Hang Lung Group Limited — Proxy Solicitation & Information Statement 2009

Jan 12, 2009

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This document should be read as a whole and in conjunction with the information contained in the Scheme Document dated 6 December, 2008. The Scheme Document is available on PCCW’s website (www.pccw.com) and hard copies are available free of charge for pick up at Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, from Monday to Friday except public holidays. This document, taken together with the Scheme Document, comprises an explanatory statement in accordance with section 166A of the Companies Ordinance. If you are in doubt as to any aspect of this document or as to the action to be taken, you should consult a licensed securities dealer, or other registered institution in securities, a bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold or transferred all your shares in PCCW, you should at once hand this document and the accompanying forms of proxy to the purchaser or the transferee or to the licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this document, 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 document.

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Pacific Century Regional Developments Limited (incorporated in the Republic of Singapore with limited liability) China United Network Communications Company Registration No. 196300381N Group Company Limited (established in the People’s Republic of China) Starvest Limited China Netcom Corporation (BVI) Limited (incorporated in the Cayman Islands (incorporated in the British Virgin Islands with limited liability) with limited liability) PCCW Limited 電訊盈科有限公司

(incorporated in Hong Kong with limited liability) (Stock Code: 0008) REVISED CANCELLATION PRICE OF HK$4.50 PER SCHEME SHARE PROPOSED PRIVATISATION OF PCCW BY THE JOINT OFFERORS BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 166 OF THE COMPANIES ORDINANCE) Financial Adviser to PCCW Financial Adviser to PCRD and Starvest Financial Adviser to Unicom and Netcom BVI

Independent Financial Adviser to the Independent Board Committee of PCCW

A letter from the Board is set out on pages 8 to 26 of this document. A letter from the Independent Board Committee containing its recommendations to Independent Shareholders, ADS Holders and Optionholders in relation to the Improved Proposal is set out on pages 27 to 28 of this document. A letter from Rothschild, the independent financial adviser to the Independent Board Committee, containing its advice to the Independent Board Committee in relation to the Improved Proposal, is set out on pages 29 to 43 of this document.

The action to be taken by the Independent Shareholders, ADS Holders and Optionholders in respect of the Improved Proposal is set out in Appendix II (“Action to be Taken”), on pages 46 to 52 of this document. Notices of the reconvened Court Meeting and the reconvened EGM to be held at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance) on Wednesday, 4 February, 2009 are set out on pages 61 to 65 of this document. Whether or not you are able to attend the reconvened Court Meeting and/or the reconvened EGM or any further adjournment thereof, you are strongly urged to complete and sign the enclosed pink form of proxy in respect of the reconvened Court Meeting and the enclosed white form of proxy in respect of the reconvened EGM, in accordance with the instructions printed on them, and to lodge them with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible but in any event not later than the respective times and dates as stated in Appendix II (“Action to be taken”) on pages 46 to 52 of this document. In the case of the pink form of proxy in respect of the reconvened Court Meeting, it may also be returned by facsimile at number (852) 2962 5926 (marked for the attention of “the Company Secretary”) up to the time of the reconvened Court Meeting or it may be handed to the chairman of the reconvened Court Meeting at the reconvened Court Meeting if it is not so lodged.

If you are an ADS Holder, you are urged to complete and return the Voting Instruction Card to instruct the Depositary, in accordance with the terms of the Deposit Agreement, to vote the Shares underlying your ADSs. Alternatively, you may exchange your ADSs for Shares in accordance with the terms of the Deposit Agreement (for which you will incur cancellation fees, taxes and other charges). If you become a Scheme Shareholder prior to 4:30 p.m. on Friday, 30 January, 2009, you may attend the reconvened Court Meeting and the reconvened EGM and/or complete and return the forms of proxy as described above. Forms of proxy distributed with the Scheme Document which have already been completed and returned by Shareholders will remain valid for the reconvened Court Meeting and the reconvened EGM respectively, unless Shareholders complete and return a new form of proxy for the relevant meeting (new forms of proxy are enclosed with this document) or unless Shareholders attend in person and vote at the reconvened meetings or unless a person who has previously completed and returned a form of proxy has subsequently disposed of the Shares to which the form of proxy relates. Accordingly, any Shareholders who have previously submitted forms of proxy who wish to change their voting instructions for the relevant meeting, or to revoke or revise any proxy appointment, must complete and return a new form of proxy for the relevant meeting (a pink form of proxy for the reconvened Court Meeting or a white form of proxy for the reconvened EGM, as the case may be). Shareholders who wish their existing form(s) of proxy to remain in place need take no action. Voting Instruction Cards made available to ADS Holders with the Scheme Document which have previously been returned to the Depositary are no longer valid. ADS Holders who wish to instruct the Depositary how to vote at the reconvened Court Meeting and the reconvened EGM must send a new completed and signed Voting Instruction Card to the Depositary in accordance with the requirements set out in Appendix II (“Action to be Taken”) on pages 46 to 52 of this document, failing which the Shares underlying such ADSs will not be voted at the reconvened Court Meeting or the reconvened EGM. If you are a Beneficial Owner whose Shares are held by a Registered Owner (such as a nominee, depositary, trustee or authorised custodian), you should contact the Registered Owner and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact the Registered Owner and provide him, her or it with instructions or make arrangements with the Registered Owner in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or reconvened EGM. Such instructions and/or arrangements should be given or made in advance of the latest time for lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM or otherwise in accordance with the instructions of the Registered Owner in order to provide the Registered Owner with sufficient time to accurately complete his, her or its form of proxy and to submit it by the deadline stated in Appendix II (“Action to be Taken”) on pages 46 to 52 of this document, or otherwise to vote at the reconvened meetings. To the extent that any Registered Owner requires instructions from or arrangements to be made with any Beneficial Owner at a particular date or time in advance of the latest time for the lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM, then any such Beneficial Owner should comply with the requirements of the Registered Owner. If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited, you should (unless you are a person admitted to participate in CCASS as an Investor Participant) contact your broker, custodian, nominee or other relevant person who is a CCASS Participant or who has deposited your Shares with a CCASS Participant (your “Intermediary”) and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact your Intermediary and provide your Intermediary with instructions or make arrangements with your Intermediary in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or reconvened EGM. Such instructions and/or arrangements should be given or made in accordance with the requirements of your Intermediary in order to allow your Intermediary sufficient time to ensure that your instructions are given effect. The procedure for voting in respect of the Scheme by CCASS Participants with respect to Shares registered under the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS. The procedure for voting at the reconvened Court Meeting and the reconvened EGM by Beneficial Owners who have been admitted to participate in CCASS as Investor Participants shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS. Beneficial Owners who have been admitted to participate in CCASS as Investor Participants should contact CCASS to check whether any voting instruction submitted before the date of this document remains valid or is void and to provide CCASS with instructions or make arrangements with CCASS in relation to the manner in which such Beneficial Owner’s Shares should be voted at the reconvened Court Meeting and/or reconvened EGM. The Revised Option Offer is made conditional upon the Scheme becoming effective. A purple Revised Option Offer Form is enclosed with this document for Optionholders who wish to accept the Revised Option Offer. Optionholders who wish to accept the Revised Option Offer should send a duly completed Revised Option Offer Form to PCCW in accordance with the requirements set out in Appendix II (“Action to be Taken”) on pages 46 to 52 of this document. Any duly completed yellow Option Offer Forms (which were distributed to Optionholders with the Scheme Document) received by PCCW from Optionholders, together with the required supporting documents, prior to the latest time for lodging Revised Option Offer Forms will, if the Scheme becomes effective, be treated as valid acceptances of the Revised Option Offer in respect of the number of Options specified in the relevant yellow Option Offer Form and will entitle the accepting Optionholder to receive the cash payment payable under the Revised Option Offer in respect of those Options. Unless the context otherwise requires or unless the relevant terms are defined in the Definitions section on pages 1 to 2 of this document, definitions used in the Scheme Document also apply in this document.

In the event of any inconsistency, the English language text of this document shall prevail over the Chinese language text.

12 January, 2009

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
IMPORTANT NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
REVISED EXPECTED TIMETABLE OF PRINCIPAL EVENTS . . . . . . . . . . . . . . . . . . . .	4
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Events to date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
The Improved Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Comparisons of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Amendment Agreement to the Consortium Agreement and
Special Dividend Payable to Post-Scheme Shareholders . . . . . . . . . . . . . . . . . . . . . . . .	14
Advice of Rothschild . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Recommendations of the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . .	15
Modifications to the Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Notice of the reconvened Court Meeting and the reconvened EGM . . . . . . . . . . . . . . . . .	15
Update in relation to the Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Effects of the Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Yue Shun Further Irrevocable Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Registration and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Statement of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Update on Information of the PCCW Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Material Changes in the Financial or Trading Position or
Outlook of the PCCW Group since 31 December, 2007 . . . . . . . . . . . . . . . . . . . . . . . .	26
Material Changes of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Action to be Taken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . .	27
LETTER FROM ROTHSCHILD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
APPENDIX I — MODIFICATIONS TO THE SCHEME . . . . . . . . . . . . . . . . . . . . . . . .	44
APPENDIX II — ACTION TO BE TAKEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	46
APPENDIX III — UPDATED GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . .	53
NOTICE OF THE RECONVENED COURT MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .	61
NOTICE OF THE RECONVENED EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	63

— i —

DEFINITIONS

Unless the context otherwise requires or unless the relevant terms are defined below, definitions used in the Scheme Document also apply in this document, together with the following definitions:

• “Beneficial Owner”

any beneficial owner of Shares whose Shares are registered in the name of a Registered Owner

• “CCASS”

the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

• “CCASS Participant”

• a person admitted by Hong Kong Securities Clearing Company Limited as a participant of CCASS

• “Further Irrevocable Undertaking”

• the further irrevocable undertaking given by Yue Shun to PCCW and Starvest dated 7 January, 2009

• “Improved Proposal”

• the proposal for the privatisation of PCCW by the Joint Offerors by way of the Scheme described in the Scheme Document as amended by the increase of the cancellation price, as described in this document, and including the Revised Option Offer

• “Intermediary”

• has the meaning given on the cover page of this document

• “Investor Participant”

• a person admitted to participate in CCASS as an Investor Participant

• “Latest Practicable Date”

• 9 January, 2009, being the latest practicable date prior to the despatch of this document for ascertaining certain information contained in it, except that the latest practicable date for information relating to the ADSs is 8 January, 2009 (which is the latest practicable date prior to the despatch of this document for ascertaining information contained in it relating to the ADSs)

• “Pre-Adjustment Date”

• 29 December, 2008, being the last day of trading in the Shares on the Stock Exchange prior to the issue of the announcement of the Joint Offerors’ proposal to increase the cancellation price under the Scheme to the Revised Cancellation Price

• “Registered Owner”

• any registered owner of Shares (including without limitation a nominee, trustee, depositary or any other authorised custodian or third party)

• “Revised Cancellation Price”

• a price of HK$4.50 per Scheme Share payable in cash to the Scheme Shareholders pursuant to the Improved Proposal

• “Revised Option Offer”

the Option Offer amended as described in this document

— 1 —

DEFINITIONS

“Revised Option Offer Form” the purple form setting out the terms and conditions of the Revised Option Offer to be completed by the Optionholders for acceptance of the Revised Option Offer

• “Scheme Document” the scheme document dated 6 December, 2008 issued by, among others, PCCW and the Joint Offerors to the Shareholders, the ADS Holders and the Optionholders in relation to the Scheme and the Option Offer

• “Scheme Document Latest 3 December, 2008, being the latest practicable date prior to Practicable Date” the despatch of the Scheme Document for ascertaining certain information contained in it, except that the latest practicable date for information relating to the ADSs was 2 December, 2008 (which was the latest practicable date prior to the despatch of the Scheme Document for ascertaining information contained in it relating to the ADSs)

• “see-through” price in relation to the amount of the cash payment under the Revised Option Offer to cancel outstanding Options that have exercise prices lower than the Revised Cancellation Price, means an amount calculated by deducting the exercise price per Option Share payable on exercise of an Option from the Revised Cancellation Price per Scheme Share

• “Unicom” China United Network Communications Group Company Limited (中國聯合網絡通信集團有限公司) (formerly known as China United Telecommunications Corporation (中國聯合 通信有限公司)), a State-owned enterprise established under the laws of the PRC

Unless the context otherwise requires, references in the Scheme Document to the “Proposal” shall with effect from the date of this document be construed as references to the Improved Proposal.

— 2 —

IMPORTANT NOTICE

NOTICE TO US SHAREHOLDERS

The Improved Proposal is being made for the Shares of PCCW, a company incorporated in Hong Kong, the Shares of which are listed on the Stock Exchange, and is proposed to be implemented by way of a scheme of arrangement under the Companies Ordinance. A transaction effected by means of a scheme of arrangement is neither subject to the proxy solicitation nor the tender offer rules under the United States Securities Exchange Act of 1934, as amended. The Improved Proposal will be subject to requirements, rules and practices in Hong Kong which are different from the requirements of the US proxy solicitation rules and tender offer rules. The financial information included in the Scheme Document and in this document has been prepared in accordance with Hong Kong Financial Reporting Standards and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States. In addition, the settlement procedure with respect to the Improved Proposal will comply with the rules of the Takeovers Code and the Companies Ordinance, which differ from US domestic settlement procedures in certain material respects, particularly with regard to the date of payment of consideration.

It may be difficult for US holders of Scheme Shares (or US holders of ADSs representing Scheme Shares) to enforce their rights and any claim arising out of the US federal securities laws, since the Joint Offerors and PCCW are located in a non-US jurisdiction, some or all of their officers and directors may be residents of non-US jurisdictions, and substantially all of the assets of the Joint Offerors and PCCW, and their respective officers and directors, may be located outside the United States. US holders of Scheme Shares (and US holders of ADSs representing Scheme Shares) may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws. Further, it may be difficult to compel a non-US company and its affiliates, or an officer or director who is not a citizen or resident of the United States, to subject themselves to a US court’s judgment.

Neither the US Securities and Exchange Commission nor any other US federal or state securities commission or regulatory authority has approved or disapproved or passed upon the accuracy or adequacy of this document. Any representation to the contrary is a criminal offence in the United States.

— 3 —

REVISED EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Hong Kong time (unless otherwise stated)

Latest time for receipt by the Depositary of
completed Voting Instruction Cards (as defined below)
from ADS Holders (Notes 1 and 2) . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. (New York time) on
Wednesday, 28 January, 2009
Latest time for lodging transfers of Shares to
qualify for attending and voting at the reconvened
Court Meeting and the reconvened EGM . . . . . . . . . . . . .4:30 p.m. on Friday, 30 January, 2009
Register of members closed for determination of entitlements
of Independent Shareholders to attend and vote
at the reconvened Court Meeting and of Shareholders
to attend and vote at the reconvened EGM . . . . . . . . . . . . . . . . . . .Monday, 2 February, 2009 to
Wednesday, 4 February, 2009
(both days inclusive)
Latest time for lodging forms of proxy in respect of
the reconvened Court Meeting (Note 3) . . . . . . . . . . . . . 2:00 p.m. on Monday, 2 February, 2009
Latest time for lodging forms of proxy in respect of
the reconvened EGM (Note 3) . . . . . . . . . . . . . . . . . . . .2:30 p.m. on Monday, 2 February, 2009
Suspension of dealings in the Shares . . . . . . . . . . . . . . 9:30 a.m. on Wednesday, 4 February, 2009
Reconvened Court Meeting (Note 4) . . . . . . . . . . . . . . 2:00 p.m. on Wednesday, 4 February, 2009
Reconvened EGM (Note 4) . . . . . . . . . . . . . . . . . . . . . 2:30 p.m. on Wednesday, 4 February, 2009
(or as soon thereafter as the reconvened
Court Meeting shall have been
concluded or adjourned)
Announcement of the results of the reconvened
Court Meeting and the reconvened EGM . . . . . . . . . . . . . . . . . . . . . . .no later than 7:00 p.m. on
Wednesday, 4 February, 2009
Resumption of dealings in the Shares . . . . . . . . . . . . . . . 9:30 a.m. on Thursday, 5 February, 2009
Latest time for dealings in the Shares . . . . . . . . . . . . . . . 4:10 p.m. on Monday, 16 February, 2009
High Court hearing of the summons for
directions in respect of the capital reduction (Note 5) . . . . . . . . . . . .Tuesday, 17 February, 2009

— 4 —

REVISED EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Hong Kong time (unless otherwise stated)

Latest time for lodging transfers of Shares to
qualify for entitlements under the Scheme	. . . . . . . . .4:30 p.m. on Thursday, 19 February, 2009
Register of members closed for determination	of
entitlements of the Scheme Shareholders
under the Scheme . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . .Friday, 20 February, 2009 to
	Tuesday, 24 February, 2009
	(both days inclusive)
High Court hearing of the petition to
sanction the Scheme (Note 5) . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .Tuesday, 24 February, 2009
Record Date . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . .Tuesday, 24 February, 2009
Announcement of (i) the result of the High Court
hearing of the petition to sanction the Scheme,
(ii) the Effective Date and (iii) the withdrawal of
the listing of the Shares on the Stock Exchange . . . . . . . . . . . . . . . .no later than 11:00 p.m. on
	Tuesday, 24 February, 2009
Effective Date (Note 6) . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . .Wednesday, 25 February, 2009
Withdrawal of the listing of the Shares on the
Stock Exchange becomes effective . . . . . . . . . . . . . .9:30 a.m. on Wednesday, 25 February, 2009
Cheques for cash entitlements under the Scheme
to be despatched . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . .on or before Saturday, 7 March, 2009
Latest time for lodging Revised Option Offer	Forms
by Optionholders (Note 7) . . . . . . . . . . . . . . . . . . . . . . .4:00 p.m. on Thursday, 12 March, 2009
Cheques for cash entitlements to the Optionholders
to be despatched . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . .on or before Saturday, 21 March, 2009

Notes:

1. Voting instruction cards in respect of ADSs (“Voting Instruction Card(s)”) to be used by ADS Holders should be returned to the Depositary in accordance with the instructions on the Voting Instruction Card as soon as possible and in any event by no later than 10:00 a.m. (New York time) on Wednesday, 28 January, 2009. If an ADS Holder does not return the Voting Instruction Card by this time, the Shares underlying his or her ADSs will not be voted at the reconvened Court Meeting or the reconvened EGM.

— 5 —

REVISED EXPECTED TIMETABLE OF PRINCIPAL EVENTS

VOTING INSTRUCTION CARDS MADE AVAILABLE TO ADS HOLDERS WITH THE SCHEME DOCUMENT WHICH HAVE PREVIOUSLY BEEN RETURNED TO THE DEPOSITARY ARE NO LONGER VALID. ADS HOLDERS WHO WISH TO INSTRUCT THE DEPOSITARY HOW TO VOTE AT THE RECONVENED COURT MEETING AND THE RECONVENED EGM MUST SEND A NEW COMPLETED AND SIGNED VOTING INSTRUCTION CARD TO THE DEPOSITARY IN ACCORDANCE WITH THE REQUIREMENTS SET OUT IN APPENDIX II (“ACTION TO BE TAKEN”) ON PAGES 46 TO 52 OF THIS DOCUMENT, FAILING WHICH THE SHARES UNDERLYING SUCH ADSs WILL NOT BE VOTED AT THE RECONVENED COURT MEETING OR THE RECONVENED EGM.

1. ADS Holders who wish to surrender their ADSs, withdraw the underlying Shares and become registered holders of the underlying Shares should contact their brokers or custodians to make the necessary arrangements or they may contact the Depositary at +1 877-248-4237.

