China Netcom completes sale of Asia Netcom

AUGUST 23, 2006 -- Ownership of Asia Netcom has been transferred to an international investor group.

AUGUST 23, 2006 -- China Netcom Group (CNCG) and China Netcom HK (search China Netcom) have completed the sale of their entire 100% ownership of Asia Netcom to an investor group led by Ashmore Investment Management Limited, Spinnaker Capital Limited, and Clearwater Capital Partners.

The total value of the deal is at $402 million. Components of this transaction include $169 million for the international service unit of the company, which is part of CNCG HK's public listing with the NYSE and SEHK, as well as $233 million for the company's pan-Asian submarine cable network.

"Going forward, CNCG has every intention to maintain a strategic business relationship with Asia Netcom, leveraging off the synergies we have built over the past three years," reports Zuo Xunsheng, President of CNCG. "For CNCG, this deal is simply a move towards the restructuring of our international strategy in order to further enhance the value of our state owned assets."

"Since the launch of Asia Netcom in 2003, we have established a strong portfolio of innovative service offerings and the company has grown above industry average at a year-over-year rate of 18%," adds Bill Barney, Asia Netcom's president and CEO. "We thank China Netcom for their strong support over these past few years and we look forward to continuing our strategic business partnership as we strengthen our market presence in China, as well as in key countries throughout Asia Pacific and beyond."

Barney notes that the company's financial and operational metrics continue to strengthen -- a solid reflection of the industry's robust growth and Asia Netcom's strong position in the enterprise and carrier markets as it continues to focus on strengthening its foundation of combining MPLS technology with a comprehensive portfolio of end-to-end communications services and network solutions, he contends.

"The Investor Group views Asian Netcom as a strategic investment and is committed to building the Company into the leader for next-generation communications services and expanding its presence across the Asia Pacific region," asserts Matthew J. Burlage, managing director of IRG Limited, which served as financial advisor to the investor group on this transaction.

Under the new ownership structure, there will be no change to Asia Netcom's operational structure and the current management team will remain in place.

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