Benefited from the robust momentum of full services operation and the seasonal effects of the Company's operation (same as prior years), the Company's operation was on track as planned for the first quarter of 2010 and the profitability has rebounded noticeably from the fourth quarter of last year. Excluding the amortisation of upfront connection fees of RMB132 million, the operating revenues were RMB 52,712 million, representing an increase of 3.6% from the first quarter of last year. The profit attributable to equity holders of the Company was RMB 4,272 million, representing a decline of 9.1% from the first quarter of last year and an increase of 127.4% from the fourth quarter of last year. EBITDA (before CDMA network capacity lease fees) was RMB 22,796 million, an increase of 2.7% from the first quarter of last year and an increase of 22.7% from the fourth quarter of last year. EBITDA margin was 43.2%, representing a decline of 0.4 percentage points from 43.6% of the first quarter of last year and an increase of 8.5 percentage points from 34.7% of the fourth quarter of last year.

In 2010, the Company will continue its operating strategy of "innovative integrated operation with differentiated edges and profitable scale development". We will continue to optimise our business structure and gradually increase the revenue contribution from mobile, broadband access, and value-added and integrated information services. While accelerating the development of our mobile services, we will promote the expansion of our core 3G products and mid-end handsets to support 3G development. We will also push forward the intensive scale promotion of industry-specific applications and provide commercialised, standardised and in-series application products components to enhance customer values. We will strive to promote the upgrade of broadband bandwidth, enrich Internet applications and integration of our wireline and wireless broadband operations.

Furthermore, we will insist on win-win cooperation strategy and adopt flexible partnership models to stimulate the development of mobile-Internet-based information services value chain, enriching the embedded values of our value-added and integrated information services. Through initiatives such as integrated operations, branded packages and service quality improvement, we will gradually alleviate the risk of our wireline voice service decline and achieve a coordinated development of full services. Meanwhile, we will strengthen our network optimisation and maintenance to further perfecting services systems and increase services capabilities. We will also strengthen the synergy between front-end and back-end to establish differentiated and perceivable competitive advantages.

In 2009, mobile services experienced rapid development. China Telecom fully utilised its customer and network resources, and marketing capabilities to rapidly expand the mobile subscriber base to 56.09 million by the end of 2009, successfully doubling the number with a growth rate of 101.0% from the beginning of 2009. Revenue from mobile services was RMB30,003 million with stable MOU and ARPU.

While we achieved scale development of mobile services and successfully invigorated industry value chain in 2009, we also accelerated our access to all kinds of mainstream open retail channels and actively promoted sales via electronic and online channels, which boosted the growth in handset sales. In 2009, CDMA handset sales reached over 30 million units, three times more than that of 2008. We will increase our efforts in cooperating with external partners and launch new models of handsets including the flagship CDMA handsets and the 3G handsets pricing around RMB1,000, stimulating the development of the information services industry value chain with a focus on mobile Internet.

In 2009, non-voice services aiming at satisfying social informatisation needs recorded strong growth. Revenue from non-voice services accounted for 52.7% of the operating revenues excluding the amortisation of the upfront connection fees, constituting a new milestone of our strategic transformation. Revenue from wireline non-voice services was RMB94,167 million, an increase of 14.7% year on year, accounting for 54.6% of the wireline services revenue excluding the upfront connection fees. Wireline broadband access services as well as wireline value-added and integrated information services experienced strong growth and their revenues were RMB47,061 million and RMB27,983 million respectively, representing an increase of 17.1% and 9.3%, respectively from 2008, optimising the overall business structure of the Company. Wireline broadband services grew significantly with net addition of 9.19 million subscribers in the year, bringing the total number of subscribers to 53.46 million with the ARPU RMB80.3. There was also strong growth in the wireline value-added and integrated information services, whereas the revenues from IT service and applications services, as well as "Best Tone" type of information services, increased by 32.4% and 14.7% respectively from 2008.

In order to seize the leading positions in mobile products, we established an innovative product development system by setting up a new product development center at our headquarters and 8 other product R&D bases to strengthen the coordination and centralised development of our key products. We also enhanced the synergy of our ICT companies and our marketing channels for the government and enterprise customers to strengthen the service support for key industry-specific application products. We further increased our efforts in the development and promotion of public information products which are based on mobile Internet applications. We launched products like "iMusic", wireless broadband, "189 mailbox", "e surfing LIVE" to gain market share through differentiation.

In 2009, capital expenditure was RMB38,042 million, a decline of 21.4% from 2008, which accounted for 18.3% of the operating revenues excluding the upfront connection fees, a decrease of 7.9 percentage points from 2008. Adhering to the principal of effectively allocating resources and supporting key development areas, we further increased investments in broadband, platform integration of value-added services and integrated information services. The investments in broadband as well as value-added and integrated information services accounted for 54.1% and 17.8% respectively of total capital expenditure of the year, an increase of 8.7 percentage points and 1.3 percentage points respectively from 2008.

The capital expenditure for 2010 will be flat at 2009 budgeted level amounted to RMB39 billion.

Taking into consideration of the return to shareholders, the Company's cash flow and its capital requirements for future development, the Board of Directors has decided to recommend at the forthcoming Annual General Meeting that a dividend being an equivalent of HK$0.085 per share for the financial year 2009, which is the same as 2008.