China Telecom

Presentation at

CLSA China Forum 2005

Ms. Wu Andi

EVP & CFO of China Telecom

May 18, 2005

Beijing

Forward-Looking Statements

Certain statements contained in this document 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 China Telecom Corporation Limited (the “Company”) to be materially different from any future performance, financial condition or results of operations implied by such 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.

2

Agenda

Overview

1Q2005 Update

Outlook

3

Leading fixed-line operator

2003: 1st AcquisitionAnother 6 Provincial Operations

2002: IPO4 Provincial Operations

2004: 2nd AcquisitionAnother 10 Provincial Operations

Sichuan

GuangxiGuangdong

Anhui

Zhejiang

Jiangsu

Shanghai

JiangxiFujian

Chongqing

Xinjiang

Qinghai

Yunnan

GuizhouHunan

Hubei

Shanxi

Ningxia

Hainan

Gansu

4

Group Structure

China Telecommunications CorporationChina Telecommunications Corporation

China Telecom Corporation Limited (HKSE: 728, NYSE: CHA)

China Telecom Corporation Limited (HKSE: 728, NYSE: CHA)

Other 3 state shareholders

Other 3 state shareholders

Public shareholders

Public shareholders

10.76%17.15%100.0% 72.09%

Operations in northern China and other assets

Operations in northern China and other assets

100.0%

20 Provincial Subsidiaries20 Provincial Subsidiaries

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Services

Contribution to

total revenue*Services Description

Local telephone Local access and telephony 53%

Long distance DLD, IDD

Internet

Data/Leased Line

VAS

DDN, FR, ATM, X.25 …

xDSL, Fttx+LAN, WLAN, Dial-up

Caller-ID, Telephone information service,

System Integration, SMS, Color ring-tone,

IDC, Yellow page

20%

9%

5%

4%

* As of the year 20046

2004 Review

Continuous growth in subscribers, revenue and net profitEBITDA margin sustained at a relatively high level

2003 2004 Growth

-** 0.25* 0.05EPS (RMB)

-** 19,565* 4,111Net Profit (RMB Mil)

2.3PP51.4%49.1%EBITDA Margin

12.7%78,54269,678EBITDA (RMB Mil)

7.7%152,754141,782Operating Revenue (RMB Mil)

91.4%13.847.23Broadband Subs (Mil)

15.9%186.65160.99Access Lines in Service (Mil)

Net profit and EPS for 2004 were arrived at after deducting asset revaluation deficit (RMB1,262 million) and related tax impact arising from across-the-board revaluation which is conducted every 3 years

**

Net profit and EPS for 2003 were arrived at after deducting asset revaluation deficit (RMB14,832 million) and related tax impact arising from 10 newly acquired provincial subsidiaries

*

Unless otherwise stated, all financial data used hereinafter excludes connection feesNotes:

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2004 Review (continued)

Broadband SubsLocal Subs

133.1161.0

186.7

2002 2003 2004

Million

CAGR: +18.4%CAGR: +18.4%

2.4

7.2

13.8

2002 2003 2004

CAGR: +139.6%CAGR: +139.6%

Million

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2004 Review (continued)

EBITDAOperating Revenue

141,782152,754

2003 2004

+7.7%+7.7%

RMB Mil

60,354

69,67878,542

2002 2003 2004

49.1%

51.4%

46.3%

CAGR: +14.1%CAGR: +14.1%

RMB Mil

EBITDA Margin9

Agenda

Overview

1Q2005 Update

Outlook

10

Key Performance Indicator

1Q2005*

195.102Local Subs (Million)

8.454**Net Add of Local Subs (Million)

1.880Net Add of Broadband Subs (Million)

15.719Broadband Subs (Million)

38,920Operating Revenue (Ex-connection fees, RMB million)

* Unaudited figures

** Benefiting from the seasonal strength and the Group’s effective targeted marketing initiatives

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Sustained Top Line Growth

Composition of Local Subs Net Adds Operating Revenue

36,700 38,920

1Q2004 1Q2005

+6.0%+6.0%

RMB Million

23.4%

5.6%

4.0%67.0%

Residential Enterprise Public PHS

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Agenda

Overview

1Q2005 Update

Outlook

13

Opportunities and Challenges

• Demand for diversified and one-stop services

• More choices and increased bargaining power

Increase operating cost of operators

New Technology

Competition

• Increasing mobile substitution

• New VAS operators entering the market

Increase pressure on operations of fixed-line operators

• Sustained and robust economic growth

• Speeding up of national economic informatization

Strong demand for telecommunications services

Economic Environment

Customers

• Rapid emergence of new technologies (like 3G, NGN), new services and new products

•Technology convergence of IT, telecom and media

Dynamic value chain 14

Near Term Development Focus

• Wireline：Leverage bundling andpackaging to boost usage

• Broadband：Expand subscriber base and extend value chain

• VAS：SMS, color ringtone

• Enterprise Subs：Provide total solutions and one-stop services

Product Bundling and Tariff Packaging

Targeted marketing, strengthening sales channel management

Brand Segmentation

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Broadband Development

Household broadband penetration < 8%, indicating huge potential

Leading position maintained with a roughly 90% market share*

Additional Broadband Subs

Million

1.89 1.88

1Q04 1Q05* Source: MII, China Telecom

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Broadband Development (Continued)

ChinaNetChinaNet

Billing& Collection

System

Billing& Collection

SystemDistribution

Channels

Distribution

Channels

VNET platform

PortalPortal Cooperation

Model

Cooperation

Model

IPTVIPTV GamingGaming EducationEducation MessagingMessaging CommunityCommunity

SPsSPs

……Applications

Platforms

Core

network

HouseholdHousehold BusinessBusiness CampusCampus Internet

Cafe

Internet

Cafe ……

National backboneNational backbone MANMAN International reachInternational reach

Access

NetworkADSL Fttx+LAN

Users

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VAS

1,206

746 923

2005.1 2005.2 2005.3

+24%+24%

+31%+31%

Million pieces

PHS SMS Usage

PHS SMSPHS SMS PHS Color Ring-tone

PHS Color Ring-tone

Fixed SMSFixed SMSFixed Color Ring-tone

Fixed Color Ring-tone

VAS pool

…

Caller-IDCaller-ID

…

TelephoneInformationTelephoneInformation

….

TelephoneQQ

TelephoneQQ

….

Yellow PageYellow Page

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Improved Key Account Service

E-Government

Solution

E-Government

Solution

E-Custom

Solution

E-Custom

SolutionBank

Solution

Bank

Solution

Security Firm

Solution

Security Firm

Solution

MNC

Solution

MNC

Solution

Chain Store

Solution

Chain Store

Solution

Tailored SolutionsTailored Solutions

One Stop Service

One Stop Service

Nation wide supporting

system

Nation wide supporting

system

Ubiquitous Customer

Care

Ubiquitous Customer

Care

Cross-region Virtual Work

Teams

Cross-region Virtual Work

Teams

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Precision Management

Persist to improve internal control to reduce risk

Strengthen financial management to control costs and CAPEX effectively

Optimize and upgrade network to support business development

Strengthen branding and sales channel management to enhance competence

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Progressive Strategic Transformation

Wireline Broadband

Network

Fixed Wireless Network

Mobile Network

Consumer Contents and Applications

（Games, VOD, family informatization）

Enterprise Applications and Solutions

（IP VPN、System Integration, IT Outsourcing）

Fixed Telephone

PC

TV Home Appliances

PDA

Mobile Handsets

Extension of value chain

Communication Services (Voice, Data, Media….)

Convergence of multi-networks, multi-terminals & multi-businesses21

THANK YOU

China Telecom Corporation Limited

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