2. Forms of proxy should be lodged, by hand or by post, with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, as soon as possible and in any event no later than the times and dates stated above. In the case of the pink form of proxy in respect of the reconvened Court Meeting, it may also be returned by facsimile at number (852) 2962 5926 (marked for the attention of “the Company Secretary”) up to the time of the reconvened Court Meeting or it may be handed to the chairman of the reconvened Court Meeting at the reconvened Court Meeting if it is not so lodged. In order to be valid, the pink form of proxy for the reconvened Court Meeting and the white form of proxy for the reconvened EGM must be lodged not later than the times and dates stated above. Completion and return of a form of proxy for the reconvened Court Meeting or the reconvened EGM will not preclude the Shareholder from attending the relevant meetings and voting in person. In such event, the returned form of proxy will be deemed to have been revoked.

FORMS OF PROXY DISTRIBUTED WITH THE SCHEME DOCUMENT WHICH HAVE ALREADY BEEN COMPLETED AND RETURNED BY SHAREHOLDERS WILL REMAIN VALID FOR THE RECONVENED COURT MEETING AND THE RECONVENED EGM RESPECTIVELY, UNLESS SHAREHOLDERS COMPLETE AND RETURN A NEW FORM OF PROXY FOR THE RELEVANT MEETING (NEW FORMS OF PROXY ARE ENCLOSED WITH THIS DOCUMENT) OR UNLESS SHAREHOLDERS ATTEND IN PERSON AND VOTE AT THE RECONVENED MEETINGS OR UNLESS A PERSON WHO HAS PREVIOUSLY COMPLETED AND RETURNED A FORM OF PROXY HAS SUBSEQUENTLY DISPOSED OF THE SHARES TO WHICH THE FORM OF PROXY RELATES. ACCORDINGLY, ANY SHAREHOLDERS WHO HAVE PREVIOUSLY SUBMITTED FORMS OF PROXY WHO WISH TO CHANGE THEIR VOTING INSTRUCTIONS FOR THE RELEVANT MEETING, OR TO REVOKE OR REVISE ANY PROXY APPOINTMENT, MUST COMPLETE AND RETURN A NEW FORM OF PROXY FOR THE RELEVANT MEETING (A PINK FORM OF PROXY FOR THE RECONVENED COURT MEETING OR A WHITE FORM OF PROXY FOR THE RECONVENED EGM, AS THE CASE MAY BE). SHAREHOLDERS WHO WISH THEIR EXISTING FORM(S) OF PROXY TO REMAIN IN PLACE DO NOT NEED TO TAKE ANY ACTION.

If you are a Beneficial Owner whose Shares are held by a Registered Owner (such as a nominee, depositary, trustee or authorised custodian), you should contact the Registered Owner and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact the Registered Owner and provide him, her or it with instructions or make arrangements with the Registered Owner in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or reconvened EGM. Such instructions and/or arrangements should be given or made in advance of the latest time for lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM or otherwise in accordance with the instructions of the Registered Owner in order to provide the Registered Owner with sufficient time to accurately complete his, her or its form of proxy and to submit it by the relevant deadline stated in Appendix II (“Action to be Taken”) on pages 46 to 52 of this document, or otherwise to vote at the reconvened meetings. To the extent that any Registered Owner requires instructions from or arrangements to be made with any Beneficial Owner at a particular date or time in advance of the latest time for the lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM, then any such Beneficial Owner should comply with the requirements of the Registered Owner.

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REVISED EXPECTED TIMETABLE OF PRINCIPAL EVENTS

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited, you should (unless you are a person admitted to participate in CCASS as an Investor Participant) contact your Intermediary and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact your Intermediary and provide your Intermediary with instructions or make arrangements with your Intermediary in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or the reconvened EGM. Such instructions and/or arrangements should be given or made in accordance with the requirements of your Intermediary in order to allow your Intermediary sufficient time to ensure that your instructions are given effect. The procedure for voting in respect of the Scheme by CCASS Participants with respect to Shares registered under the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS.

The procedure for voting at the reconvened Court Meeting and the reconvened EGM by Beneficial Owners who have been admitted to participate in CCASS as Investor Participants shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS. Beneficial Owners who have been admitted to participate in CCASS as Investor Participants should contact CCASS to check whether any voting instruction submitted before the date of this document remains valid or is void and to provide CCASS with instructions or make arrangements with CCASS in relation to the manner in which such Beneficial Onwer’s Shares should be voted at the reconvened Court Meeting and/or the reconvened EGM.

1. The reconvened Court Meeting and the reconvened EGM will both be held at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance) on Wednesday, 4 February, 2009 at 2:00 p.m. and 2:30 p.m. (or as soon thereafter as the reconvened Court Meeting shall have been concluded or adjourned), respectively. Please see the notice of the reconvened Court Meeting set out on pages 61 to 62 and the notice of the reconvened EGM set out on pages 63 to 65 of this document for details.

2. The High Court hearings of the summons for directions in respect of the capital reduction and of the petition to sanction the Scheme will be held at the High Court Building, 38 Queensway, Hong Kong.

3. The Scheme shall become effective upon all the Conditions being fulfilled and/or otherwise waived (as the case may be).

4. The Revised Option Offer is made conditional upon the Scheme becoming effective. Revised Option Offer Forms, duly completed in accordance with the instructions on them, must be lodged with PCCW at its registered office, 39th Floor, PCCW Tower, TaiKoo Place, 979 King’s Road, Quarry Bay, Hong Kong marked for the attention of “the Company Secretary”, so as to reach PCCW no later than 4:00 p.m. on Thursday, 12 March, 2009 or such later date and time as may be notified to the Optionholders by the Joint Offerors. Any duly completed yellow Option Offer Forms (which were distributed to Optionholders with the Scheme Document) received by PCCW from Optionholders, together with the required supporting documents, prior to the latest time for lodging the Revised Option Offer Forms will, if the Scheme becomes effective, be treated as valid acceptances of the Revised Option Offer in respect of the number of Options specified in the relevant yellow Option Offer Form and will entitle the accepting Optionholder to receive the cash payment payable under the Revised Option Offer in respect of those Options.

All references to times and dates in this document are references to Hong Kong times and dates, unless otherwise stated.

Shareholders, ADS Holders and Optionholders should note that the above revised expected timetable, which is dependent on all Conditions being fulfilled and/or otherwise waived (as the case may be) and the availability of the dates for the High Court to hear the proceedings for the sanction of the Scheme and directions in respect of the capital reduction, is subject to change. Further announcements will be made in the event of a material change to the revised expected timetable.

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LETTER FROM THE BOARD

==> picture [86 x 41] intentionally omitted <==

PCCW Limited 電訊盈科有限公司

(Incorporated in Hong Kong with limited liability)

(Stock Code: 0008)

Executive Directors: Mr. Li Tzar Kai, Richard (Chairman) Mr. Alexander Anthony Arena (Group Managing Director) Mr. Peter Anthony Allen Mr. Chung Cho Yee, Mico Mr. Lee Chi Hong, Robert

Registered office: 39th Floor, PCCW Tower TaiKoo Place, 979 King’s Road Quarry Bay Hong Kong

Non-Executive Directors: Sir David Ford, KBE, LVO Mr. Lu Yimin Mr. Zuo Xunsheng (Deputy Chairman) Mr. Li Fushen

Independent Non-Executive Directors: Professor Chang Hsin-kang, FREng, GBS, JP Dr. The Hon. Sir David Li Kwok Po, GBM, GBS, OBE, JP Sir Roger Lobo, CBE, LLD, JP Mr. Aman Mehta The Hon. Raymond George Hardenbergh Seitz

12 January, 2009

To the Shareholders, the ADS Holders and the Optionholders

Dear Sir or Madam,

REVISED CANCELLATION PRICE OF HK$4.50 PER SCHEME SHARE PROPOSED PRIVATISATION OF PCCW BY THE JOINT OFFERORS BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 166 OF THE COMPANIES ORDINANCE)

EVENTS TO DATE

The Proposal

On 4 November, 2008, the Joint Offerors, PCCW, PCRD and CNC jointly announced that on 3 November, 2008, the Joint Offerors had requested the Board to put forward the Proposal to the Scheme Shareholders regarding a proposed privatisation of PCCW by way of the Scheme.

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LETTER FROM THE BOARD

The Scheme Document

The Scheme Document in relation to the Scheme was despatched to Shareholders on 6 December, 2008 and includes, among other things:

• (a) a letter from the Board;

• (b) an explanatory statement under Section 166A of the Companies Ordinance explaining the terms and effect of the Scheme and the Option Offer and providing Scheme Shareholders and the Optionholders with other relevant information in relation to the Scheme and the Option Offer;

• (c) a letter of advice from Rothschild, the independent financial adviser appointed to advise the Independent Board Committee with respect to the Proposal;

• (d) a letter from the Independent Board Committee containing its recommendations to the Independent Shareholders and the ADS Holders in respect of the Scheme and its recommendation to the Optionholders in respect of the Option Offer; and

• (e) notices convening the Court Meeting, originally convened to be held at 10:00 a.m. on Tuesday, 30 December, 2008 and the EGM, originally convened to be held at 10:30 a.m. (or as soon thereafter as the Court Meeting shall have been concluded or adjourned) on the same date.

The Improved Proposal

On 30 December, 2008, the Joint Offerors, PCCW, PCRD and CNC jointly announced that the Joint Offerors proposed to increase the price payable by the Joint Offerors under the Scheme for the cancellation and extinguishment of the Scheme Shares, from HK$4.20 to an amount of HK$4.50 in cash for each Scheme Share cancelled under the Scheme. The Joint Offerors have decided to increase the Cancellation Price so as to make the Proposal more attractive to Scheme Shareholders and have requested PCCW to put forward the Improved Proposal to the Scheme Shareholders.

The 30 December, 2008 announcement also explained that, as a result of the proposed increase in the cancellation price under the Scheme, the exercise prices of some outstanding Options would be lower than the Revised Cancellation Price. Accordingly, the Option Offer would be revised, as described under the heading “Revised Option Offer” on page 11 of this document.

Effect of Unicom-CNC Merger

As disclosed on page 62 of the Scheme Document, China United Network Communications Group Company Limited (“Unicom”, formerly known as China United Telecommunications Corporation) and CNC agreed to undertake a merger (“Unicom-CNC Merger”) which became effective on 1 January, 2009 after approval by the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. Unicom, through absorption of CNC, is the successor entity to the Unicom-CNC Merger. As a result of the Unicom-CNC Merger, Unicom has assumed all

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LETTER FROM THE BOARD

the rights and obligations of CNC and all the assets, liabilities and business of CNC have vested in Unicom. Hence, all rights and obligations of CNC, including but not limited to CNC’s rights and obligations under the Consortium Agreement (as amended from time to time), the Proposal (as revised and supplemented from time to time) and the Improved Proposal, have been assumed by Unicom effective on 1 January, 2009 and all references to “CNC” in all documents relating to the Proposal preceding this document shall be construed as references to “Unicom”.

Netcom BVI has become a wholly-owned subsidiary of Unicom.

Adjournment of the Court Meeting and the EGM

The 30 December, 2008 announcement explained that in order for the Improved Proposal to be put forward to the Independent Shareholders in accordance with the Takeovers Code and in order to comply with the Order of the High Court directing that the Court Meeting be convened, it was necessary to adjourn the Court Meeting and the EGM originally convened to be held on 30 December, 2008 to a date which is not less than 21 clear days after the date of posting and deemed delivery of this document. Accordingly, resolutions were duly passed at the Court Meeting and the EGM originally convened to be held on 30 December, 2008, adjourning each meeting to a time, date and place of which notice would be given by PCCW, being a date not less than 21 clear days after the date of posting and deemed delivery of this document.

On 12 January, 2009, the Joint Offerors, PCCW, PCRD and Unicom jointly announced that the Court Meeting would be reconvened at 2:00 p.m. on Wednesday, 4 February, 2009 and that the EGM would be reconvened at 2:30 p.m. (or as soon thereafter as the reconvened Court Meeting shall have been concluded or adjourned) on the same date.

No Increase Statement

The Joint Offerors also stated in the 30 December, 2008 announcement that they would not further increase the Revised Cancellation Price and that Shareholders, holders of other securities and/or potential investors should be aware that, as a result of Rule 18.3 of the Takeovers Code, following the making of that statement the Joint Offerors will not be allowed to increase the Revised Cancellation Price (save in wholly exceptional circumstances).

THE IMPROVED PROPOSAL

Revised Cancellation Price

Under the terms of the Improved Proposal, Scheme Shares will be cancelled in exchange for the payment to each Scheme Shareholder of:

for each Scheme Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$4.50 in cash

ADSs

Consequently, if the Improved Proposal becomes effective, the Shares underlying each ADS will be cancelled on the Effective Date and the ADS Holders will receive the US$ equivalent (at the then prevailing market rate of exchange) of HK$45.00 per ADS (10:1 ratio) from the Depositary (less any fees and expenses of the Depositary in connection with the currency conversion and cancellation of the ADSs).

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LETTER FROM THE BOARD

Revised Option Offer

The Revised Cancellation Price now exceeds the exercise prices of some of the Options. Accordingly, in relation to those Options in respect of which the exercise price per Option Share is lower than the Revised Cancellation Price, the amount of the cash payment to Optionholders accepting the Revised Option Offer will be calculated by deducting the exercise price per underlying Option Share payable on exercise of the relevant Option from the Revised Cancellation Price, of HK$4.50, per Scheme Share payable under the Scheme in accordance with the Improved Proposal (i.e. the “see-through” price). In relation to those Options in respect of which the exercise price per underlying Option Share is equal to or exceeds the Revised Cancellation Price, the cash payment under the Revised Option Offer for the cancellation of those Options will continue to be the nominal amount of HK$0.01 for each 10,000 underlying Option Shares in respect of which an Option has been granted, as stated in the Scheme Document. The Revised Option Offer is made conditional upon the Scheme becoming effective.

The attention of Optionholders is drawn to Appendix II (“Action to be Taken”) on pages 46 to 52 of this document which explains the action which Optionholders should take in respect of the Revised Option Offer.

Revised Expected Timetable

The revised expected timetable for the implementation of the Improved Proposal is set out on pages 4 to 7 of this document.

No other Changes

Except as stated above in relation to the Revised Cancellation Price, the consequential changes in relation to the ADSs and the Option Offer and the revised expected timetable, all other terms of the Proposal as set out in the Scheme Document remain unchanged and constitute the terms of the Improved Proposal.

COMPARISONS OF VALUE

The Revised Cancellation Price represents:

• a premium of approximately 20.97% over the closing price of HK$3.72 per Share as quoted on the Stock Exchange on the Latest Practicable Date;

• a premium of approximately 25.35% over the average closing price of about HK$3.59 per Share based on the daily closing prices as quoted on the Stock Exchange over the 5 trading days up to and including the Latest Practicable Date;

• a premium of approximately 27.12% over the average closing price of about HK$3.54 per Share based on the daily closing prices as quoted on the Stock Exchange over the 30 trading days up to and including the Latest Practicable Date;

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LETTER FROM THE BOARD

• a premium of approximately 2.27% over the average closing price of about HK$4.40 per Share based on the daily closing prices as quoted on the Stock Exchange over the 180 trading days up to and including the Latest Practicable Date;

• a premium of approximately 30.43% over the closing price of HK$3.45 per Share as quoted on the Stock Exchange on the Pre-Adjustment Date;

• a premium of approximately 34.73% over the average closing price of about HK$3.34 per Share based on the daily closing prices as quoted on the Stock Exchange over the 5 trading days up to and including the Pre-Adjustment Date;

• a premium of approximately 27.84% over the average closing price of about HK$3.52 per Share based on the daily closing prices as quoted on the Stock Exchange over the 30 trading days up to and including the Pre-Adjustment Date;

• a premium of approximately 1.12% over the average closing price of about HK$4.45 per Share based on the daily closing prices as quoted on the Stock Exchange over the 180 trading days up to and including the Pre-Adjustment Date;

• a premium of approximately 63.64% over the closing price of HK$2.75 per Share as quoted on the Stock Exchange on the Last Trading Date;

• a premium of approximately 57.34% over the average closing price of about HK$2.86 per Share based on the daily closing prices as quoted on the Stock Exchange over the 5 trading days up to and including the Last Trading Date;

• a premium of approximately 14.50% over the average closing price of about HK$3.93 per Share based on the daily closing prices as quoted on the Stock Exchange over the 30 trading days up to and including the Last Trading Date;

• a discount of approximately 3.02% to the average closing price of about HK$4.64 per Share based on the daily closing prices as quoted on the Stock Exchange over the 180 trading days up to and including the Last Trading Date;

• a premium of approximately 1,856.52% to the audited consolidated net asset value attributable to Shareholders per Share of about HK$0.23 as at 31 December, 2007; and

• a premium of approximately 1,566.67% to the unaudited consolidated net asset value attributable to Shareholders per Share of about HK$0.27 as at 30 June, 2008.

Number of Shares in issue and Options outstanding

As at the Latest Practicable Date, there were 6,772,294,654 Shares in issue and the Scheme Shareholders were interested in 3,540,779,586 Shares (representing approximately 52.28% of the issued share capital of PCCW as at the Latest Practicable Date). As at the Latest Practicable Date, 2,232,687 ADSs were outstanding.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, there were Options to subscribe an aggregate of 89,837,372 Option Shares outstanding and having exercise prices under the Revised Cancellation Price and Options to subscribe an aggregate of 48,114,638 Option Shares outstanding and having exercise prices which are equal to or above the Revised Cancellation Price.

At the Revised Cancellation Price, the Improved Proposal values the entire issued share capital of PCCW, as at the Latest Practicable Date, at approximately HK$30,475 million. The amount payable for the 22,326,870 underlying Shares represented by the 2,232,687 outstanding ADSs as at the Latest Practicable Date is approximately HK$100 million.

Total Consideration

Starvest will pay 74.27% and Netcom BVI will pay 25.73% of the cash consideration payable under the Improved Proposal.

Assuming none of the Options are exercised before the Effective Date and that there are no other changes to the shareholding structure of PCCW, the amount of cash consideration required to effect the Scheme on the basis of the Revised Cancellation Price would be increased from approximately HK$14,871 million to approximately HK$15,934 million, of which approximately HK$11,834 million would be paid by Starvest and approximately HK$4,100 million would be paid by Netcom BVI and the cash consideration payable under the Revised Option Offer to cancel all the Options would be approximately HK$8.68 million (of which approximately HK$6.45 million would be paid by Starvest and approximately HK$2.23 million would be paid by Netcom BVI).

Assuming all the Options are exercised before the Effective Date and that there are no other changes to the shareholding structure of PCCW, the amount of cash consideration required to effect the Scheme on the basis of the Revised Cancellation Price would be increased from approximately HK$15,452 million to approximately HK$16,554 million, of which approximately HK$12,295 million would be paid by Starvest and approximately HK$4,259 million would be paid by Netcom BVI.

On the basis of the Revised Cancellation Price, the table below illustrates the change in capital value for the Scheme Shareholders, assuming that the Scheme is implemented:

		On the	On the Latest
	On the Last	Pre-Adjustment	Practicable
	Trading Date	Date	Date
	HK$	HK$	HK$
Consideration receivable (per 1,000
Shares) under the Scheme	4,500	4,500	4,500
Value of 1,000 Shares (Note)	2,750	3,450	3,720
This represents an increase of
approximately	63.64%	30.43%	20.97%

Note: Based on the closing price of the Shares as quoted on the Stock Exchange on the respective dates.

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LETTER FROM THE BOARD

Confirmation of Financial Resources

HSBC, as financial adviser to PCRD and Starvest, is satisfied that sufficient financial resources are available to Starvest for the payment of its 74.27% proportion of the cash consideration payable under the Improved Proposal. RBS, as financial adviser to Unicom and Netcom BVI, is satisfied that sufficient financial resources are available to Netcom BVI for the payment of its 25.73% proportion of the cash consideration payable under the Improved Proposal.

Starvest has entered into the Starvest Facility Agreement with HSBC to fund the payment of Starvest’s proportion of the cash consideration payable under the Improved Proposal. That loan facility will be used by Starvest for payment of the cash consideration payable to Scheme Shareholders and Optionholders pursuant to its obligations under the Improved Proposal and the costs and expenses incurred in connection therewith. It is intended that Starvest will use the dividends to be distributed by PCCW to Starvest and the Excluded Group after the Scheme becomes effective to pay (or prepay before their maturity) the amounts outstanding under that loan facility.

Netcom BVI will fund the payment of its proportion of the cash consideration under the Improved Proposal by using funds drawn down under the Netcom Facility and its internal cash resources. Netcom BVI has drawn down under the Netcom Facility and the funds drawn down, together with funds from Netcom BVI’s internal cash resources, have been transferred to and deposited in the RBS Account. The funds in the RBS Account will be used to fund the payment of Netcom BVI’s proportion of the cash consideration payable under the Improved Proposal.

AMENDMENT AGREEMENT TO THE CONSORTIUM AGREEMENT AND SPECIAL DIVIDEND PAYABLE TO POST-SCHEME SHAREHOLDERS

The parties to the Consortium Agreement have entered into an amendment agreement dated 30 December, 2008 to amend certain provisions of the Consortium Agreement in order to give effect to, inter alia , the increase in the Cancellation Price. Each of PCGH, PCD and Eisner confirmed to Unicom and Netcom BVI on 30 December, 2008 that the undertakings given by it in respect of the Consortium Agreement shall apply to the Consortium Agreement as amended by the amendment agreement dated 30 December, 2008.

As described in the Scheme Document, under the Consortium Agreement, PCRD, Starvest, Unicom and Netcom BVI have agreed to procure that PCCW will, within 20 days after the Effective Date, declare a special dividend in cash to the Post-Scheme Shareholders. On the basis of the Revised Cancellation Price, the amount of the special dividend will be not less than HK$18,134 million (if no Options are exercised between the Latest Practicable Date and the Effective Date and no Options have been cancelled using the “see-through” price) and not more than HK$18,783 million (if all Options (including those “out of the money” with an exercise price per Option Share above the Revised Cancellation Price) are exercised between the Latest Practicable Date and the Effective Date). As at the Latest Practicable Date there were Options outstanding in respect of an aggregate of 48,114,638 Option Shares having exercise prices which are equal to or above the Revised Cancellation Price. If exercised in full, those Options would have an aggregate value of HK$216,515,871 at the Revised Cancellation Price.

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LETTER FROM THE BOARD

An amount of not more than approximately HK$5,486 million of the special dividend will be deferred by PCCW for such period as PCCW may determine (but in any event, not more than 12 months after the date on which the dividend is declared or, if earlier, the date on which the finance parties under the Starvest Facility Agreement are entitled, upon the occurrence of certain events, to exercise certain rights under the Starvest Facility Agreement) and PCCW will pay interest on such deferred sums at a rate of LIBOR plus 1.5% per annum.

ADVICE OF ROTHSCHILD

A letter from Rothschild is set out on pages 29 to 43 of this document, containing Rothschild’s advice and recommendations in relation to the Improved Proposal and the Revised Option Offer. That letter supplements Rothschild’s advice and recommendations to the Independent Board Committee in relation to the Proposal and the Option Offer as set out in the letter from Rothschild contained in the Scheme Document, and should be read in conjunction with the letter from Rothschild contained in the Scheme Document. Shareholders, ADS Holders and Optionholders are advised to carefully consider the contents of the advice contained in Rothschild’s letter, set out on pages 29 to 43 of this document, in relation to the Improved Proposal and the Revised Option Offer.

RECOMMENDATIONS OF THE INDEPENDENT BOARD COMMITTEE

A letter from the Independent Board Committee is set out on pages 27 to 28 of this document, containing its recommendations in relation to the Scheme and the Improved Proposal. Shareholders, ADS Holders and Optionholders are advised to carefully consider the contents of the “Letter from the Independent Board Committee” in relation to the Improved Proposal and the Scheme.

MODIFICATIONS TO THE SCHEME

The Joint Offerors and PCCW have jointly consented, subject to the approval of the High Court, to revise the Cancellation Price as stated in the Scheme from the original price of HK$4.20 in cash for each Scheme Share held to the increased price of HK$4.50 in cash for each Scheme Share held. In that regard, it is proposed that certain conformatory modifications be made to the Scheme. The formal proposed modifications to the Scheme are set out in Appendix I of this document. Other than this, there have been no other changes to the Scheme, which in all other respects remains as set out in the Scheme Document.

NOTICE OF THE RECONVENED COURT MEETING AND THE RECONVENED EGM

The Court Meeting has been convened for the purpose of considering and, if thought fit, passing an appropriate resolution to approve the Scheme, modified as described in this document and with or without any further modifications.

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LETTER FROM THE BOARD

The Court Meeting originally convened to be held on Tuesday, 30 December, 2008 was adjourned. The adjourned Court Meeting will reconvene and be held at 2:00 p.m. on Wednesday, 4 February, 2009 at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance). Notice of the reconvened Court Meeting is set out on pages 61 to 62 of this document.

Insofar as the sanction of the Scheme by the High Court is concerned, the resolution to approve the Scheme will be passed if a majority in number representing not less than three-fourths in value of the Scheme Shares held by the Scheme Shareholders present and voting either in person or by proxy at the Court Meeting vote in favour of the Scheme. However, the Scheme will only be considered to have been approved under the Takeovers Code: if (i) the Scheme is approved by at least 75% of the votes attaching to the Scheme Shares of the Independent Shareholders that are cast either in person or by proxy at the Court Meeting; and (ii) the number of votes cast against the resolution at the Court Meeting is not more than 10% of all the Scheme Shares held by all of the Independent Shareholders. Based on 3,473,432,507 Scheme Shares held by the Independent Shareholders as at the Latest Practicable Date, 10% of such Shares amounts to approximately 347,343,251 Shares.

As at the Latest Practicable Date, the Scheme Shareholders were interested in 3,540,779,586 Shares (representing approximately 52.28% of the issued share capital of PCCW as at the Latest Practicable Date), and the Joint Offerors and the Excluded Group were interested in 3,231,515,068 Shares (representing approximately 47.72% of the issued share capital of PCCW as at the Latest Practicable Date). The Shares owned by the Joint Offerors and the Excluded Group will not form part of the Scheme Shares and, as such, will not be voted at the Court Meeting. Further, only Independent Shareholders may vote at the Court Meeting. In view of the interests of the Joint Offerors in the Improved Proposal, any holders of Scheme Shares who are acting in concert with the Joint Offerors are not entitled to and will not vote at the Court Meeting. Accordingly, any Scheme Shares held by the Starvest Concert Parties, the Excluded Group, the Joint Offerors and any other persons acting in concert with any of the Joint Offerors will not be voted at the Court Meeting.

The EGM has been convened for the purpose of considering and, if thought fit, passing a special resolution to approve and give effect to the Scheme, including the reduction of share capital resulting from the cancellation of the Scheme Shares, the application of the reserve thereby created to pay up in full such number of New Shares as is equal to the number of Scheme Shares cancelled, the issue of those New Shares credited as fully paid to Starvest and Netcom BVI (and/or Unicom) and the making of an application to the Stock Exchange for the withdrawal of the listing of the Shares on the Stock Exchange, subject to the Scheme taking effect.

The EGM originally convened to be held on Tuesday, 30 December, 2008 was adjourned. The adjourned EGM will reconvene at 2:30 p.m. (or as soon thereafter as the reconvened Court Meeting shall have been concluded or adjourned) on Wednesday, 4 February, 2009 at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance). Notice of the reconvened EGM is set out on pages 63 to 65 of this document.

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LETTER FROM THE BOARD

The special resolution to be proposed at the reconvened EGM will be passed provided that it is approved by a majority of not less than three-fourths of the votes cast by the Shareholders present and voting, in person or by proxy, at the reconvened EGM. All Shareholders will be entitled to attend and vote at the reconvened EGM.

Your attention is drawn to Appendix II (“Action to be Taken”) of this document which explains the action which Shareholders, Beneficial Owners and ADS Holders should take in respect of the reconvened Court Meeting and the reconvened EGM and the Improved Proposal.

UPDATE IN RELATION TO THE CONDITIONS

The Improved Proposal remains conditional upon the fulfillment or waiver, as applicable, of all the Conditions described in the Scheme Document. All Conditions will have to be fulfilled or waived, as applicable, on or before 23 April, 2009 (or such later date as the Joint Offerors and PCCW may agree and the High Court may allow), otherwise the Improved Proposal will lapse.

The Conditions are set out in full in the Scheme Document, on pages 44 to 49 of the Scheme Document, in the section headed “Conditions of the Proposal”, which forms part of the Explanatory Statement. The descriptions of the Conditions discussed below are only summaries and reference should be made to the Scheme Document for the complete text of the Conditions.

Condition (a) is the approval of the Scheme by the requisite majority of Independent Shareholders at the Court Meeting, as described in the section above headed “Notice of the Reconvened Court Meeting and the Reconvened EGM”. Condition (b) is the passing of the special resolution at the reconvened EGM by the requisite majority of Shareholders described above in the same section. Condition (c) is the High Court’s sanction of the Scheme and the confirmation by the High Court of the reduction of the issued share capital of PCCW involved in the Scheme, while Condition (d) is compliance with the procedural requirements of sections 166 and 61 of the Companies Ordinance in relation to the Scheme and the reduction of the issued share capital of PCCW, respectively. Accordingly, the fulfillment of Conditions (a) to (d) is dependent on the outcome of voting by Shareholders in respect of the resolutions to be proposed at the reconvened Court Meeting and the reconvened EGM.

Condition (e) is that the shareholders of PCRD approve, at an extraordinary general meeting of such shareholders convened for the purpose, such resolutions as may be necessary to implement the Proposal. An extraordinary general meeting of PCRD was held on 29 December, 2008 at which the shareholders of PCRD approved, by ordinary resolution, the Proposal on the terms and subject to the conditions set out in the Scheme Document. A further extraordinary general meeting of PCRD will need to be convened to consider and approve, by ordinary resolution, the Improved Proposal. If the Improved Proposal is not approved by the shareholders of PCRD at the further extraordinary general meeting of PCRD (or at any adjournment of that meeting), the Scheme will lapse. The Singapore Exchange has confirmed that each of Borsington, Anglang and PCG Cayman can vote their PCRD Shares at the extraordinary general meeting of PCRD to be convened to consider and approve, by ordinary resolution, the Improved Proposal, and PCGH has confirmed to PCRD that each of Borsington, Anglang and PCG Cayman will vote their PCRD Shares in favour of such ordinary resolution. Hopestar will abstain from voting its PCRD Shares at the extraordinary general meeting of PCRD to be held as aforesaid.

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LETTER FROM THE BOARD

Condition (f) is the Singapore Exchange’s approval of the Scheme (with or without modifications) having been obtained where necessary and such approval not having been withdrawn or revoked as at the Effective Date. The Singapore Exchange has given its approval of the Scheme based on the Cancellation Price of HK$4.20 per Scheme Share. PCRD will apply to the Singapore Exchange to seek its approval of the Scheme based on the Revised Cancellation Price of HK$4.50 per Scheme Share.

Condition (g) is the approval of the Proposal by the Relevant Authorities in the PRC having been obtained by Unicom and/or Netcom BVI. The approval process is ongoing and the approvals required for the Improved Proposal are currently expected to be obtained by 23 February, 2009.

Condition (h) requires the drawdown by HKT of the total amount available under the HKT Loan Facilities and all amounts having been applied such that: (i) all Indebtedness under the Existing Facilities has been repaid and discharged in full; (ii) an amount of not less than HK$7,020 million has been lawfully transferred to PCCW; and (iii) as a result of (ii), not less than HK$12,675 million is standing to the credit of a designated account held by PCCW and is available for distribution to the Post-Scheme Shareholders. As referred to in the Scheme Document, the terms of the HKTGH Restructuring provide for the cash component of the consideration payable for the acquisition by HKT of the business and assets of HKTC, a wholly-owned subsidiary of PCCW, to be paid in three instalments: (1) an amount of HK$9,500 million was payable by no later than 28 November, 2008 (and has been paid); (2) an amount of HK$7,100 million was payable by no later than 10 December, 2008 (and has been paid); and (3) an amount of HK$7,200 million was payable by no later than 2 January, 2009 (and has been paid). The cash component of the consideration payable by HKT for the acquisition of the business and assets of HKTC was funded from amounts drawn down under the HKT Loan Facilities. Also as referred to in the Scheme Document, an amount of HK$9,500 million was drawn down by HKT under the HKT Loan Facilities for the payment of the first instalment of the cash component of the consideration for the acquisition of HKTC’s business and assets. HKTC, in turn, applied the cash together with internal resources to repay in full the amount outstanding under the HK$10,150 million Bayerische Landesbank facility entered into on 3 October, 2006, which was one of the Existing Facilities. A further amount of HK$7,100 million was drawn down by HKT under the HKT Loan Facilities on 10 December, 2008 and applied by HKT to pay the second instalment of the cash consideration payable for the acquisition by HKT of the business and assets of HKTC. Substantially all of the net consideration was transferred to PCCW by way of a series of dividends and repayments of intragroup loans and the required amount was applied by PCCW to repay in full all amounts outstanding in respect of the HK$6,450 million Bayerische Landesbank facility entered into on 18 July, 2006, which was the other Existing Facility. As a result, sub-Condition (i) of Condition (h) has been fulfilled. The remaining amount of HK$7,200 million available for drawdown under the HKT Loan Facilities was drawn down by HKT on 2 January, 2009 and used by HKT to pay the remaining instalment of the cash consideration payable for the acquisition by HKT of the business and assets of HKTC. Following its receipt by HKTC, substantially all of the net consideration received by HKTC from HKT was transferred to PCCW by way of a series of dividends and repayments of intragroup loans, resulting in an incremental increase in PCCW’s cash of not less than HK$7,020 million, thereby resulting in sub-Condition (ii) of Condition (h) having been fulfilled. As at 31 October, 2008, PCCW had freely fungible cash (being cash held by certain principal PCCW Group

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LETTER FROM THE BOARD

companies but excluding the PCPD Group cash of not less than HK$1,722 million) (“Freely Fungible Cash of PCCW”) of not less than HK$6,281 million which, when aggregated with the amount of cash transferred to and held by PCCW, is expected to result in sub-Condition (iii) of Condition (h) being fulfilled by 23 February, 2009.

Condition (i) is no event having occurred and being continuing under the HKT Loan Facilities which would result in any amounts owing under such agreement being or becoming repayable (or capable of being declared repayable) immediately or earlier than their stated maturity date or repayment date or which has resulted in all amounts under such agreement being declared repayable immediately. As at the Latest Practicable Date, no such event has occurred.

Condition (j) is, in summary, there being no provision of any agreement, arrangement, licence, permit or other instrument to which any member of the PCCW Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which as a consequence of the Proposal or the Scheme would result in (in each case to an extent which is material in the context of the PCCW Group as a whole and in the context of the Proposal) the acceleration of any indebtedness of the PCCW Group or the termination or adverse modification of any such agreement, arrangement, licence, permit or instrument or the creation or enforcement of any security interest over the whole or part of the business, property or assets of the PCCW Group. As at the Latest Practicable Date, the Joint Offerors and PCCW are not aware of there being any provision of any such agreement, arrangement, licence, permit or other instrument which would result in Condition (j) not being fulfilled.

Condition (k) can be summarised as requiring that since 30 June, 2008 no member of the PCCW Group has (in each case to an extent which is material in the context of the PCCW Group as a whole and in the context of the Proposal) taken any of the actions listed in sub-paragraphs (i) to (ix) of Condition (k) on pages 47 to 48 of the Scheme Document except in so far as such action forms part of the Proposal, the Scheme or the HKTGH Restructuring or was publicly disclosed prior to 4 November, 2008. As at the Latest Practicable Date, no member of the PCCW Group has taken any action which would result in Condition (k) not being fulfilled.

Condition (l) is that all Authorisations (if any) in connection with the Proposal from or with (as the case may be) the Relevant Authorities in the PRC, Hong Kong and/or any other relevant jurisdictions having been made and, if applicable, any waiting periods having expired or terminated (in each case where such Authorisation is material in the context of the PCCW Group as a whole and in the context of the Proposal).

Condition (m) is all Authorisations (if any) remaining in full force and effect without variation, and all necessary statutory or regulatory obligations in all relevant jurisdictions having been complied with and no requirement having been imposed by any Relevant Authorities which is not expressly provided for (or is in addition to requirements expressly provided for) in relevant laws, rules, regulations or codes in connection with the Proposal or any matters, documents (including circulars) or things relating thereto, in each aforesaid case up to and at the time when the Scheme becomes effective (in each case where such Authorisation is material in the context of the PCCW Group as a whole and in the context of the Proposal).

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LETTER FROM THE BOARD

On 22 December, 2008, the Telecommunications Authority appointed under the Telecommunications Ordinance (Cap 106 of the Laws of Hong Kong) gave its consent to the Proposal pursuant to section 7P(7)(a) of the Telecommunications Ordinance, on the basis that the Proposal would not have, or would not be likely to have, the effect of substantially lessening competition in a telecommunications market in Hong Kong. Such consent given by the Telecommunications Authority was given specifically based on the terms of the Scheme as set out in the Announcement prior to the proposed increase of the Cancellation Price. PCCW submitted a letter on 7 January, 2009 seeking the Telecommunications Authority’s confirmation that the consent previously given by it would extend to the Improved Proposal. PCCW is currently awaiting confirmation from the Telecommunications Authority.

Application has been made to the Broadcasting Authority under the Broadcasting Ordinance (Cap 562 of the Laws of Hong Kong) for the Authorisations required as a result of the increase of the shareholdings of Starvest and the Excluded Group and Netcom BVI (and/or Unicom), respectively, in PCCW if the Scheme becomes effective. The approval process for such Authorisations required from the Broadcasting Authority is still ongoing.

An application has also been made to the US Federal Communications Commission (“FCC”) for Authorisations required from the FCC for the proposed privatisation of PCCW in accordance with the Scheme, if the Scheme becomes effective. Such Authorisations are required because PCCW is the holding company of three subsidiaries, BtN Access Limited, PCCW Global Limited and PCCW Global, Inc. which jointly hold a licence issued under section 214 of the US Communications Act of 1934. A special temporary authorisation, valid until 28 February, 2009, has been obtained, which would permit the Improved Proposal to proceed and become effective in accordance with the revised expected timetable set out on pages 4 to 7 of this document.

Condition (n) is no government, governmental, quasi-governmental, statutory or regulatory body, court or agency in any jurisdiction having taken or instituted any action, proceeding, suit, investigation or enquiry (or enacted, made or proposed, and there not continuing to be outstanding, any statute, regulation, demand or order) that would make the Proposal or the Scheme void, unenforceable or illegal (or which would impose any material and adverse conditions or obligations with respect to the Proposal or the Scheme). As at the Latest Practicable Date, none of the Joint Offerors or PCCW are aware of any such action, proceeding, suit, investigation or enquiry having been taken or instituted.

Condition (o) is all necessary consents (other than any that may be required from any member of the PCRD Group) which may be required under any existing contractual obligations of PCCW and/or its subsidiaries being obtained and remaining in full force and effect without modification (in each case where the failure to obtain such consent is material in the context of the PCCW Group as a whole and in the context of the Proposal). As at the Latest Practicable Date, the Joint Offerors and PCCW are not aware of any consents which would be required in order to fulfill Condition (o) which have not already been obtained.

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LETTER FROM THE BOARD

Condition (p) can be summarised as requiring that since 30 June, 2008 there having been no adverse change in the business, assets, financial or trading positions, profits or prospects of any member of the PCCW Group (to an extent which is material in the context of the PCCW Group taken as a whole and in the context of the Proposal) and there not having been instituted or remaining outstanding any litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the PCCW Group is a party and no such proceedings having been threatened in writing against any such member (and no investigation by any governmental, regulatory or investigative body or court having been threatened in writing or announced in respect of any member of the PCCW Group) which is material and adverse in the context of the PCCW Group taken as a whole and in the context of the Proposal. As at the Latest Practicable Date, the Joint Offerors and PCCW are not aware of any event having occurred which would result in Condition (p) not being fulfilled.

