovation and Cooperation, vigorously accelerate Internet-oriented operation, forcefully push ahead in-depth synergetic business cooperation with strategic investors, speed up improvement in innovative capability and deepen system and mechanism reforms to raise vibrancy and efficiency, striving to start a new era for its innovative development.

Caution Statement

The Board wishes to remind shareholders of the Company and investors that the above financial and business data are based on the Group's internal records and management accounts and have not been reviewed or audited by the auditors. The Company's shareholders and investors are cautioned not to unduly rely on such data. In the meantime, the Company's shareholders and investors are advised to exercise caution in dealing in the securities of the Company.

By order of the Board China Unicom (Hong Kong) Limited

Yung Shun Loy Jacky Company Secretary

Hong Kong, 20 April 2018

Certain statements contained in this announcement may be viewed as "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E of the U.S. Securities Exchange Act of 1934 (as amended). Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward looking statements. In addition, we do not intend to update these forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company's most recent Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the "SEC") and in the Company's other filings with the SEC.

As at the date of this announcement, the board of directors of the Company comprises: