About China Unicom (Hong Kong)

China Unicom (Hong Kong) Limited, an integrated telecommunications operator, provides a wide range of telecommunications services and telecommunications products to its customers worldwide. The company is a subsidiary of China Unicom (BVI) Limited. The company’s telecommunications services include mobile voice, data and value-added, fixed-line voice and value-added, fixed-line broadband, data communications and other telecommunications services. The company, China Mobile (China Mobile Communications Group Co. Ltd.), and China Telecom (China Telecommunications Group Co. Ltd.) are the three major telecommunications operators in the People’s Republic of China (China or PRC). Telecommunications Services The company’s telecommunications services primarily include mobile services and fixed-line services. It charges voice usage and monthly fees for its mobile voice services and fixed-line voice service. The company’s service revenue from other telecommunications services, including mobile non-voice services, fixed-line broadband access services, transmission lines usage and associated services, fixed-line data and Internet application services, and fixed-line other services. Mobile Services The company’s mobile services consist of GSM, 3G, 4G (fourth generation mobile telecommunications) and 5G (fifth generation mobile telecommunications) services. The company focuses on the migration of mobile service from older generations, including GSM and 3G services, to new generations. The company commercially launched its 5G services in October 2019, rolled out the brand ‘5Gn’ to promote the company’s 5G services and has been developing its 5G network, terminals and applications to strengthen the company’s 5G business. The company has been cooperating with China Telecom on jointly building and sharing the 5G networks. The company’s mobile services primarily consist of mobile voice services and mobile non-voice services. Its mobile voice services enable the company’s subscribers to make and receive phone calls, including local calls, domestic long-distance calls, international, Hong Kong, Macau and Taiwan long-distance calls, intra-provincial roaming, inter-provincial roaming and international roaming, with a mobile handset at any point within the coverage area of its mobile telecommunications networks. The company’s mobile non-voice services primarily include mobile data services; mobile data and Internet application services, such as big data and Internet of things (IoT) services; and other mobile services, for example, value-added services, including SMS, mobile reading, mobile music and ‘WO App Store’, and other services. Mobile Billing Subscribers As of December 31, 2020, the company’s total number of mobile billing subscribers included 305.8 million. Mobile billing subscribers are referred generally to subscribers who have revenue contribution in the December of the relevant years. 4G Subscribers As of December 31, 2020, the total number of the company’s 4G subscribers included 270.2 million as of December 31, 2020. 4G subscribers are referred generally to subscribers who possess 4G or 5G handsets, use the company’s 4G or 5G networks. Fixed-Line Services The company is a leading fixed-line broadband and communications operator in northern China. The company offers a wide range of fixed-line services nationwide in China, including fixed-line broadband access services, fixed-line voice services, transmission lines usage and associated services, data and Internet application services, and fixed-line other services. Fixed-Line Broadband Access Services The company provides fixed-line broadband access services in its fixed-line northern service region. The company continued to focus on the integration of its fixed-line broadband services, mobile services and smart hardware products. The company optimized its broadband service packages with high-bandwidth and enriched video content portfolio, rolled out a number of new smart home service offerings, and promoted its high quality gigabit broadband services in selected cities. The company also enhanced its penetration into more household customers by cooperating with Internet companies and other enterprises under its marketing models, such as the 2I2H (to-Internet Company-to-Household) and 2B2H (to-Business-to-Household) models. As of December 31, 2020, the company’s fixed-line broadband subscribers included approximately 86.1 million, of which subscribers with 100Mbps-and-above bandwidth accounted for 87.8% of all fixed-line broadband subscribers. The company’s fixed-line broadband access ARPU (average revenue per subscriber per month) was RMB41.5 in 2020. Fixed-Line Voice Services The company’s fixed-line voice services primarily consist of local voice, domestic long-distance, international long-distance and interconnection services. Along the continuous migration of users from fixed-line voice services to mobile services, the number of its fixed-line local access subscribers was 47.3 million as of December 31, 2020. Transmission Lines Usage and Associated Services The company is a leading provider of data communications services in its fixed-line northern service region. The company offers data products, such as those based on digital data networks (DDN), frame relay, asynchronous transfer mode (ATM), and Internet protocol-virtual private network (IP-VPN). The company also offers transmission line products, including domestic and international leased circuits. The company’s customers for these services include government entities, large financial institutions and other domestic and multinational businesses, Internet service providers and other telecommunications operators. In 2020, the company continued to offer full-scale data communications services to international operators and domestic and international corporate customers. The company has also improved its capabilities to offer cross-border data communications and integrated information services. Fixed-Line Data and Internet Application Services The company offers fixed-line data and Internet application services, such as Internet data center (IDC), cloud computing, information technology services and other services. In 2020, focusing on key areas, such as smart city, digital government and industrial Internet, the company continued to implement its new integrated sales model ‘Cloud + Smart Network + Intelligent Application’ targeting at government and enterprises. Leveraging its cloud computing capabilities, the company has built a ‘6+N+1’ system for innovative businesses, which integrates cloud computing, big data, IoT, AI (artificial intelligence), security and block chain features; and has been widely applied in key areas, such as smart city and digital government. As of December 31, 2020, the company had approximately 561 IDC nationwide; 277,000 racks supporting its IDC services; and 205T IDC bandwidth. Additionally, the resource pool of its ‘WO’ platform consists of 84 public resource pools and 50 private cloud resource pools, with storage capacity of 434PB and Internet capacity of 2,580G. Fixed-Line Other Services The company’s fixed-line other services primarily include fixed-line voice value-added services, installation of fixed-line equipment services, Internet hosting services, telecommunications equipment, and real property leasing services and other services. Sales of Telecommunications Products The company’s sales of telecommunications products primarily comprise sales of mobile handsets, fixed-line terminals and accessories. Interconnection and Roaming Arrangements Interconnection Interconnection refers to the arrangements that permit the connection of the company’s telecommunications networks with other networks. The company’s mobile and fixed-line networks interconnect with Unicom Group’s networks. The company charges interconnection fees for terminating or transiting calls that originate from other domestic telecommunications operators’ networks and pay interconnection fees to other operators for calls originating from its networks that are terminated on their networks. The company earns and pays such fees in respect of mobile calls, local and domestic and international long-distance calls and Internet services. The company is required to pay the interconnection fees regardless of its ability or inability to collect the tariff from its subscribers. All interconnection and settlement arrangements among domestic telecommunications operators in China are governed by the Telecommunications Regulations and the rules on interconnection arrangements and settlement promulgated by the Ministry of Industry and Information Technology (MIIT). Some of the agreements pursuant to which the company interconnects with other domestic operators were entered into by Unicom Group. The company has an agreement with Unicom Group (China United Network Communications Group Company Limited, the company’s indirect controlling shareholder) pursuant to which it has agreed with Unicom Group that the benefits arising under these agreements, as they relate to its operations, will be incurred to its account. Roaming The company provides roaming services, which allow its subscribers to access its mobile services while they are physically outside of their registered service area or in the coverage areas of other mobile networks in other countries and regions with which the company has roaming arrangements. As of March 31, 2021, the company had roaming arrangements for GSM international voice and SMS services with 630 operators in 260 countries and regions; GPRS international inbound data services with 562 operators in 232 countries and regions and for GPRS international outbound data services with 525 operators in 249 countries and regions; 3G services with 497 WCDMA operators in 250 countries and regions; 4G international inbound data services with 333 operators in 163 countries and regions and for 4G international outbound data services with 331 operators in 203 countries and regions; 5G NSA international inbound data services with 33 operators in 18 countries; and 5G NSA international outbound data services with nine operators in 16 countries. Networks The company operates an advanced network system to support its integrated operations. The backbone of the system is a nationwide fiber-optic transmission network, which serves as the common platform for its mobile, fixed-line voice, broadband and data services. The company utilizes a centralized network planning and equipment selection process, which ensures uniform nationwide design and network compatibility. After its merger with China Netcom Group Corporation (Hong Kong) Limited in 2008, the company has actively integrated its network resources to improve its network quality and capacity. The company procures its network equipment and related maintenance and technical support mainly from a number of PRC and overseas telecommunications network equipment manufacturers and suppliers, which include Huawei Technologies, Ericsson, Nokia, and ZTE Corporation, among others. Mobile Networks The company’s mobile network generally consists of base station sites, which are physical locations, each equipped with a base station that houses transmitters, receivers and other equipment used to communicate through radio channels with subscribers’ mobile handsets within the range of a cell; base station controllers, which connect to, and control, the base stations; mobile switching centers, which control the base station controllers and the routing of telephone calls; and a bearer network and a transmission network, which links the mobile switching centers, base station controllers, base stations and the public switched telephone network. The company has deployed GSM, WCDMA, LTE and 5G mobile networks. Its 2G, 3G and 4G mobile network mainly operates at 900 MHz, 1800 MHz and 2100MHz frequency bands for FDD network. The company owns the frequency band of 3500-3600MHz, 1940-1965MHz and 2130-2155MHz for deploying its 5G mobile network. The company focuses on the development of its ‘5G + 4G’ premium network. The company has further expanded the depth and width of its 4G network coverage, optimized its network structure, and facilitated the development of software-defined networking, virtual, cloud-based and smart networks. As of December 31, 2020, the company’s 4G network base stations reached 1.5 million. In the meantime, the company has expanded the scale of the co-building and co-sharing of 4G network with China Telecom. In 2020, the company and China Telecom have added 170,000 co-building and co-sharing 4G network base stations for shared use. Fixed-Line Networks The company operates fixed-line networks, which provide extensive coverage in China. These networks are technologically advanced and conducive to the introduction of the next generation fixed-line network and mobile technologies. These networks support a wide range of end-to-end fixed-line telecommunications services and enable customized products to be delivered to meet a variety of telecommunications needs in ‘real-time’. The company’s fixed-line networks consist of fixed-line telephone networks, broadband Internet and data networks, transmission networks, value-added service platforms, information technology (IT) support systems and related infrastructures. Its transmission networks consist primarily of fiber-optic based networks, which cover its major service regions, supplemented by satellite transmission and digital microwave links. The company has integrated its resources to optimize and improve the transport capabilities of its IP networks and improved its long-distance soft-switch network capability. By the end of 2020, the company had 14 national Internet backbone nodes. By the end of 2020, the number of fixed-line broadband access ports included 225 million. As of December 31, 2020, its international submarine cable resource capacity reached 52.6T, while its international outbound Internet capacity reached 4.12T, and the company’s overseas homebound bandwidth reached 3.3T. Marketing, Sales and Distribution The company provides user-oriented product offerings consisted of a mix of products catering to users with diversifying demands. For example, the company offers ‘Ice-cream Package’ that includes unlimited domestic usage of mobile data and mobile voice under certain prescribed terms to target high-end customers and ‘Tencent King Card’ that targets at heavy data users of Tencent mobile applications by offering unlimited mobile data usage for Tencent mobile applications. The company also offers data promotion or other packages to users of Internet companies under 2I2C model and group service package to the employees of enterprises, governments and other organizations under 2B2C model. The company distributes its services through a variety of distribution channels, consisting of self-owned channels, including proprietary sales outlets and direct sales forces targeting retail and corporate customers; social channels, including cooperative sales outlets and exclusive sales outlets and agency sales outlets; and online channels, including self-owned and third-party channel online e-stores. Strategic Alliances with Telefónica The company has a strategic alliance with Telefónica, S.A., or Telefónica, a Spanish telecommunications company. Telefónica and the company agreed to share business experience and strengthen cooperation in the areas of mobile communications, broadband applications, international business, marketing and sales, and telecommunications services to corporate clients, to strengthen the business of each party and achieve synergies by cooperation. In 2015, the company and Telefónica established a joint venture company, Smart Steps Digital Technology Co., Ltd., or Smart Steps, to engage in big data application services in China. In April 2019, JD Digits Technology Holding Co., Ltd, or JD Digits, made a strategic investment in Smart Steps, upon the completion of which, the company, Telefónica and JD Digits had a shareholding interest of approximately 45.8%, 37.5%, and 16.7% in Smart Steps, respectively. The strategic partnership with Telefónica and JD Digits is expected to integrate the company’s big data resources, technologies and capabilities; and thus contributing to the big data service capabilities of Smart Steps. Strategic Cooperation with China Telecom In January 2016, the company entered into a strategic cooperation agreement with China Telecom in relation to resource-sharing and joint investments. Under the strategic cooperation, the company agreed to share certain telecommunications facilities, such as mobile networks and transmission networks with each other, jointly carry out certain network maintenance services and certain marketing initiatives, as well as seek and explore opportunities in joint investments in innovative and emerging business areas. In September 2019, the company, through its wholly owned subsidiary, China United Network Communications Corporation Limited, entered into a framework agreement with a subsidiary of China Telecom, China Telecom Corporation Limited, in relation to the cooperation on building and sharing of 5G access networks. Trademarks The company conducts its businesses under the Unicom name and logo. Unicom Group is the registered proprietor in China of the ‘Unicom’ trademark in English and the trademark bearing the Unicom logo. Unicom Group is also the registered proprietor of the trademark of the word ‘Unicom’ in Chinese. Unicom Group has granted the company the right to use these trademarks on a royalty-free basis with periodic renewals, and licensed the company any trademark that it registers in China in the future, which incorporates the word Unicom. Competition The company competes with China Mobile and China Telecom. History The company was incorporated under the laws of Hong Kong in 2000 under the Companies Ordinance as a company limited by shares under the name China Unicom Limited. In 2008, the company changed its name to China Unicom (Hong Kong) Limited.