EFFECTS OF THE SCHEME

Shareholding structure

The chart below shows a simplified shareholding structure of PCCW and PCRD as at the Latest Practicable Date:

==> picture [454 x 296] intentionally omitted <==

----- Start of picture text -----

Other
PCGH PCD [(1)] Eisner [(1)] Unicom
Shareholders
100% 100% 100%
Borsington Pacific Century CNG
International
0.49% Limited
100%
100%
Netcom BVI
Hopestar [(1)] PCG Cayman
0.91% 100%
Other shareholders Anglang 1.51% 3.19% 0.5% 19.84% 52.28%
23.34% 37.5% 37.76%
22.68%
PCRD PCCW
100%
Starvest Other 61.53% 100%
shareholders
38.47%
PCPD HKTGH
100%
HKT
----- End of picture text -----

(1) Hopestar, PCD and Eisner are companies wholly-owned by Mr. Richard Li.

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LETTER FROM THE BOARD

The table below sets out the shareholding structure of PCCW as at the Latest Practicable Date and immediately following implementation of the Scheme (assuming there are no other changes to PCCW’s shareholding structure and no Options are exercised on or prior to the Effective Date):

Shareholders Post-Scheme Shareholders Starvest(1) PCRD Netcom BVI(1) PCGH PCD(2) Eisner(2) Sub-total Scheme Shareholders and Starvest Concert Parties(3) Yue Shun Alexander Anthony Arena Peter Anthony Allen Francis Yuen Tin Fan Tom Yee Lat Shing HSBC(4)(5) RBS(4)(7) Other Scheme Shareholders Sub-total Total	As at the Latest Practicable Date Number of Shares % 0 0 1,535,711,301 22.68 1,343,571,766 19.84 102,122,177 1.51 216,362,824 3.19 33,747,000 0.50 3,231,515,068 47.72 36,726,857 0.542 760,200(6) 0.011 253,200 0.004 1,420,000 0.021 2,520 0.000 28,410,084 0.420 5,000 0.000 3,473,201,725 51.29 3,540,779,586 52.28 6,772,294,654 100.00	Immediately following implementation of the Scheme Number of Shares % 2,629,736,999 38.83 1,535,711,301 22.68 2,254,614,353 33.29 102,122,177 1.51 216,362,824 3.19 33,747,000 0.50 6,772,294,654 100.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6,772,294,654 100.00	Immediately following implementation of the Scheme Number of Shares % 2,629,736,999 38.83 1,535,711,301 22.68 2,254,614,353 33.29 102,122,177 1.51 216,362,824 3.19 33,747,000 0.50 6,772,294,654 100.00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6,772,294,654 100.00
			100.00
			0 0 0 0 0 0 0 0
			0
			100.00

(1) Pursuant to the Consortium Agreement, the New Shares will be issued in the ratio of 74.27:25.73 to Starvest and Netcom BVI (and/or Unicom) respectively (which corresponds to 2,629,736,999 New Shares to Starvest and 911,042,587 New Shares to Netcom BVI (and/or Unicom) on the basis of 3,540,779,586 Scheme Shares to be cancelled, assuming that there are no other changes to PCCW’s shareholding structure and no Options are exercised on or prior to the Effective Date). Netcom BVI may direct (in its absolute discretion) PCCW to issue such number of New Shares, to which Netcom BVI is entitled, to Unicom.

(2) PCD and Eisner are companies wholly-owned by Mr. Richard Li. PCD and Eisner are parties acting in concert with Starvest and will not participate in the Scheme. The Shares held by PCD and Eisner will, therefore, not form part of the Scheme Shares.

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LETTER FROM THE BOARD

• (3) Yue Shun held 36,726,857 Shares (representing approximately 0.54% of the issued share capital of PCCW as at the Latest Practicable Date) and is a Scheme Shareholder. Yue Shun is a wholly-owned subsidiary of Hutchison Whampoa Limited and is presumed to be acting in concert with Starvest in accordance with class 8 of the definition of “acting in concert” in the Takeovers Code. On that basis, Yue Shun is not treated as an Independent Shareholder and Yue Shun has given the Further Irrevocable Undertaking that it will not vote at the Court Meeting.

The following directors of PCRD hold Shares and each of them is presumed to be acting in concert with Starvest in accordance with class 2 of the definition of “acting in concert” in the Takeovers Code: Mr. Alexander Anthony Arena held 760,200 Shares (including 200 underlying Shares in the form of 20 ADSs); Mr. Peter Anthony Allen held 253,200 Shares; Mr. Francis Yuen Tin Fan held 1,420,000 Shares; and Mr. Tom Yee Lat Shing held 2,520 Shares. Mr. Alexander Anthony Arena also held 15,800,000 Options and Mr. Peter Anthony Allen also held 4,629,200 Options. Mr. Alexander Anthony Arena is also a director of PCCW and Mr. Peter Anthony Allen is also a director of Starvest and PCCW. Each of those directors is a Scheme Shareholder but is not treated as an Independent Shareholder and will not vote at the Court Meeting. Ms. Winnie King Yan Siu Morrison is a director of Starvest and held 7,200,000 Options. Except for those 7,200,000 Options, Ms. Winnie King Yan Siu Morrison does not hold any Shares or other relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of PCCW. Ms. Winnie King Yan Siu Morrison is presumed to be acting in concert with Starvest in accordance with class 2 of the definition of “acting in concert” in the Takeovers Code.

• (4) HSBC and persons controlling, controlled by or under the same control as HSBC, other than persons holding the status of exempt fund manager (“ HSBC Group ”), are presumed to be acting in concert with Starvest in accordance with class 5 of the definition of “acting in concert” in the Takeovers Code. RBS and persons controlling, controlled by or under the same control as RBS, other than persons holding the status of exempt fund manager, are presumed to be acting in concert with Netcom BVI in accordance with class 5 of the definition of “acting in concert” in the Takeovers Code.

• (5) As at the Latest Practicable Date, 28,410,084 Shares (out of which 10,961,800 Shares were proprietarily held and 17,448,284 Shares were under discretionary management authority) were proprietarily held by and/or under the discretionary management authority of the HSBC Group and 8,222 units of derivatives relating to 794,627 Shares were also proprietarily held by a member of the HSBC Group.

• (6) Includes 200 underlying Shares held in the form of 20 ADSs.

• (7) As at the Latest Practicable Date, RBS had a long position of 10,000 Shares and a short position of 5,000 Shares in PCCW.

Material interests of Directors and effects of the Scheme on such interests

Details of the interests of the Directors in Shares, and Directors’ rights to acquire Shares which are set out on pages 211 to 215 of the Scheme Document remain accurate as at the Latest Practicable Date. PCD and Eisner, which respectively held 216,362,824 Shares and 33,747,000 Shares as at the Latest Practicable Date, are companies wholly-owned by Mr. Richard Li. PCGH held 102,122,177 Shares as at the Latest Practicable Date. Mr. Richard Li is the founder of certain trusts which wholly own PCGH. PCGH, through certain wholly-owned subsidiaries (Anglang, PCG Cayman, Pacific Century International Limited and Borsington) held an aggregate 75.74% interest in PCRD as at the Latest Practicable Date and PCRD held 1,535,711,301 Shares as at the Latest Practicable Date. Starvest is a wholly-owned subsidiary of PCRD. The Shares held by PCRD, PCGH, PCD and Eisner are not Scheme Shares and will not be cancelled under the Scheme. Under the Consortium Agreement, New Shares will be issued to Starvest and Netcom BVI (and/or Unicom) if the Scheme becomes effective and Starvest, Netcom BVI (and/or Unicom), PCRD, PCGH, PCD and Eisner would be entitled to receive the special dividend required to be paid to the Post-Scheme Shareholders under the

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LETTER FROM THE BOARD

Consortium Agreement, as described on page 58 of the Scheme Document, as supplemented by pages 14 to 15 of this document. The Shares in which the other Directors are interested, set out on pages 211 to 212 of the Scheme Document, are Scheme Shares and will be cancelled if the Scheme becomes effective. The Options held by the Directors, disclosed on pages 213 to 215 of the Scheme Document, will be treated in the same way as the Options held by other Optionholders.

YUE SHUN FURTHER IRREVOCABLE UNDERTAKING

Yue Shun is a Scheme Shareholder and gave the Irrevocable Undertaking to Starvest and PCCW as described in the Scheme Document. Pursuant to the Irrevocable Undertaking, Yue Shun undertook that it would not vote at the Court Meeting but would vote in favour of the special resolution to be proposed at the EGM to reduce the share capital in PCCW.

Following the improvement made to the Proposal, Yue Shun has given the Further Irrevocable Undertaking to Starvest and PCCW. The Further Irrevocable Undertaking provides that Yue Shun will not vote at the reconvened Court Meeting (or at any adjourned Court Meeting) but that Yue Shun will vote in favour of the special resolution to be proposed at the reconvened EGM (or at any adjourned EGM) to reduce the share capital in PCCW. The Further Irrevocable Undertaking was given in respect of Yue Shun’s 36,726,857 Shares (representing approximately 0.54% of the issued share capital of PCCW as at the Latest Practicable Date) and also provides that Yue Shun will not acquire or dispose of any Shares, convertible securities, warrants, options or derivatives of PCCW. The Further Irrevocable Undertaking will remain valid until the Scheme is withdrawn or otherwise lapses or becomes effective.

REGISTRATION AND PAYMENT

Scheme Shares

Upon the Scheme becoming effective, payment of the consideration for the Scheme Shares will be made to the Scheme Shareholders whose names appear on the Register on the Record Date. On the basis that the Scheme becomes effective on or about 25 February, 2009, cheques for payment of the consideration payable under the Scheme are expected to be despatched on or before 7 March, 2009.

The latest time for lodging transfers of Shares to qualify for entitlements under the Scheme is 4:30 p.m. on 19 February, 2009. The Scheme Shareholders should ensure that their Shares are registered or lodged for registration in their names or in the name(s) of their nominees at or with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, before that time.

Options

Upon the Scheme becoming effective, payment of the consideration to the Optionholders will be made: (i) if the Option Form or the Revised Option Offer Form, together with all requisite documents to render acceptance under the Revised Option Offer complete and valid are received on or before the Effective Date, on or before 7 March, 2009; and (ii) if the Revised Option Offer Form, together with all requisite documents to render acceptance under the Revised Option Offer complete and valid are received after the Effective Date, within 10 days of the date of receipt by the Company Secretary of such acceptance by the Optionholder.

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LETTER FROM THE BOARD

The latest time for lodging the Revised Option Offer Form is 4:00 p.m. on 12 March, 2009.

STATEMENT OF INDEBTEDNESS

At the close of business on 31 October, 2008, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this document, the PCCW Group had outstanding indebtedness of approximately HK$32,752 million, comprising short term unsecured bank loans of approximately HK$16,600 million, long term unsecured guaranteed notes of approximately HK$15,419 million and other liabilities of approximately HK$733 million.

At the close of business on 31 October, 2008, the PCCW Group had contingent liabilities of approximately HK$947 million in respect of guarantees for its subsidiaries in the normal course of business and other guarantees of approximately HK$11 million.

Save as aforesaid and apart from intra-group liabilities and normal trade payables in the ordinary course of business, the PCCW Group did not have any loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, material obligations under hire purchase contracts or finance leases, guarantees or other material contingent liabilities as at the close of business on 31 October, 2008.

For the purpose of the above indebtedness statement, foreign currency amounts have been translated into Hong Kong dollars at the respective rates of exchange prevailing at the close of business on 31 October, 2008.

Subsequent to 31 October, 2008, the following material changes in the PCCW Group’s indebtedness took place:

• (a) On 28 November, 2008, the PCCW Group drew down HK$9,500 million under the HK$23,800 million HKT Loan Facilities to effect the transfer of certain businesses and assets between PCCW Group companies.

• (b) On 28 November, 2008, the PCCW Group repaid in full the HK$10,150 million Bayerische Landesbank facility entered into on 3 October, 2006, which was one of the Existing Facilities.

• (c) On 10 December, 2008, the PCCW Group drew down HK$7,100 million under the HK$23,800 million HKT Loan Facilities to effect the transfer of certain businesses and assets between PCCW Group companies.

• (d) On 10 December, 2008, the PCCW Group repaid in full the HK$6,450 million Bayerische Landesbank facility entered into on 18 July, 2006, which was the other Existing Facility.

• (e) On 2 January, 2009, the PCCW Group drew down the remaining amount of HK$7,200 million available for drawdown under the HK$23,800 million HKT Loan Facilities, to effect the transfer of certain businesses and assets between PCCW Group companies.

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LETTER FROM THE BOARD

Except as disclosed in the preceding paragraphs, there are no material changes in respect of the indebtedness and contingent liabilities of the PCCW Group since 31 October, 2008.

UPDATE ON INFORMATION OF THE PCCW GROUP

The gross debt of the PCCW Group (calculated as the total of short-term borrowings and long-term borrowings) as at 31 October, 2008 was approximately HK$32,019 million. The net debt of the PCCW Group (calculated as gross debt minus Freely Fungible Cash of PCCW and cash held by the PCPD Group) as at 31 October, 2008 was not more than HK$24,016 million.

MATERIAL CHANGES IN THE FINANCIAL OR TRADING POSITON OR OUTLOOK OF THE PCCW GROUP SINCE 31 DECEMBER, 2007

There are no material changes in the financial or trading position or outlook of the PCCW Group since 31 December, 2007, the date to which the latest audited consolidated financial statements of the PCCW Group were made up.

MATERIAL CHANGES OF INFORMATION

Except as described in this document, there are no material changes to the information previously published in the Scheme Document.

FURTHER INFORMATION

You should read this document in conjunction with the Scheme Document and not just rely on the information contained in this document.

This document, taken together with the Scheme Document, comprises an explanatory statement in accordance with Section 166A of the Companies Ordinance.

ACTION TO BE TAKEN

Your attention is drawn to Appendix II (“Action to be Taken”) on pages 46 to 52 of this document which explains the action you should take in respect of the Improved Proposal.

Yours faithfully, For and on behalf of the Board of PCCW Limited Sir David Ford, KBE, LVO Non-Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [86 x 41] intentionally omitted <==

PCCW Limited 電訊盈科有限公司

(Incorporated in Hong Kong with limited liability) (Stock Code: 0008)

12 January, 2009

To the Independent Shareholders, ADS Holders and the Optionholders

Dear Sir or Madam,

REVISED CANCELLATION PRICE OF HK$4.50 PER SCHEME SHARE PROPOSED PRIVATISATION OF PCCW

BY

THE JOINT OFFERORS BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 166 OF THE COMPANIES ORDINANCE)

We refer to the Scheme Document and to the composite document dated 12 January, 2009, of which this letter forms part, jointly issued by PCCW and the Joint Offerors in relation to the Improved Proposal (the “Supplemental Scheme Document”). The terms used in this letter shall have the same meanings as defined in the Supplemental Scheme Document, unless the context otherwise requires.

We refer to our appointment as members of the Independent Board Committee to give a recommendation with respect to the Improved Proposal and the Scheme, details of which are described in the Supplemental Scheme Document.

Rothschild has been engaged as the independent financial adviser to advise the Independent Board Committee with respect to the Improved Proposal and the Scheme. Details of the advice from Rothschild and the principal factors Rothschild has taken into consideration in arriving at its recommendations are set out in the “Letter from Rothschild” on pages 14 to 42 of the Scheme Document and in the further “Letter from Rothschild” on pages 29 to 43 of the Supplemental Scheme Document. We also wish to draw the attention of the Independent Shareholders, the ADS Holders and the Optionholders to the information set out in the Scheme Document and in the Supplemental Scheme Document.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Recommendations

Having considered the “Letter from Rothschild” set out on pages 14 to 42 of the Scheme Document and the “Letter from Rothschild” set out on pages 29 to 43 of the Supplemental Scheme Document, the Independent Board Committee is of the view that the terms of the Improved Proposal are fair and reasonable so far as the Independent Shareholders are concerned.

The Independent Board Committee recommends that the Independent Shareholders vote in favour of the resolution to approve the Scheme at the Court Meeting reconvened to be held on 4 February, 2009 and vote in favour of the special resolution to approve and give effect to the Scheme at the EGM reconvened to be held on 4 February, 2009.

The Independent Board Committee also recommends that the ADS Holders instruct the Depositary to vote the Scheme Shares held on their behalf in favour of the resolution to approve the Scheme at the Court Meeting reconvened to be held on 4 February, 2009 and the special resolution to approve and give effect to the Scheme at the EGM reconvened to be held on 4 February, 2009.

In respect of the Revised Option Offer, having considered the terms of the Revised Option Offer and the advice from Rothschild, the Independent Board Committee considers that the terms of the Revised Option Offer are also fair and reasonable so far as the Optionholders are concerned both in respect of (i) those outstanding Options in respect of which the Revised Cancellation Price is above the exercise price per underlying Option Share, as the “see-through price” offered is equivalent to the difference between the Revised Cancellation Price and the exercise price per underlying Option Share payable on exercise of the relevant Option; and (ii) those outstanding Options that are considered out-of-the-money based on both the Revised Cancellation Price and recent market prices. The Independent Board Committee recommends that Optionholders accept the Revised Option Offer.

Yours faithfully,

Independent Board Committee

Professor Chang Hsin-kang,

FREng, GBS, JP

Independent Non-Executive Director

Dr. The Hon. Sir David Li Kwok Po,

GBM, GBS, OBE, JP Independent Non-Executive Director

Sir Roger Lobo, CBE, LLD, JP Independent Non-Executive Director

Mr. Aman Mehta

Independent Non-Executive Director

The Hon. Raymond George Hardenbergh Seitz

Independent Non-Executive Director

— 28 —

LETTER FROM ROTHSCHILD

12 January, 2009

To the Independent Board Committee of PCCW Limited

Dear Sirs,

REVISED CANCELLATION PRICE OF HK$4.50 PER SCHEME SHARE PROPOSED PRIVATISATION OF PCCW

BY

THE JOINT OFFERORS BY WAY OF A SCHEME OF ARRANGEMENT (UNDER SECTION 166 OF THE COMPANIES ORDINANCE)

We refer to our engagement to advise the Independent Board Committee with respect to the Improved Proposal and the Scheme, details of which are contained in the supplemental scheme document jointly issued by, amongst others, PCCW and the Joint Offerors dated 12 January, 2009 (“Supplemental Scheme Document”) of which this letter forms a part. Rothschild has been appointed as the independent financial adviser to advise the Independent Board Committee as to (i) whether or not the terms of the Improved Proposal and the Scheme are fair and reasonable so far as the Independent Shareholders are concerned, (ii) whether or not the terms of the Revised Option Offer are fair and reasonable so far as the Optionholders are concerned; and to advise the Independent Board Committee (a) as to how the Independent Shareholders should be advised to vote on the Scheme at the Court Meeting and the EGM which have been reconvened to be held on 4 February, 2009, and (b) as to how the ADS Holders should be advised to direct the Depositary to vote on the Scheme Shares held on their behalf at the Court Meeting and the EGM which have been reconvened to be held on 4 February, 2009.

This letter should be read in conjunction with the “Letter from Rothschild” in the Scheme Document (the “Initial Rothschild Letter”). The terms used in this letter shall have the same meanings as defined in the Scheme Document and the Supplemental Scheme Document unless the context otherwise requires. If there is any conflict and/or inconsistency between the meanings for the terms defined in the Scheme Document and the Supplemental Scheme Document, the meanings for the terms defined in the Supplemental Scheme Document shall prevail.

N M Rothschild & Sons (Hong Kong) Limited 16th Floor, Alexandra House 18 Chater Road, Central Hong Kong SAR

Telephone +852 2525 5333 Facsimile +852 2868 1728

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LETTER FROM ROTHSCHILD

In formulating our recommendation, we have relied on the information and facts supplied to us by PCCW and have assumed that any information and representations made to us are true, accurate and complete in all respects as at the date hereof and that they may be relied upon. We have also assumed that all information, representations and opinions contained or referred to in the Scheme Document and the Supplemental Scheme Document are complete in all respects, fair and reasonable and, accordingly, we have relied on them.

We have been advised by the Directors that no material facts have been omitted and we are not aware of any facts or circumstances which would render the information provided and the representations made to us untrue, inaccurate or misleading. We have no reason to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. The Directors and the directors of PCRD, Starvest and Netcom BVI have all declared in separate responsibility statements set out in “Updated general information” in Appendix III to the Supplemental Scheme Document and “General information” in Appendix III to the Scheme Document that they jointly and severally accept responsibility for the accuracy of the information in the Supplemental Scheme Document and the Scheme Document subject to certain limited exceptions which are specific to each set of directors and are set out in each of their individual responsibility statements. Also, in those same responsibility statements, the Directors and the directors of PCRD, Starvest and Netcom BVI confirm, subject to certain exceptions which are specific to each set of directors and are set out in each of the individual responsibility statements, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Supplemental Scheme Document and the Scheme Document have been arrived at after due and careful consideration and there are no other facts not contained in the Supplemental Scheme Document or the Scheme Document, the omission of which would make any statement in the Supplemental Scheme Document or the Scheme Document misleading. In Appendix III to the Scheme Document a responsibility statement in substantially similar form (subject to the exceptions set out in that responsibility statement) was also given by the authorised representative of CNC. Following the Unicom — CNC Merger becoming effective, in the Supplemental Scheme Document that responsibility statement was given instead by the directors of Unicom. We believe that we have reviewed sufficient information to reach an informed view in order to provide a reasonable basis for our advice. We have not, however, conducted any independent in-depth investigation into the business and affairs of the PCCW Group.

We have not considered the tax consequences on the Independent Shareholders, the ADS Holders and the Optionholders of their acceptances or non-acceptances of the Improved Proposal and the Revised Option Offer since these are particular to their own individual circumstances. In particular, holders of the Shares, the ADSs and the Options who are residents outside of Hong Kong, or subject to overseas taxes or Hong Kong taxation on securities dealing should consider their own tax position with regard to the Improved Proposal and the Revised Option Offer and, if in any doubt, should consult their own professional advisers.

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LETTER FROM ROTHSCHILD

TERMS OF THE IMPROVED PROPOSAL

The Joint Offerors, PCCW, PCRD and CNC jointly announced, on 30 December, 2008, that the Joint Offerors proposed to increase the Cancellation Price from HK$4.20 to HK$4.50 per Scheme Share. The terms of the Improved Proposal are set out in the “Letter from the Board” in the Supplemental Scheme Document. In summary, the Improved Proposal involves the following principal steps:

Scheme Shares

• The Joint Offerors propose a cash payment of HK$4.50 for each Scheme Share in exchange for the cancellation of all Scheme Shares.

ADS

• Consequently, if the Improved Proposal becomes effective, the Shares underlying each ADS will be cancelled on the Effective Date and the ADS Holders will receive the US$ equivalent (at the then prevailing market rate of exchange) of HK$45.00 (10:1 ratio) from the Depositary (less any fees and expenses of the Depositary in connection with the currency conversion and cancellation of the ADSs). ADS Holders may incur related taxes and government charges.

Options

• Conditional upon the Scheme becoming effective, the Joint Offerors will make the Revised Option Offer to all Optionholders to cancel their Options in exchange for cash. In relation to those outstanding Options in respect of which the Revised Cancellation Price is above the exercise price per underlying Option Share, the amount of the cash payment under the Revised Option Offer will be calculated by deducting the exercise price per underlying Option Share payable on the exercise of the relevant Option from the Revised Cancellation Price per Scheme Share payable under the Scheme in accordance with the Improved Proposal (i.e the “see-through” price). In relation to those outstanding Options in respect of which the Revised Cancellation Price is equal to or below the exercise price per underlying Option Share, the cash payment under the Revised Option Offer will continue to be the nominal amount of HK$0.01 for each 10,000 underlying Option Shares in respect of which an Option has been granted, as stated in the Scheme Document.

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LETTER FROM ROTHSCHILD

Independent Shareholders should note that save for the increase of the Cancellation Price from HK$4.20 to HK$4.50 for each Scheme Share (representing an increase of approximately 7.14%), and the consequential changes in relation to the ADSs and the Option Offer and the revised expected timetable, all other terms of the Proposal as set out in the Scheme Document remain unchanged and constitute the terms of the Improved Proposal.

PRINCIPAL FACTORS AND REASONS

The Independent Board Committee and the Independent Shareholders are advised to read this letter in conjunction with the Initial Rothschild Letter.

In arriving at our opinion, we have added to the principal factors and reasons as set out in the Initial Rothschild Letter in order to take into consideration the increase of the Cancellation Price from HK$4.20 to HK$4.50 for each Scheme Share. The unaffected principal factors and reasons stated in the Initial Rothschild Letter (such as the paragraphs headed “Background”, “Financial performance of PCCW” and “Cancellation Price analysis — Public trading analysis — Historical trading volume” in the Initial Rothschild Letter) have not been discussed again in this letter. We have taken into consideration the following additional principal factors and reasons:

1. Revised Cancellation Price analysis

We have used the same methodologies to analyse the Revised Cancellation Price, namely (i) the “comparable companies analysis”, (ii) the “sum-of-the-parts analysis”, (iii) the “public trading analysis”, and (iv) the “comparable transactions analysis”.

(i) Comparable companies analysis

We have reviewed the trading multiples of the same 12 companies comparable to PCCW (the “Comparable Companies”) as set out in the paragraph headed “Cancellation Price analysis — Comparable companies analysis” in the Initial Rothschild Letter. Table 1 below compares the enterprise value[1] (“EV”)/EBITDA and price-earnings ratio (“PER”) multiples (being the most

1 Enterprise value is defined as the equity value plus net debt and minority interests less interests in joint ventures and associates. Equity value is the market capitalisation.

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LETTER FROM ROTHSCHILD

commonly used multiples in the telecommunications sector) of the PCCW Group and the Comparable Companies based on average closing prices for the period from 14 October, 2007 up to and including the Last Trading Date (“One-Year Period”) and the closing prices as at the Latest Practicable Date.

Table 1 Trading multiples of Comparable Companies

		Market					Based on
		capitalisation based on	Based on One-Year Period		Market	share prices as at the Latest
Company	Listing	One-Year Period	average share prices		capitalisation as at Latest	Practicable Date
		average	EV/		Practicable	EV/
		share prices	EBITDA1	PER1	Date	EBITDA1	PER1
		(HK$			(HK$
		million)	(Times)	(Times)	million)	(Times)	(Times)
Belgacom	Belgium	106,360	5.8	10.6	96,729	5.3	9.6
	United
BT	Kingdom	220,806	5.2	9.7	132,742	4.0	5.8
China Telecom	Hong Kong	413,471	5.1	16.2	233,895	3.2	9.2
China Unicom2	Hong Kong	374,652	4.8	20.4	212,718	2.9	11.6
Chunghwa
Telecom	Taiwan	136,710	4.7	11.8	112,913	3.7	9.7
Elisa	Finland	28,558	7.3	12.8	21,969	6.1	9.9
KT Corporation	Korea	74,846	3.8	11.3	63,142	3.4	9.5
LG Dacom	Korea	9,847	2.9	12.5	9,271	2.6	11.7
SK Broadband	Korea	12,632	4.9	n.m.	8,975	3.8	n.m.
Starhub	Singapore	25,897	8.9	14.8	17,717	6.5	10.1
Swisscom	Switzerland	140,636	6.9	9.4	132,934	6.7	8.9
Telstra	Australia	307,540	6.8	15.2	253,961	5.9	12.5
Simple average
(Mean)			5.6	13.1		4.5	9.9
Median			5.2	12.5		3.9	9.7
The PCCW
Group under
the Improved
Proposal					30,475	7.7	20.1

Sources: Bloomberg and the latest published financial statements of the respective companies

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LETTER FROM ROTHSCHILD

Notes:

1. EBITDA and net profit as per the latest published annual financial statements of the relevant comparable company available on the Latest Practicable Date. Net profit is adjusted to exclude exceptional items and goodwill amortisation. In respect of the PCCW Group, the net profit for the year ended 31 December, 2007 has been adjusted to exclude the other losses of approximately HK$3 million and losses on property, plant and equipment of approximately HK$7 million which are considered to be non-recurring.

2. The EBITDA and net profit of China Unicom are extracted from the proforma consolidated financial statements of the enlarged China Unicom as at 31 December, 2007 set out in the scheme document for the proposed merger of China Unicom Limited and China Netcom dated 15 August, 2008 and fixed-line operations of China Netcom pre-merger.

3. Since PCCW is interested in approximately 61.53% equity interest in PCPD, we have (for illustrative purpose only) adjusted the EV/EBITDA and PER multiples of the PCCW Group under the Improved Proposal to exclude the contribution from PCPD. The EV/EBITDA multiple and PER of the PCCW Group under the Improved Proposal excluding PCPD are approximately 8.2 times and 25.9 times respectively.

4. Multiples of more than 100 times are denoted as non-meaningful (“n.m.”).

5. Exchange rates into HK$ as at the Latest Practicable Date were used.

As illustrated in Table 1 above, the Revised Cancellation Price represents an EV/EBITDA multiple of approximately 7.7 times the EBITDA of PCCW for the year ended 31 December, 2007. This represents a premium of approximately 71.1% and 97.4%, respectively, over the mean EV/EBITDA multiple of approximately 4.5 times and median EV/EBITDA multiple of approximately 3.9 times of the Comparable Companies as at the Latest Practicable Date. It also represents a premium of approximately 37.5% and 48.1%, respectively, over the mean EV/EBITDA multiple of approximately 5.6 times and median EV/EBITDA multiple of approximately 5.2 times of the Comparable Companies based on the One-Year Period average closing price. The PER implied by the Revised Cancellation Price of approximately 20.1 times the net profit of the PCCW Group for the year ended 31 December, 2007 is at a premium of approximately 103.0% and 107.2%, respectively, over the mean and median PER of the Comparable Companies as at the Latest Practicable Date; and approximately 53.4% and 60.8%, respectively, over the mean and median PER of the Comparable Companies based on the One-Year Period average closing price.

(ii) Sum-of-the-parts analysis

As set out in the paragraph headed “Cancellation Price analysis — Sum-of-the-parts analysis” in the Initial Rothschild Letter, we have conducted a “sum-of-the-parts analysis” in which the enterprise value[2] of the PCCW Group implied by the highest proposals received in the HKTGH Sale is in the range of approximately HK$50.2 billion to HK$52.2 billion. By deducting

2 Enterprise value (in this case already taken into account various company level adjustments) is calculated as the equity value plus net debt.

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LETTER FROM ROTHSCHILD

net debt[3] (adjusted by excluding cash held by the PCPD Group) of approximately HK$25.7 billion as at 31 October, 2008, the implied equity value of the PCCW Group is in the range of approximately HK$3.62 to HK$3.90 per Share based on 6,772,294,654 Shares in issue as at the Latest Practicable Date. The Revised Cancellation Price represents a premium of approximately 15.4% and 24.3% over the per Share value range implied by the highest proposals received in the HKTGH Sale, respectively. (Note: There may be a slight variation in the numbers and percentages due to rounding.) Whilst we continue to believe it is appropriate to conduct a “sum-of-the-parts analysis” using the Revised Cancellation Price, Independent Shareholders are reminded that the proposals from the HKTGH Sale were received on 11 October, 2008. The fact that the HKTGH Sale was discontinued does therefore reduce the relevance of these proposals to serve as a benchmark for comparison with the Revised Cancellation Price.

(iii) Public trading analysis

Relative price performances

We have reviewed the price performance of the Shares relative to the Comparable Companies, the Hang Seng Index (“HSI”) and the Hang Seng Composite Industry Index — Telecommunications (“HSTI”) as set out in the paragraph headed “Cancellation Price analysis — Public trading analysis” and “Table 7 — Price performance of the Shares relative to the Comparable Companies, the HSI and the HSTI” in the Initial Rothschild Letter.

The Revised Cancellation Price of HK$4.50 represents a higher premium of approximately 50.0% and 14.5% over the average closing prices of the Shares over the 10 and 30 trading days up to and including the Last Trading Date and a smaller discount of approximately 1.1% and 3.0% to the respective average closing prices of the Shares over the 90 and 180 trading days up to and including the Last Trading Date. Therefore, given that it may be considered that there exists a relative premium when compared to the mean of the Comparable Companies and the market indices, in that the discount represented by the Cancellation Price of HK$4.20 is far less than that of the mean of the Comparable Companies and the market indices over the same period; the Revised Cancellation Price presents an even higher relative premium.

Price performance over the Three-Year Period[4]

A comparison of the historical prices of the Shares against the Revised Cancellation Price is set out in the paragraph headed “Comparisons of value” in the “Letter from the Board” in the Supplemental Scheme Document. It should be noted that, whilst the Revised Cancellation Price represents a discount to the long-term historical Share price, the long-term historical Share price may have been affected positively by a market expectation that certain corporate actions would

3 Net debt is defined as the total of short-term borrowings and long-term borrowings minus Freely Fungible Cash of PCCW and cash held by the PCPD Group, as set out in the paragraph headed “Update on information of the PCCW Group” in the Supplemental Scheme Document.

4 Three-Year Period denotes the period from 14 October, 2005 up to and including the Last Trading Date.

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LETTER FROM ROTHSCHILD

occur (as listed in points (b) to (d) in the paragraph headed “Cancellation Price analysis — Public trading analysis — Price performance over the Three-Year Period” in the Initial Rothschild Letter) which have not in practice materialised. In our view, these catalysts which did not in practice materialise coupled with low trading liquidity of the Shares (as discussed in the paragraph headed “Cancellation Price analysis — Public trading analysis — Historical trading volume” in the Initial Rothschild Letter) reduce the relevance of the price performance of the Shares over the Three-Year Period in serving as a key factor in determining the appropriateness of the Revised Cancellation Price.

Price performance over the One-Month Period[5]

The Revised Cancellation Price of HK$4.50 per Share represents a premium of approximately 35.5% over the One-Month Period average closing price of approximately HK$3.32 per Share. The Shares closed at HK$3.72 per Share on the Latest Practicable Date.

(iv) Comparable transactions analysis

We refer to the comparable transactions (“Comparable Transactions”) as set out in “Table 12 — Recent privatisation of telecommunications companies in Hong Kong” in the Initial Rothschild Letter. The Revised Cancellation Price represents a premium of approximately 63.6%, 50.0% and 14.5% over the Share price on the Last Trading Date and the average historical Share price over the 10 and 30 trading days up to and including the Last Trading Date respectively, and a discount of approximately 1.1% and 3.0% to the average historical Share price over the 90 and 180 trading days up to and including the Last Trading Date respectively. The Revised Cancellation Price represents a higher premium or a lower discount than the Cancellation Price of HK$4.20 in comparison with the premia offered by the mean and median of the Comparable Transactions. For the same reasons to those given in the same analysis in the Initial Rothschild Letter we consider that the comparable transaction analysis merely serves as a general indication of pricing benchmarks in the telecommunications services sectors in Hong Kong.

As at the Latest Practicable Date, the Joint Offerors and the Excluded Group were interested in 3,231,515,068 Shares representing approximately 47.72% of the issued share capital of PCCW. There is no indication the Joint Offerors and the Excluded Group have any intention of selling their interest in PCCW. Accordingly, it is unlikely that Independent Shareholders will receive another offer or proposal from a third party without the support of the Joint Offerors and the Excluded Group. In addition, in the event that the Improved Proposal is not approved by the Independent Shareholders and lapses, neither the Joint Offerors and the Excluded Group nor its concert parties under the Improved Proposal may, under the Takeovers Code, announce another offer for the Shares within 12 months from the date on which the Improved Proposal lapses, except with the consent of the Executive. Also, since

5 One-Month Period denotes the period from 16 September, 2008 up to and including the Last Trading Date.

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LETTER FROM ROTHSCHILD

the Joint Offerors stated in the 30 December, 2008 announcement that they would not further increase the Revised Cancellation Price, as a result of Rule 18.3 of the Takeovers Code, following the making of that statement the Joint Offerors will not be allowed to increase the Revised Cancellation Price (save in wholly exceptional circumstances).

In light of the various analyses of the Revised Cancellation Price set out above and the fact that the Revised Cancellation Price of HK$4.50 offers a higher premium or a smaller discount than the original Cancellation Price of HK$4.20 as illustrated in various analyses above relative to the analyses in the Initial Rothschild Letter, we remain of the view that the Revised Cancellation Price offers a reasonable premium in comparison with the Comparable Companies, proposals received for the HKTGH Sale, historical trading prices, and the Comparable Transactions.

2. The Amendment Agreement to the Consortium Agreement and special dividend payable to Post-Scheme Shareholders

The parties to the Consortium Agreement have entered into an amendment agreement (the “Amendment Agreement”) to amend certain provisions of the Consortium Agreement in order to give effect to, inter alia , the increase in the Cancellation Price. As described in the Scheme Document, PCRD, Starvest, Unicom and Netcom BVI have agreed to procure that PCCW will, within 20 days after the Effective Date, declare a special dividend in cash to the Post-Scheme Shareholders. On the basis of the Revised Cancellation Price, the amount of the special dividend will be an aggregate amount of not less than HK$18,134 million (if no Options are exercised between the Latest Practicable Date and the Effective Date and no Options have been cancelled using the “see-through” price) and not more than HK$18,783 million (if all Options (including those “out of the money” Options with the Revised Cancellation Price below the exercise price per underlying Option Share) are exercised between the Latest Practicable Date and the Effective Date), of which an amount of not more than HK$5,486 million will be deferred by PCCW for such period as PCCW may determine (but in any event, not more than 12 months after the date on which the dividend is declared or, if earlier, the date on which the finance parties under the Starvest Facility Agreement are entitled, upon the occurrence of certain events, to exercise certain rights under the Starvest Facility Agreement) and PCCW will pay interest on such deferred sums at a rate of LIBOR plus 1.5% per annum. Please refer to the paragraph headed “Amendent Agreement to the Consortium Agreement and special dividend payable to Post-Scheme Shareholders” in the “Letter from the Board” in the Supplemental Scheme Document for details.

As mentioned in the Initial Rothschild Letter, the Joint Offerors’ financing structure is a common structure for take-private transactions, as undertaken by private equity firms. The cash distribution to the Post-Scheme Shareholders should not affect our analyses of the Cancellation Price or the Revised Cancellation Price since the cash distribution will be funded through part of the HKT Loan Facilities which will correspondingly reduce the value of the equity held by the Post-Scheme Shareholders with the enterprise value of PCCW being constant.

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LETTER FROM ROTHSCHILD

Independent Shareholders should note that the Post-Scheme Shareholders will be bearing the risks of an investment in a highly-geared company after the Effective Date and dividend distribution as the net debt of the PCCW Group is expected to increase substantially with the drawdowns of the HKT Loan Facilities, the full repayment of the Existing Facilities and the dividend distribution pursuant to Condition h(iii) under the paragraph headed “Conditions of the Proposal” in the Explanatory Statement to the Scheme Document.

Independent Shareholders should also note that the proposal to pay a special dividend to the Post-Scheme Shareholders after the Effective Date is specific to the Scheme becoming effective; if the Scheme does not become effective then the special dividend proposal lapses and PCCW stated that there is no proposal or intention to declare or pay a special dividend.

3. ADSs

Under the Improved Proposal, the consideration for each ADS is the US$ equivalent (at the then prevailing market rate of exchange) of HK$45.00 (less any fees and expenses of the Depositary in connection with the currency conversion and cancellation of the ADSs).

4. The Revised Option Offer

Pursuant to the Revised Option Offer, which is conditional upon the Scheme becoming effective, the Revised Cancellation Price now exceeds the exercise price of some of the Options. As the Joint Offerors will cancel each existing Option in exchange for cash, the Revised Option Offer comprises two parts, (i) in relation to those outstanding Options in respect of which the Revised Cancellation Price is above the exercise price per underlying Option Share, the amount of the cash payment under the Revised Option Offer is calculated by deducting the exercise price per underlying Option Share payable on exercise of the relevant Option from the Revised Cancellation Price per Scheme Share payable under the Scheme in accordance with the Improved Proposal (i.e. the “see-through” price) and (ii) for those outstanding Options in respect of which the Revised Cancellation Price is equal to or below the exercise price per underlying Option Share, the cash payment under the Revised Option Offer will continue to be the nominal amount of HK$0.01 for each 10,000 underlying Option Shares in respect of which an Option has been granted.

For Optionholders with Options in respect of which the Revised Cancellation Price is above the exercise price per underlying Option Share, they can consider selling out their position and have the choice of either (i) tendering their Options to receive the “see-through” price in cash or (ii) exercising such Options for Shares and holding such Shares should the Optionholders wish to vote in the reconvened Court Meeting and the reconvened EGM, in which case the Options should be exercised in sufficient time to ensure that the Option Shares are issued on or before 4:30 p.m. on 30 January,

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LETTER FROM ROTHSCHILD

2009 being the time for determining entitlements to attend and vote at the reconvened Court Meeting and the reconvened EGM. With option (ii), if the Improved Proposal becomes effective, such Optionholders will then receive the Revised Cancellation Price for their Shares. However, if the Improved Proposal does not become effective, such Optionholders will be left holding the Shares and the market price for those Shares may be less than the exercise price of the Options. Optionholders would need to consider that risk when deciding whether or not to exercise such Options.

Please refer to the paragraph headed “Revised Option Offer” in the “Letter from the Board” in the Supplemental Scheme Document, the paragraph headed “Option Offer” in the Explanatory Statement in the Scheme Document and the paragraph headed “Action to be taken by Optionholders” in Appendix II to the Supplemental Scheme Document for further details.

SUMMARY

Having considered the analysis and the principal factors and reasons behind the Proposal as set out in the Initial Rothschild Letter as well as the additional analysis and principal factors and reasons as set out in this letter, we draw your attention to the following conclusions, which should be read in conjunction with and interpreted in the full context of this letter and the Initial Rothschild Letter.

We continue to conclude that the main benefit of the Improved Proposal is to provide the Scheme Shareholders with an opportunity to divest their holding of the Shares in exchange for cash in the current poor market environment. In addition, as stated in the Explanatory Statement in the Scheme Document, PCRD is of the belief that, in view of the relatively low trading liquidity and persistently weak performance of the Shares, access to the equity capital markets does not provide PCCW with an attractive fund raising avenue, and that the costs and management resources associated with the maintenance of PCCW’s listing status are not warranted. It is against this background that the Scheme Shareholders must decide whether or not to vote in favour of the Scheme at the EGM reconvened to be held on 4 February, 2009.

Revised Cancellation Price analysis

We have set out above in this letter a number of commonly used methodologies to analyse the Revised Cancellation Price to be considered in conjunction with the Initial Rothschild Letter. As in the Initial Rothschild Letter, we are of the view that the “comparable companies analysis”, the “sum-of-the-parts analysis” and the “public trading analysis” are the most appropriate methodologies for the purpose of providing our opinion in respect of the Revised Cancellation Price whilst the

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LETTER FROM ROTHSCHILD

“comparable transactions analysis” merely serves as a general indication of pricing benchmark in the telecommunication services sectors in Hong Kong (for the reasons discussed above and in the Initial Rothschild Letter):

(i) Comparable companies analysis

Notwithstanding that the Share price has generally underperformed the Comparable Companies, the HSI and the HSTI, the EV/EBITDA multiple and PER implied by the Revised Cancellation Price are at a premium over the mean and median EV/EBITDA multiple and PER of the Comparable Companies as at the Latest Practicable Date:

• The EV/EBITDA multiple implied by the Revised Cancellation Price of approximately 7.7 times the EBITDA of PCCW for the year ended 31 December, 2007 is at a premium of approximately 71.1% and 37.5% over the mean EV/EBITDA multiple of the Comparable Companies as at the Latest Practicable Date and the One-Year Period average closing price, respectively;

• the PER implied by the Revised Cancellation Price of approximately 20.1 times the net profit of PCCW for the year ended 31 December, 2007 is also at a premium of approximately 103.0% and 53.4% over the mean PER of the Comparable Companies as at the Latest Practicable Date and the One-Year Period average closing price, respectively; and

• a comparison of the Revised Cancellation Price with the median of the Comparable Companies produces similar results to that with the mean of the Comparable Companies.

(ii) Sum-of-the-parts analysis

The Revised Cancellation Price represents a premium of approximately between 15.4% and 24.3% over the per Share value implied by the highest proposals received for the 45% equity interest in HKTGH during the HKTGH Sale process. We believe it is appropriate to make this comparison for the analysis of the Revised Cancellation Price as the proposals received as part of the HKTGH Sale represented market-tested prices and were the result of a vigorous process involving in-depth due diligence and valuation exercises undertaken by the potential buyers. However, while we believe such a comparison is appropriate, Independent Shareholders are reminded that the proposals from the HKTGH Sale were received on 11 October, 2008. The fact that the HKTGH Sale was discontinued does therefore reduce the relevance of these proposals to serve as a benchmark for comparison with the Revised Cancellation Price. In considering the change of ownership in the sale of up to a 45% equity interest in HKTGH from PCCW, it is noted that some corporate governance rights were attached to that equity interest, and therefore, the interest may not be considered as a pure minority equity interest.

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LETTER FROM ROTHSCHILD

(iii) Public trading analysis

It should be noted that, whilst the Revised Cancellation Price represents a discount to the long-term historical Share price, the long-term historical Share price, as discussed in the Initial Rothschild Letter, has arguably been elevated and maintained by a market expectation that corporate actions would occur which have not in practice materialised.

In our view, these expectations of corporate actions (none of which have materialised to date) coupled with low trading liquidity of the Shares (as discussed in the paragraph headed “Cancellation Price analysis — Public trading analysis — Historical trading volume” in the Initial Rothschild Letter) reduce the relevance of the price performance of the Shares over the Three-Year Period in serving as a key factor in determining the appropriateness of the Revised Cancellation Price.

However, recognising the importance of the historical Share price to the analysis of the Revised Cancellation Price, we have reviewed the price performance of the Shares relative to the Comparable Companies, the HSI and the HSTI as set out in “Table 7 — Price performance of the Shares relative to the Comparable Companies, the HSI and the HSTI” in the Initial Rothschild Letter. In comparison with the Cancellation Price of HK$4.20, the Revised Cancellation Price of HK$4.50 represents a higher premium of approximately 50.0% and 14.5% over the average closing prices of the Shares over the 10 and 30 trading days up to and including the Last Trading Date and a smaller discount of approximately 1.1% and 3.0% to the respective average closing prices of the Shares over the 90 and 180 trading days up to and including the Last Trading Date. Therefore, given that it may be considered that there exists a relative premium when compared to the mean of the Comparable Companies and the market indices, in that the discount represented by the Cancellation Price of HK$4.20 is far less than that of the mean of the Comparable Companies and the market indices over the same period; the Revised Cancellation Price presents an even higher relative premium.

(iv) Comparable transactions analysis

For similar reasons to those as set out in the public trading analysis above and in the Initial Rothschild Letter and given that the benchmarks provided by the Comparable Transactions need to be assessed on their own commercial and financial merits and depend on specific factors such as prevailing market conditions, financial and business performance of the target company and general economic and business risks, we continue to consider that the comparable transaction analysis merely serves as a general indication of pricing benchmarks in the telecommunications services sectors in Hong Kong. Also, the Comparable Transactions were implemented during a more stable environment to that in which the Improved Proposal has been made which, in our view, renders them less directly comparable to the current transaction for the purposes of our analysis.

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LETTER FROM ROTHSCHILD

As at the Latest Practicable Date, the Joint Offerors and the Excluded Group were interested in 3,231,515,068 Shares representing approximately 47.72% of the issued share capital of PCCW. There is no indication the Joint Offerors and the Excluded Group have any intention of selling their interest in PCCW. Accordingly, it is unlikely that Independent Shareholders will receive another offer or proposal from a third party without the support of the Joint Offerors and the Excluded Group. In addition, in the event that the Improved Proposal is not approved by the Independent Shareholders and lapses, neither the Joint Offerors and the Excluded Group nor its concert parties under the Improved Proposal may, under the Takeovers Code, announce another offer for the Shares within 12 months from the date on which the Improved Proposal lapses, except with the consent of the Executive. Also, since the Joint Offerors stated in the 30 December, 2008 announcement that they would not further increase the Revised Cancellation Price, as a result of Rule 18.3 of the Takeovers Code, following the making of that statement the Joint Offerors will not be allowed to increase the Revised Cancellation Price (save in wholly exceptional circumstances).

As illustrated in various analyses above relative to the analyses in the Initial Rothschild Letter, the Revised Cancellation Price offers a higher premium or a smaller discount than the original Cancellation Price.

RECOMMENDATIONS

Having considered the principal factors and reasons as set out in the Initial Rothschild Letter as well as the additional analysis and principal factors and reasons as set out in this letter, we remain of the view that the terms of the Improved Proposal are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders to vote in favour of the resolution to approve the Scheme at the Court Meeting reconvened to be held on 4 February, 2009, as well as to recommend the Independent Shareholders to vote in favour of the special resolution to approve and give effect to the Scheme at the EGM reconvened to be held on 4 February, 2009.

With reference to our opinion that the terms of the Improved Proposal are fair and reasonable, we advise the Independent Board Committee to recommend the ADS Holders to instruct the Depositary to vote the Scheme Shares held on their behalf in favour of the resolution to approve the Scheme at the Court Meeting reconvened to be held on 4 February, 2009 and the special resolution to approve and give effect to the Scheme at the EGM reconvened to be held on 4 February, 2009.

In respect of the Revised Option Offer, we consider that the terms of the Revised Option Offer are also fair and reasonable so far as the Optionholders are concerned both in respect to (i) those outstanding Options in respect of which the Revised Cancellation Price is above the exercise price per underlying Option Share as the “see-through” price offered is equivalent to the difference between the Revised Cancellation Price and the exercise price per underlying Option Share payable on exercise of the relevant Option; and (ii) those outstanding Options that are considered out-of-the-money based on both the Revised Cancellation Price and recent market prices. We advise the Independent Board Committee to recommend the Optionholders to accept the Revised Option Offer.

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LETTER FROM ROTHSCHILD

In making this recommendation, we note that Independent Shareholders are at liberty to vote according to their personal preference and circumstances and they should consult their own professional advisers for professional advice. Independent Shareholders who are confident of the future prospects of the PCCW Group and/or wish to continue to retain an exposure in the PCCW Group or who are not attracted by the capital value of the Revised Cancellation Price as compared with the historical trading performance or their respective investment costs of the Shares may wish to vote against the resolution in relation to the Improved Proposal.

Those Scheme Shareholders who are concerned that the Improved Proposal may not become effective and that the Share price may fall back to lower levels existing prior to the Last Trading Date may consider disposing of their Shares in the open market before the reconvened Court Meeting, particularly if the market price of the Shares trades close to or above the Revised Cancellation Price.

Yours very truly, For and on behalf of N M Rothschild & Sons (Hong Kong) Limited

Kelvin Chau Catherine Yien Managing Director Director

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MODIFICATIONS TO THE SCHEME

APPENDIX I

The Joint Offerors and PCCW have jointly consented, subject to the approval of the High Court, for and on behalf of all parties concerned in the Scheme to the following modifications to the Scheme:

• (a) The sum of “HK$4.20” in the definition of “Cancellation Price” in Recital (A) of the Scheme shall be deleted and replaced with the sum of “HK$4.50”;

• (b) The amount of “HK$4.20” in clause 2 of the Scheme shall be deleted and replaced with the amount of “HK$4.50”;

• (c) The date “3 December, 2008” in the definition of “Latest Practicable Date” in Recital (A) of the Scheme shall be deleted and replaced with “9 January, 2009”;

• (d) The date “2 December, 2008” in the definition of “Latest Practicable Date” in Recital (A) of the Scheme shall be deleted and replaced with “8 January, 2009”;

• (e) The definition of “CNC” in Recital (A) of the Scheme shall be deleted and replaced with the following new definition:

• “Unicom” China United Network Communications Group Company Limited (中國聯合網絡通信集團有限公司) (formerly known as China United Telecommunications Corporation (中國聯合 通信有限公司)), a State-owned enterprise established under the laws of the PRC

• (f) The definition of “Scheme Document” in Recital (A) of the Scheme shall be deleted and replaced with the following new definition:

• “Scheme Document” the document dated 6 December, 2008 issued by PCCW and the Joint Offerors which includes this Scheme, as supplemented by the document dated 12 January, 2009 issued by PCCW and the Joint Offerors which is supplemental to and should be read in conjunction with the document dated 6 December, 2008

• (g) The definition of “Option Offer” in Recital (A) of the Scheme shall be deleted and replaced with the following new definition:

• “Option Offer”

• the conditional offer by the Joint Offerors to the Optionholders to cancel the outstanding Options on the terms and subject to the conditions contained in the scheme document dated 6 December, 2008, as supplemented by a supplemental scheme document dated 12 January, 2009 and the Option Offer Form which was despatched together with that supplemental scheme document

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MODIFICATIONS TO THE SCHEME

APPENDIX I

• (h) The definition of “Option Offer Form” in Recital (A) of the Scheme shall be deleted and replaced with the following new definition:

• “Option Offer Form”

• the acceptance form(s) setting out the terms and conditions of the Option Offer to be completed by the Optionholders for acceptance of the Option Offer

• (i) Recital (E) of the Scheme shall be deleted and replaced with the following new Recital (E):

“As at the Latest Practicable Date, Options relating to 137,952,010 Option Shares are currently outstanding and exercisable under the Share Option Schemes, with exercise prices ranging from HK$4.35 to HK$75.24 per Option Share. Of those Options, as at the Latest Practicable Date, Options relating to an aggregate of 89,837,372 Option Shares have exercise prices which are less than the Cancellation Price and Options relating to an aggregate of 48,114,638 Option Shares have exercise prices which are equal to or exceed the Cancellation Price. The Joint Offerors have made the Option Offer, conditional upon the Scheme becoming effective, to cancel each existing Option in exchange for cash, being:

• (i) (in relation to those Options in respect of which the exercise price per Option Share is less than the Cancellation Price), an amount calculated by deducting the exercise price per Share payable on exercise of the relevant Option from the Cancellation Price; or

• (ii) (in relation to those Options in respect of which the exercise price per Option Share is equal to or exceeds the Cancellation Price), an amount equal to HK$0.01 for each 10,000 Option Shares underlying the Options in respect of which the Option Offer is accepted.”

• (j) Each reference in the Scheme to “CNC” shall be deleted and replaced with a reference to “Unicom”.

• (k) The date “6 December, 2008” at the end of the Scheme Document shall be deleted and replaced with “12 January, 2009”.

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ACTION TO BE TAKEN

APPENDIX II

ACTION TO BE TAKEN BY SHAREHOLDERS

Summary of background

On 30 December, 2008, the Joint Offerors announced their proposal to increase the cancellation price under the Scheme to HK$4.50 per Scheme Share. In order to give Independent Shareholders the opportunity to consider the Improved Proposal, on 30 December, 2008, the Court Meeting and the EGM were adjourned, in each case, to a time, date and place of which notice would be given by PCCW. The Court Meeting is being reconvened to be held at 2:00 p.m. on Wednesday, 4 February, 2009, and the EGM is being reconvened to be held at 2:30 p.m. on Wednesday, 4 February, 2009 or as soon thereafter as the reconvened Court Meeting is concluded or adjourned. Both meetings will be held at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance).

In order to be effective, the Scheme will require approval at the reconvened Court Meeting by the requisite majority of Independent Shareholders specified on page 16 of this document. The implementation of the Scheme will also require approval of the special resolution to be proposed at the reconvened EGM, by the requisite majority of Shareholders specified in respect of that resolution on page 16 of this document.

Eligibility to attend and vote

ONLY INDEPENDENT SHAREHOLDERS WHOSE NAMES ARE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 WILL BE ELIGIBLE TO ATTEND AND VOTE AT THE RECONVENED COURT MEETING.

SIMILARLY, ONLY SHAREHOLDERS WHOSE NAMES ARE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 WILL BE ELIGIBLE TO ATTEND AND VOTE AT THE RECONVENED EGM.

New forms of proxy

Shareholders should have received, with the Scheme Document posted to Shareholders on 6 December, 2008, a pink form of proxy in respect of the Court Meeting and a white form of proxy in respect of the EGM.

Shareholders will find enclosed with this document an additional pink form of proxy for use in connection with the reconvened Court Meeting and an additional white form of proxy for use in connection with the reconvened EGM. These should be completed if you wish to make any proxy appointment (or to revoke or revise any proxy appointment which you have already made) in connection with the reconvened Court Meeting and/or the reconvened EGM.

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ACTION TO BE TAKEN

APPENDIX II

Status of previously submitted forms of proxy

IF SHAREHOLDERS WHOSE NAMES WILL BE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 HAVE ALREADY COMPLETED AND RETURNED EITHER OR BOTH FORMS OF PROXY DISTRIBUTED WITH THE SCHEME DOCUMENT, THOSE FORMS OF PROXY (INCLUDING THE VOTING INSTRUCTIONS, IF ANY, GIVEN IN THOSE FORMS OF PROXY) WILL REMAIN VALID FOR THE RECONVENED COURT MEETING AND THE RECONVENED EGM, RESPECTIVELY, UNLESS YOU COMPLETE AND RETURN A NEW FORM OF PROXY OR UNLESS YOU ATTEND IN PERSON AND VOTE AT THE RECONVENED MEETING.

This means that, UNLESS YOU COMPLETE AND RETURN A NEW FORM OF PROXY WITH NEW VOTING INSTRUCTIONS OR YOU ATTEND IN PERSON AND VOTE AT THE RECONVENED MEETING, a previously submitted form of proxy containing a vote “against” a resolution will be counted as a vote “against” the relevant resolution when it is proposed at the reconvened meeting (notwithstanding the increase in the cancellation price) or, conversely, a previously submitted form of proxy containing a vote “for” a resolution will be counted as a vote “for” the relevant resolution when it is proposed at the reconvened meeting (again, notwithstanding the increase in the cancellation price).

Shareholders who wish their existing form(s) of proxy to remain in place

SHAREHOLDERS WHOSE NAMES WILL BE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 AND WHO WISH ANY EXISTING FORM(S) OF PROXY TO REMAIN IN PLACE NEED TAKE NO ACTION.

Shareholders who wish to change their voting instructions or proxy appointment

IF SHAREHOLDERS WHOSE NAMES WILL BE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 WISH TO CHANGE THEIR VOTING INSTRUCTIONS FOR THE RECONVENED COURT MEETING AND/OR THE RECONVENED EGM, OR TO REVISE ANY PROXY APPOINTMENT WHICH HAS ALREADY BEEN MADE, THEY SHOULD COMPLETE AND RETURN THE NEW FORMS OF PROXY ENCLOSED WITH THIS DOCUMENT. ANY NEW FORMS OF PROXY SO RETURNED WILL SUPERSEDE ANY PREVIOUS FORM(S) OF PROXY WHICH HAVE PREVIOUSLY BEEN SUBMITTED BY THEM IN RESPECT OF THE SAME SHARES.

ALTERNATIVELY, SHAREHOLDERS CAN ATTEND IN PERSON AND VOTE AT THE RELEVANT MEETING. IN SUCH EVENT, A PREVIOUSLY COMPLETED AND RETURNED FORM OF PROXY WILL BE DEEMED TO HAVE BEEN REVOKED.

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ACTION TO BE TAKEN

APPENDIX II

Shareholders who have not previously completed and returned forms of proxy

IF SHAREHOLDERS WHOSE NAMES WILL BE IN THE REGISTER ON WEDNESDAY, 4 FEBRUARY, 2009 HAVE NOT ALREADY COMPLETED AND RETURNED FORMS OF PROXY FOR THE COURT MEETING AND/OR THE EGM, THEY SHOULD COMPLETE AND RETURN THE NEW FORMS OF PROXY ENCLOSED WITH THIS DOCUMENT IF THEY WISH TO APPOINT A PROXY AND/OR GIVE VOTING INSTRUCTIONS FOR THE RECONVENED MEETINGS.

Forms of proxy submitted by persons who dispose of their Shares prior to Wednesday, 4 February, 2009

If a Shareholder has previously completed and returned a form of proxy in respect of his Shares, but is no longer the registered holder of those Shares on Wednesday, 4 February, 2009, the form of proxy submitted by the former Shareholder in respect of those Shares will not be valid for the reconvened Court Meeting or the reconvened EGM (as the case may be) and will be disregarded. Only Shareholders whose names are in the Register on Wednesday, 4 February, 2009 will be eligible to attend and vote at the Court Meeting and the EGM, respectively.

If a Shareholder whose name will be in the Register on Wednesday, 4 February, 2009 has previously completed and returned forms of proxy for use at the Court Meeting and/or the EGM but has subsequently sold part of his shareholding since the date on which the forms of proxy were returned, then, unless the Shareholder completes and returns new forms of proxy in respect of the Shareholder’s remaining Shares, the previously returned forms of proxy will remain valid for the reconvened meetings in respect of the Shareholder’s remaining Shares registered in his name on Wednesday, 4 February, 2009.

Forms of proxy submitted by Shareholders who have subsequently acquired additional Shares

If a Shareholder has previously completed and returned forms of proxy for use at the Court Meeting and/or the EGM but has subsequently acquired additional Shares, such Shareholder should complete and return new forms of proxy enclosed with this document in respect of those additional Shares, if the Shareholder wishes to appoint a proxy and/or give voting instructions for the reconvened meetings in respect of those additional Shares. Those new forms of proxy may be completed and returned in respect of all the Shares held by a Shareholder (in which case the new forms of proxy will supersede the forms of proxy previously completed and returned) or in respect of only the additional Shares acquired (in which case the previously completed and returned forms of proxy will remain valid in respect of the numbers of Shares in respect of which they were previously completed and returned).

Shareholders not precluded from attending and voting in person

THE COMPLETION AND RETURN OF A FORM OF PROXY FOR THE RECONVENED COURT MEETING AND/OR THE RECONVENED EGM WILL NOT PRECLUDE SHAREHOLDERS FROM ATTENDING AND VOTING IN PERSON AT THE RELEVANT MEETING. IN SUCH EVENT, THE RETURNED FORM(S) OF PROXY WILL BE DEEMED TO HAVE BEEN REVOKED.

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ACTION TO BE TAKEN

APPENDIX II

Closure of the Register

For the purposes of determining the entitlements of Shareholders to attend and vote at the reconvened Court Meeting and the reconvened EGM, the Register will be closed from Monday, 2 February, 2009 to Wednesday, 4 February, 2009 (both days inclusive) and during such period no transfer of Shares will be effected. In order to qualify to vote at the reconvened Court Meeting and the reconvened EGM, all transfers accompanied by the relevant Share certificates must be lodged with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Friday, 30 January, 2009.

General

It is important that, for the reconvened Court Meeting in particular, as many votes as possible are cast so that the High Court may be satisfied that there is a fair and reasonable representation of shareholder opinion. Whether or not Shareholders intend to attend the reconvened Court Meeting and/or the reconvened EGM in person, Shareholders are strongly urged to complete and return their forms of proxy in accordance with the instructions printed on them, and to lodge them with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong. In order to be valid, the pink form of proxy for use at the reconvened Court Meeting should be lodged not later than 2:00 p.m. on Monday, 2 February, 2009 and the white form of proxy for use at the reconvened EGM should be lodged not later than 2:30 p.m. on Monday, 2 February, 2009. In the case of the pink form of proxy in respect of the reconvened Court Meeting, it may also be returned by facsimile at number (852) 2962 5926 (marked for the attention of “the Company Secretary”) up to the time of the reconvened Court Meeting or it may be handed to the Chairman of the reconvened Court Meeting at the reconvened Court Meeting if it is not so lodged.

ACTION TO BE TAKEN BY BENEFICIAL OWNERS WHOSE SHARES ARE HELD BY A REGISTERED OWNER OR DEPOSITED IN CCASS (OTHER THAN ADS HOLDERS)

No person shall be recognised by PCCW as holding any Shares upon any trust.

If you are Beneficial Owner whose Shares are held by a Registered Owner (such as a nominee, depositary, trustee or authorised custodian), you should contact the Registered Owner and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact the Registered Owner and provide him, her or it with instructions or make arrangements with the Registered Owner in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or reconvened EGM. Such instructions and/or arrangements should be given or made in advance of the aforementioned latest time for the lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM or otherwise in accordance with the instructions of the Registered Owner in order to provide the Registered Owner with sufficient time to accurately complete his, her or its forms of proxy and to submit it by the deadline stated in this Appendix II, or otherwise to vote at the reconvened meetings. To the extent that

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APPENDIX II

ACTION TO BE TAKEN

any Registered Owner requires instructions from or arrangements to be made with any Beneficial Owner at a particular date or time in advance of the aforementioned latest time for the lodgement of forms of proxy in respect of the reconvened Court Meeting and the reconvened EGM, then any such Beneficial Owner should comply with the requirements of the Registered Owner.

If you are a Beneficial Owner whose Shares are deposited in CCASS and registered under the name of HKSCC Nominees Limited you should (unless you are a person admitted to participate in CCASS as an Investor Participant) contact your Intermediary and check whether any voting instruction submitted before the date of this document remains valid or is void. You should contact your Intermediary and provide your Intermediary with instructions or make arrangements with the Intermediary in relation to the manner in which your Shares should be voted at the reconvened Court Meeting and/or the reconvened EGM. Such instructions and/or arrangements should be given or made in accordance with the requirements of your Intermediary in order to allow your Intermediary sufficient time to ensure that your instructions are given effect. The procedure for voting in respect of the Scheme by CCASS Participants with respect to Shares registered under the name of HKSCC Nominees Limited shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS.

The procedure for voting at the reconvened Court Meeting and the reconvened EGM by Beneficial Owners who have been admitted to participate in CCASS as Investor Participants shall be in accordance with the “General Rules of CCASS”, the “CCASS Operational Procedures” and any other requirements of CCASS. Beneficial Owners who have been admitted to participate in CCASS as Investor Participants should contact CCASS to check whether any voting instruction submitted before the date of this document remains valid or is void and to provide CCASS with instructions or make arrangements with CCASS in relation to the manner in which such Beneficial Owner’s Shares should be voted at the reconvened Court Meeting and/or the reconvened EGM.

ACTION TO BE TAKEN BY ADS HOLDERS

ADS Holders cannot vote at the Court Meeting or the EGM directly but may instruct the Depositary to vote the Shares underlying their ADSs in accordance with the terms of the Deposit Agreement. A Voting Instruction Card is made available to ADS Holders with this document for this purpose, and must be completed, signed and returned to the Depositary so that the Depositary receives it no later than 10:00 a.m. (New York time) on Wednesday, 28 January, 2009.

VOTING INSTRUCTION CARDS PREVIOUSLY RETURNED TO THE DEPOSITARY ARE NO LONGER VALID. ADS HOLDERS WHO WISH TO INSTRUCT THE DEPOSITARY HOW TO VOTE AT THE RECONVENED COURT MEETING AND RECONVENED EGM MUST SEND A NEW COMPLETED AND SIGNED VOTING INSTRUCTION CARD TO THE DEPOSITARY SO THAT THE DEPOSITARY RECEIVES IT NO LATER THAN 10:00 A.M. (NEW YORK TIME) ON WEDNESDAY, 28 JANUARY, 2009. IF AN ADS HOLDER DOES NOT RETURN THE VOTING INSTRUCTION CARD BY THIS TIME, THE SHARES UNDERLYING HIS OR HER ADSs WILL NOT BE VOTED AT THE RECONVENED COURT MEETING OR THE RECONVENED EGM. PERSONS HOLDING ADSs INDIRECTLY MUST RELY ON THE PROCEDURES OF THE BANK, BROKER OR FINANCIAL INSTITUTION IN WHICH SUCH ADSs ARE HELD.

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APPENDIX II

ACTION TO BE TAKEN

If they wish to attend the reconvened Court Meeting and the reconvened EGM (whether in person or by proxy), ADS Holders must elect to become holders of Shares by surrendering their ADSs and withdrawing the Shares represented by their ADSs in accordance with the terms of the Deposit Agreement so that they become registered holders of the Shares prior to 4:30 p.m. (Hong Kong time) on Friday, 30 January, 2009. Such ADS Holders must pay a cancellation fee of up to US$0.05 (equivalent to approximately HK$0.39) per ADS cancelled and may incur taxes and governmental charges payable in connection with such cancellation and withdrawal. In order to surrender their ADSs and withdraw the underlying Shares, ADS Holders should contact their brokers or custodians to make the necessary arrangements or otherwise they may contact the Depositary at +1 877-248-4237.

Upon the Scheme becoming effective, ADSs will represent the right to receive the cash consideration paid for the Scheme Shares and thereafter, the Depositary (as the registered holder of the Shares underlying the ADSs) will receive an amount in Hong Kong dollars equal to the amount payable in respect of all Shares held by the Depositary. Upon receipt, the Depositary will convert such funds into US$ at the then prevailing market rate of exchange. Upon surrender of their ADSs in accordance with the terms of the Deposit Agreement, ADS Holders will receive their pro-rata portion of the consideration from the Depositary, less a cancellation fee of up to US$0.05 (equivalent to approximately HK$0.39) per ADS cancelled and any other expenses of the Depositary in connection with the currency conversion. ADS Holders may also incur related taxes and governmental charges. It is expected that, if the Scheme becomes effective, the Depositary, at the direction of PCCW, will terminate the Deposit Agreement by sending notice of such termination to the registered holders of ADSs then outstanding at least 30 days prior to the date fixed in such notice for termination.

ACTION TO BE TAKEN BY OPTIONHOLDERS

A purple Revised Option Offer Form is enclosed with this document for Optionholders who wish to accept the Revised Option Offer. Any Optionholders who wish to accept the Revised Option Offer must complete and return the duly completed and executed Revised Option Offer Form, together with the relevant certificate(s) or other document evidencing the grant of the Options to him or her, and any documents of title or entitlement (and/or any satisfactory indemnity or indemnities required in respect thereof), for the aggregate number of outstanding Options in respect of which the Optionholder wishes to accept the Revised Option Offer by 4:00 p.m. on Thursday, 12 March, 2009 or such later date and time as may be notified to the Optionholders by the Joint Offerors. The completed and executed Revised Option Offer Form and accompanying documents must be delivered to PCCW at its registered office at 39th Floor, PCCW Tower, TaiKoo Place, 979 King’s Road, Quarry Bay, Hong Kong, marked “Joint Offerors’ Option Offer” for the attention of the Company Secretary, so as to reach PCCW no later than 4:00 p.m. on Thursday, 12 March, 2009 or such later date and time as may be notified to the Optionholders by the Joint Offerors. No acknowledgement of receipt of any Revised Option Offer Form or other document evidencing the grant of the Options or other documents of title or entitlement (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given. Optionholders who do not lodge the duly completed and executed Revised Option Offer Form at or before 4:00 p.m. on Thursday, 12 March, 2009 or such later date and time as may be notified to the Optionholders by the Joint Offerors will not receive the relevant payment to be made by the Joint Offerors under the Revised Option Offer. The Revised Option Offer is made conditional upon the Scheme becoming effective. The Optionholders should also note the instructions printed on the Revised Option Offer Form.

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APPENDIX II

ACTION TO BE TAKEN

Any duly completed yellow Option Offer Forms (which were distributed to Optionholders together with the Scheme Document) received by PCCW from Optionholders, together with the relevant certificate(s) or other document evidencing the grant of the relevant Options to the Optionholders and any documents of title or entitlements (and/or any satisfactory indemnity or indemnities required in respect thereof), before the latest time for accepting the Revised Option Offer stated above, will, if the Scheme becomes effective, be treated as valid acceptances of the Revised Option Offer in respect of the number of Options specified in the relevant yellow Option Offer Form and will entitle the accepting Optionholder to receive the cash payment payable under the Revised Option Offer in respect of those Options.

An accepting Optionholder shall be entitled to withdraw his/her acceptance of the Revised Option Offer after Tuesday, 20 January, 2009 but no later than the Business Day immediately preceding the date on which the Scheme is approved by the requisite majorities of Independent Shareholders and Shareholders at the Court Meeting and the EGM, respectively.

Optionholders should be aware that, as described in the section headed “Provisions which apply under the Share Option Schemes to Options which are not tendered for cancellation under the Option Offer” on pages 71 to 73 of the Scheme Document, after the Scheme becomes effective, the Options will no longer be convertible into Shares and will lapse.

Optionholders who wish to exercise their Options and participate in the Scheme as holders of Scheme Shares must exercise their Options no later than four Business Days prior to the revised Record Date specified in the revised expected timetable on pages 4 to 7 of this document. If any Options are exercised after the Latest Practicable Date but not later than four Business Days prior to the revised Record Date, and Option Shares are issued pursuant to such exercise prior to the revised Record Date, such Option Shares shall constitute Scheme Shares and shall be eligible to participate in the Scheme. Further, any such Option Shares issued on or before 4:30 p.m. on Friday, 30 January, 2009, being the time fixed for determining the entitlements to attend and vote at the reconvened Court Meeting and the reconvened EGM, will entitle their holders to attend and vote at the reconvened Court Meeting and the reconvened EGM.

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UPDATED GENERAL INFORMATION

APPENDIX III

1. RESPONSIBILITY STATEMENT

This document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Scheme and PCCW.

The directors of PCCW jointly and severally accept full responsibility for the accuracy of the information contained in this document relating to the PCCW Group and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document by PCCW have been arrived at after due and careful consideration and there are no other facts relating to the PCCW Group not contained in this document, the omission of which would make any statement in this document misleading.

The directors of PCRD jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than that relating to the PCCW Group and the Netcom Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document (other than opinions expressed by the PCCW Group and the Netcom Group) have been arrived at after due and careful consideration and there are no other facts not contained in this document, the omission of which would make any statement in this document misleading.

The directors of Starvest jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than that relating to the PCCW Group and the Netcom Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document (other than opinions expressed by the PCCW Group and the Netcom Group) have been arrived at after due and careful consideration and there are no other facts not contained in this document, the omission of which would make any statement in this document misleading.

The directors of Unicom jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than that relating to the PCCW Group and the PCRD Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document (other than opinions expressed by the PCCW Group and the PCRD Group) have been arrived at after due and careful consideration and there are no other facts not contained in this document, the omission of which would make any statement in this document misleading.

The directors of Netcom BVI jointly and severally accept full responsibility for the accuracy of the information contained in this document (other than that relating to the PCCW Group and the PCRD Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this document (other than opinions expressed by the PCCW Group and the PCRD Group) have been arrived at after due and careful consideration and there are no other facts not contained in this document, the omission of which would make any statement in this document misleading.

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UPDATED GENERAL INFORMATION

APPENDIX III

2. UPDATE OF CERTAIN INFORMATION DISCLOSED IN APPENDIX III (“GENERAL INFORMATION”) OF THE SCHEME DOCUMENT

In accordance with Rule 8.5 of the Takeovers Code, the following matters dealt with in Appendix III (“General Information”) of the Scheme Document are updated as follows:

2.1 Changes or additions to Material Contracts:

Between the Scheme Document Latest Practicable Date and the Latest Practicable Date, there have been no material changes to the information in section 8 (“Material Contracts”) as set out on page 233 of the Scheme Document.

2.2 Disclosure of Interests under the SFO:

Between the Scheme Document Latest Practicable Date and the Latest Practicable Date, there have been no material changes to the information in section 4 (“Disclosure of Interests under the SFO”) of Appendix III of the Scheme Document, as set out on pages 211 to 216 of the Scheme Document, except that each reference in that section to “CNC” shall now be construed as reference to “Unicom” following the Unicom-CNC Merger having become effective.

2.3 Disclosure of interests under the Takeovers Code:

• (i) Interests discloseable under Schedule 1 to the Takeovers Code

• (a) The shareholdings of the Joint Offerors in PCCW as at the Latest Practicable Date are set out in the section headed “Effects of the Scheme” on pages 21 to 24 of this document.

• (b) As at the Latest Practicable Date, save as disclosed in the section headed “Effects of the Scheme” on pages 21 to 24 of this document, no director of either of the Joint Offerors was interested in any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (c) As at the Latest Practicable Date, save as disclosed in the section headed “Effects of the Scheme” on pages 21 to 24 of this document, none of the parties acting in concert with the Joint Offerors owned or controlled any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (d) Except for Yue Shun, which has undertaken (pursuant to the Further Irrevocable Undertaking) to vote in favour of the resolution to be proposed at the reconvened EGM, as at the Latest Practicable Date, no one has irrevocably committed to vote in favour of or against the Scheme.

• (e) Except for the interests in Shares, convertible securities, warrants, options or derivatives of PCCW held by the parties to the Consortium Agreement, PCGH, PCD and Eisner disclosed in the section headed “Effects of the Scheme” set out on pages

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APPENDIX III

UPDATED GENERAL INFORMATION

21 to 24 of this document, as at the Latest Practicable Date, no person that had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with Starvest, PCRD, Unicom, Netcom BVI or any person acting in concert with any of them owned or controlled any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (f) As at the Latest Practicable Date, none of Starvest, PCRD, Unicom, Netcom BVI or any person acting in concert with any of them had borrowed or lent any Shares, convertible securities, warrants, options or derivatives of PCCW (save for any borrowed Shares which have been either on-lent or sold).

• (ii) Interests discloseable under Schedule II to the Takeovers Code

• (a) As at the Latest Practicable Date, PCCW had no holdings of shares, convertible securities, warrants, options or derivatives of PCRD, Starvest, Unicom or Netcom BVI.

• (b) As at the Latest Practicable Date, save as disclosed in the section headed “Effects of the Scheme” set out on pages 21 to 24 of this document and paragraphs 4(a)(A) and 4(a)(C) under the section headed “4. Disclosure of Interests under the SFO” set out on pages 211 to 216 of the Scheme Document, no Director was interested in any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (c) Mr. Richard Li is the founder of certain trusts which wholly own PCGH. PCGH, through certain wholly-owned subsidiaries (Anglang, PCG Cayman, Pacific Century International Limited and Borsington) held an aggregate of 2,345,250,230 shares in PCRD, as at the Latest Practicable Date. Hopestar, a company wholly-owned by Mr. Richard Li, held 28,167,000 shares in PCRD as at the Latest Practicable Date. Mr. Peter Anthony Allen and Mr. Chung Cho Yee, Mico were interested in 5,010,000 shares in PCRD and 8,000,000 shares in PCRD, respectively, as at the Latest Practicable Date. Mr. Alexander Anthony Arena was interested in options to subscribe for 15,300,000 shares in PCRD, as at the Latest Practicable Date. Mr. Richard Li, Mr. Peter Anthony Allen, Mr. Chung Cho Yee, Mico and Mr. Alexander Anthony Arena are all Directors. Save for the foregoing, as at the Latest Practicable Date, no Director was interested in the shares, convertible securities, warrants, options or derivatives of PCRD, Starvest, Unicom or Netcom BVI.

• (d) As at the Latest Practicable Date, no subsidiary of PCCW, nor any pension fund of PCCW or any of its subsidiaries owned or controlled any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (e) As at the Latest Practicable Date, UBS Securities LLC, owned or controlled an aggregate of 8,100 Shares and 200 American depositary receipts, of which 8,100 Shares and nil American depositary receipts were held proprietarily. The 200 American depositary receipts were held under stock borrowing and lending accounts.

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UPDATED GENERAL INFORMATION

APPENDIX III

Subject to the foregoing, as at the Latest Practicable Date, none of the advisers to PCCW as specified in class (2) of the definition of Associate under the Takeovers Code (excluding exempt principal traders) owned or controlled any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (f) Except for the parties to the Consortium Agreement and the undertakings given by each of PCGH, PCD and Eisner referred to on page 59 of the Scheme Document and page 14 of this document, as at the Latest Practicable Date, no person that had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with PCCW or with any person who is an Associate of PCCW by virtue of classes (1), (2), (3) or (4) of the definition of Associate under the Takeovers Code owned or controlled any Shares, convertible securities, warrants, options or derivatives of PCCW.

• (g) Except as disclosed in paragraph 2.3(ii)(e) above, as at the Latest Practicable Date, there were no Shares, convertible securities, warrants, options or derivatives of PCCW managed on a discretionary basis by fund managers (other than exempt fund managers) connected with PCCW.

• (h) As at the Latest Practicable Date, the following directors of PCRD held Shares and each of them is presumed to be acting in concert with Starvest in accordance with class 2 of the definition of “acting in concert” in the Takeovers Code: Mr. Alexander Anthony Arena held 760,200 Shares (including 200 underlying Shares in the form of 20 ADSs); Mr. Peter Anthony Allen held 253,200 Shares; Mr. Francis Yuen Tin Fan held 1,420,000 Shares; and Mr. Tom Yee Lat Shing held 2,520 Shares. Mr. Alexander Anthony Arena also held 15,800,000 Options and Mr. Peter Anthony Allen also held 4,629,200 Options. Mr. Alexander Anthony Arena is also a director of PCCW and Mr. Peter Anthony Allen is also a director of Starvest and PCCW. Each of those directors is a Scheme Shareholder but is not treated as an Independent Shareholder and will not vote at the Court Meeting. In addition, the Directors nominated for appointment originally by CNC (namely Mr. Lu Yimin, Mr. Zuo Xunsheng and Mr. Li Fushen) would not be permitted to vote at the Court Meeting, if they were to hold any Shares at the relevant time. As at the Latest Practicable Date, none of the other Directors who hold Shares have indicated whether or not they will vote in favour of or against the resolution to be proposed at the Court Meeting. Similarly, as at the Latest Practicable Date, none of the Directors who hold Shares have indicated whether or not they will vote in favour of or against the resolution to be proposed at the EGM. As at the Latest Practicable Date, none of the Directors who hold Options have indicated whether or not they will accept or reject the Revised Option Offer.

• (i) As at the Latest Practicable Date, none of PCCW nor any Directors had borrowed or lent any Shares, convertible securities, warrants, options or derivatives of PCCW (save for any borrowed shares which have been either on-lent or sold).

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UPDATED GENERAL INFORMATION

APPENDIX III

• 2.4 Dealings in Shares:

• (i) Dealings in Shares by the HSBC Group:

The dealings in Shares under discretionary investment authority and/or on a proprietary basis by the HSBC Group between the Scheme Document Latest Practicable Date and the Latest Practicable Date were as follows (these exclude dealings on an agency or non-discretionary basis which are subject to private disclosure during the Offer Period under the Takeovers Code):

				Dealing
	Sale/	Number of		price
Parties	Purchase	**Shares **	Dealing dates	(per Share)
				(HK$)
HSBC International Trustee	Purchase	224,000	17 December,	3.50
Limited — Singapore Branch			2008
HSBC International Trustee	Purchase	700,000	17 December,	3.51
Limited — Singapore Branch			2008
HSBC International Trustee	Purchase	76,000	17 December,	3.52
Limited — Singapore Branch			2008

• (ii) Other dealings in Shares between the Scheme Document Latest Practicable Date and the Latest Practicable Date discloseable under Schedule I to the Takeovers Code.

• (a) Save as disclosed in paragraph 2.4(i) above, none of Starvest, PCRD nor parties acting in concert with any of them under the Takeovers Code have dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (b) None of Unicom, Netcom BVI nor parties acting in concert with any of them under the Takeovers Code have dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (c) No director of Starvest, PCRD, Unicom or Netcom BVI has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (d) Yue Shun, which has undertaken (pursuant to the Further Irrevocable Undertaking) to vote in favour of the resolution to be proposed at the reconvened EGM, has not dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (e) No person that had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with Starvest, PCRD, Unicom, Netcom BVI or with any person acting

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APPENDIX III

UPDATED GENERAL INFORMATION

in concert with any of them has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date. No party to the Consortium Agreement has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (iii) Dealings in Shares discloseable under Schedule II of the Takeovers Code:

• (a) PCCW has not dealt for value in the shares, convertible securities, warrants, options or derivatives of Starvest, PCRD, Unicom or Netcom BVI between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (b) No Directors have dealt for value in the shares, convertible securities, warrants, options or derivatives of any of PCCW, Starvest, PCRD, Unicom or Netcom BVI between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (c) None of PCCW nor any subsidiary of PCCW, nor any pension fund of PCCW or any of its subsidiaries have dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (d) No adviser to PCCW as specified in class (2) of the definition of Associate under the Takeovers Code (but excluding exempt principal traders) has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (e) No person that had an arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with PCCW or with any person who is an Associate of PCCW by virtue of classes (1), (2), (3) or (4) of the definition of Associate under the Takeovers Code has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date. No party to the Consortium Agreement has dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

• (f) No fund managers (other than exempt fund managers) managing funds on a discretionary basis which are connected with PCCW have dealt for value in the Shares, convertible securities, warrants, options or derivatives of PCCW between the Scheme Document Latest Practicable Date and the Latest Practicable Date.

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UPDATED GENERAL INFORMATION

APPENDIX III

• 2.5 Miscellaneous

• (a) None of the existing Directors will be given any benefit as compensation for loss of office or otherwise in connection with the Scheme.

• (b) Except for the Consortium Agreement as amended as described on pages 14 to 15 of this document, as at the Latest Practicable Date, there is no agreement or arrangement between any of the Directors and any other person which is conditional on or dependent upon the outcome of the Scheme or otherwise connected with the Scheme.

• (c) Except for the Consortium Agreement as amended as described on pages 14 to 15 of this document, and the Further Irrevocable Undertaking, as at the Latest Practicable Date, there is no agreement or arrangement or understanding (including any compensation arrangement) between either of the Joint Offerors or any person acting in concert with either of them and any of the Directors, recent directors, Shareholders or recent Shareholders of PCCW having any connection with or dependence upon the Scheme.

• (d) The directors of Unicom are Chang Xiaobing, Tong Jilu, Li Gang, Zhang Jun’an, Dong Qunke, Li Xiong, Zhang Dongchen, Jiang Peihua.

• (e) As at the Latest Practicable Date, there was no material contract entered into by Starvest, PCRD, Unicom or Netcom BVI in which any of the Directors had a material personal interest.

• (f) As at the Latest Practicable Date, save for the Consortium Agreement, as amended as described on pages 14 to 15 of this document, and the undertakings given by each of PCGH, PCD and Eisner referred to on page 59 of the Scheme Document, there is no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code between Starvest, PCRD, Unicom or Netcom BVI, any parties acting in concert with any of them, or any Associate of any of them, and any other person.

• (g) As at the Latest Practicable Date, none of the Directors has entered into any service contract with PCCW or any of its subsidiaries or associated companies for a fixed term contract with more than 12 months to run irrespective of notice period, or which has been entered into or amended within six months before the commencement of the Offer Period or which are continuous contracts with a notice period of 12 months or more.

• (h) The Improved Proposal is conditional on the Conditions being fulfilled or (to the extent applicable) waived. Any decision in relation to invoking or waiving a Condition must be made jointly by the Joint Offerors. The circumstances in which the Conditions can be waived or invoked are set out on pages 44 to 51 of the Scheme Document. Subject to the foregoing, there are no other arrangements or agreements to which either of the Joint Offerors is a party which relate to the circumstances in which the Joint Offerors may or may not invoke or seek to invoke a condition to the Improved Proposal.

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UPDATED GENERAL INFORMATION

APPENDIX III

2.6 Ultimate owners of securities acquired under the Scheme

As disclosed on pages 9 to 10 above, the Unicom-CNC Merger became effective from 1 January, 2009 and, as a result, Unicom has assumed all the rights and obligations of CNC and all the assets, liabilities and business of CNC have vested in Unicom. Accordingly, Netcom BVI has become a wholly-owned subsidiary of Unicom and all rights and obligations of CNC in relation to the Proposal and Improved Proposal (including but not limited to the rights and obligations of CNC under the Consortium Agreement, as amended) have been assumed by Unicom. Subject to the foregoing, as at the Latest Practicable Date, there is no material change to the ultimate owners of securities proposed to be acquired under the Scheme from that disclosed in the Scheme Document.

3. CONSENTS

Each of HSBC, RBS, Rothschild and UBS has given and has not withdrawn its written consent to the issue of this document with the inclusion in this document of the texts of its letter and/or references to its name in the form and context in which they are included.

4. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the documents listed in paragraph 12 of Appendix III to the Scheme Document will continue to be available for inspection from 9:30 a.m. to 5:30 p.m., Monday to Friday at (i) the office of Richards Butler in association with Reed Smith LLP, Hong Kong legal adviser to PCCW, at 20th Floor, Alexandra House, 16-20 Chater Road, Central, Hong Kong; (ii) the website of PCCW at http://www.pccw.com; and (iii) the website of the SFC at http://www.sfc.hk until the Effective Date or the date on which the Scheme lapses, whichever is earliest. In addition, copies of the following documents will also be made available for inspection at the same locations from the date of this document until the Effective Date or the date on which the Scheme lapses, whichever is earliest:

• (a) the letter from the Board dated 12 January, 2009, the text of which is set out on pages 8 to 26 of this document;

• (b) the letter of recommendation from the Independent Board Committee, the text of which is set out on pages 27 to 28 of this document;

• (c) the letter of advice from Rothschild dated 12 January, 2009, the text of which is set out on pages 29 to 43 of this document;

• (d) the written consents in relation to this document given by HSBC, RBS, Rothschild and UBS; and

• (e) the Further Irrevocable Undertaking.

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NOTICE OF THE RECONVENED COURT MEETING

SCHEME OF ARRANGEMENT IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 2382 OF 2008

IN THE MATTER OF PCCW LIMITED 電訊盈科有限公司 AND IN THE MATTER OF SECTION 166 OF THE COMPANIES ORDINANCE CHAPTER 32 OF THE LAWS OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

SCHEME OF ARRANGEMENT

Under Section 166 of the Companies Ordinance Chapter 32 of The Laws of the Hong Kong Special Administrative Region

NOTICE OF COURT MEETING

NOTICE IS HEREBY GIVEN that, by an order dated 5 December, 2008 (the “Order”) made in the above matters, the High Court of the Hong Kong Special Administrative Region (the “High Court”) has directed a meeting (the “Meeting”) to be convened of the holders of the Scheme Shares (as defined in the scheme of arrangement hereinafter mentioned) for the purpose of considering and, if thought fit, approving, with or without modification, a scheme of arrangement proposed to be made between PCCW Limited (“PCCW”) and the holders of the Scheme Shares (the “Scheme”). Such Meeting, having been adjourned on 30 December, 2008, will be reconvened at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance) on Wednesday, 4 February, 2009, at 2:00 p.m. , at which place and time all holders of the Scheme Shares are requested to attend.

A copy of the Scheme and a copy of an explanatory statement (the “Explanatory Statement”) explaining the effect of the Scheme, required to be furnished pursuant to Section 166A of the above mentioned Ordinance, are set out in the composite document dated 6 December, 2008 sent by PCCW to its shareholders (the “Scheme Document”). A copy of the modifications to the Scheme proposed as at the date hereof and further information in relation to the modified Scheme are incorporated in the composite document of which this Notice forms part. The statement required to be furnished pursuant to Section 166A of the Companies Ordinance is comprised in the composite document of which this Notice forms part taken together with the Scheme Document.

The above-mentioned holders of the Scheme Shares may vote in person at the Meeting or they may appoint one or more proxies (who must be an individual), whether a member of PCCW or not, to attend and vote in their stead. A pink form of proxy for use at the Meeting is enclosed herewith.

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NOTICE OF THE RECONVENED COURT MEETING

Holders of Scheme Shares that have already lodged a properly executed pink form of proxy prior to the date of this Notice should note that such proxies remain valid for the Meeting unless holders of Scheme Shares elect to (i) lodge a new pink form of proxy in respect of the relevant Shares, or (ii) attend in person and vote at the Meeting. Holders of Scheme Shares that have sold or transferred some of their Scheme Shares should note that any pink forms of proxy lodged earlier remain valid for the Meeting as to the balance of the Scheme Shares that remain registered in the name of the holder as at the date on which entitlements to attend and vote at the Meeting are to be determined, unless the holder elects to lodge a new pink form of proxy in respect of those remaining Scheme Shares or to attend in person and vote at the Meeting. Persons that have sold or transferred all of their Scheme Shares should note that any pink forms of proxy lodged earlier will be invalid.

In the case of joint holders, the vote of the most senior holder who tenders a vote, whether personally or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s), and, for this purpose, seniority will be determined by the order in which the names of the joint holders stand in the register of members of PCCW in respect of the relevant joint holding.

It is requested that forms appointing proxies be lodged, by hand or by post, with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not less than forty-eight (48) hours before the time appointed for the Meeting. Forms of proxy may also be returned by facsimile at (852) 2962 5926 up to the time of the Meeting or may be handed to the chairman of the Meeting at the Meeting, if not so lodged.

By the Order, the High Court has appointed Sir David Ford, a director of PCCW or, failing him, any other person who is a director of PCCW as at the date of the Order to act as the chairman of the Meeting and has directed the chairman of the Meeting to report the outcome thereof to the High Court.

The Scheme will be subject to the subsequent approval of the High Court as set out in the Explanatory Statement contained in the Scheme Document taken together with the composite document of which this Notice forms part.

Richards Butler in association with Reed Smith LLP 20th Floor, Alexandra House 16-20 Chater Road Central, Hong Kong Solicitors for PCCW Limited

Dated 12 January, 2009

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NOTICE OF THE RECONVENED EGM

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PCCW Limited 電訊盈科有限公司 (Incorporated in Hong Kong with limited liability) (Stock Code: 0008)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting of PCCW Limited (“PCCW”) having been adjourned on 30 December, 2008 will be reconvened at the Convention Hall, the Hong Kong Convention and Exhibition Centre, 1 Harbour Road, Wan Chai, Hong Kong (please use the Harbour Road entrance), on Wednesday, 4 February, 2009, at 2:30 p.m. (or as soon thereafter as the Court Meeting (as defined in the scheme of arrangement hereinafter mentioned) reconvened for the same day and place shall have been concluded or been further adjourned), for the purpose of considering and, if thought fit, passing the following resolution as a special resolution:

SPECIAL RESOLUTION

“ THAT:

• (A) the proposed scheme of arrangement (the “Scheme”) between PCCW and the holders of the Scheme Shares (as defined in the Scheme) in the form of the print thereof, which has been produced to this meeting and for the purposes of identification signed by the chairman of this meeting, or in such other form and on such terms and conditions as may be approved by the High Court of the Hong Kong Special Administrative Region, be and is hereby approved;

• (B) for the purposes of giving effect to the Scheme, on the Effective Date (as defined in the Scheme):

• (i) the authorised and issued share capital of PCCW shall be reduced by cancelling and extinguishing the Scheme Shares;

• (ii) subject to and forthwith upon the said reduction of share capital taking effect, the authorised share capital of PCCW shall be increased to its former amount by the creation of such number of new Shares (as defined in the Scheme) as is equal to the number of Scheme Shares cancelled; and

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NOTICE OF THE RECONVENED EGM

• (iii) PCCW shall apply the credit arising in its books of account as a result of the said reduction of capital in paying up the new Shares referred to in paragraph (ii) above in full at par and those new Shares shall be allotted and issued, credited as fully paid, as to:

• (1) 74.27% of the aggregate number of new Shares referred to in paragraph (ii) above, to Starvest (as defined in the Scheme); and

• (2) 25.73% of the aggregate number of new Shares referred to in paragraph (ii) above, to Netcom BVI (and/or Unicom, as Netcom BVI shall in its absolute discretion direct) (each as defined in the Scheme);

and any entitlements to fractions of new Shares which may result from that calculation shall be allocated and dealt with as between Starvest and Netcom BVI as may be agreed between Starvest and Netcom BVI;

• (C) the directors of PCCW be and are hereby authorised to make application to The Stock Exchange of Hong Kong Limited (hereinafter called the “Stock Exchange”) for the withdrawal of the listing of PCCW’s shares on the Stock Exchange, subject to the Scheme taking effect; and

• (D) the directors of PCCW be and are hereby authorised to do all other acts and things as considered by them to be necessary or desirable in connection with the implementation of the Scheme, including (without limitation) the giving of consent to any modifications of, or additions to, the Scheme, which the High Court of the Hong Kong Special Administrative Region may see fit to impose and to do all other acts and things as considered by them to be necessary or desirable in connection with the implementation of the Scheme and in relation to the Improved Proposal (as defined in the document of which the notice of this resolution forms part) as a whole.”

By Order of the Board Philana WY Poon

Group General Counsel and Company Secretary

Hong Kong, 12 January, 2009

Registered office: 39th Floor, PCCW Tower TaiKoo Place 979 King’s Road Quarry Bay Hong Kong

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NOTICE OF THE RECONVENED EGM

Notes:

1. Members that have already lodged a properly executed white form of proxy prior to the date of this Notice should note that such proxies remain valid for the reconvened extraordinary general meeting unless Members (i) elect to lodge a new white form of proxy in respect of the relevant Shares, or (ii) elect to attend in person and vote at the reconvened extraordinary general meeting. Members that have sold or transferred some of their Shares should note that any white forms of proxy lodged earlier remain valid for the reconvened meeting as to the balance of the Shares that remain registered in such Member’s name as at the date on which entitlements to attend and vote at the reconvened meeting are to be determined. Persons that have sold or transferred all of their Shares should note that any white forms of proxy lodged earlier will be invalid.

2. A white form of proxy for use at this reconvened meeting is enclosed with the composite document of which this Notice forms part. Completion and return of a new white form of proxy will revoke any form of proxy submitted prior to the date of this Notice in respect of the same Shares.

3. A member of PCCW entitled to attend and vote at this reconvened meeting is entitled to appoint one or more proxies (who must be an individual) to attend and vote instead of him/her. A proxy need not be a member of PCCW.

4. In order to be valid, the white form of proxy together with any power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power of attorney, must be deposited with Computershare Hong Kong Investor Services Limited, the share registrar of PCCW, at Rooms 1806-1807, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, not less than forty-eight (48) hours before the time appointed for holding this reconvened meeting or any further adjournment thereof.

5. Completion and return of the form of proxy shall not preclude a member from attending and voting in person at this reconvened meeting and, in such event, the form of proxy shall be deemed to be revoked.

6. Where there are joint holders of any share in PCCW, any one of such joint holders may vote at this reconvened meeting, either personally or by proxy, in respect of such share as if he/she were solely entitled thereto; but if more than one of such joint holders are present at this reconvened meeting personally or by proxy, the most senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register of members of PCCW in respect of the relevant joint holding.

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