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China Communications Services Corporation Limited Annual Report 2015
REPORT OF THE DIRECTORS
PRE-EMPTIVE RIGHTS
There are no provisions for pre-emptive rights in the Articles of Association requiring the Company to offer new shares to the
existing shareholders in proportion to their shareholdings.
MAJOR CUSTOMERS AND SUPPLIERS
For the reporting period, the revenue from sales of goods or rendering of services to the five largest customers (including China
Telecom, China Mobile, China Unicom and China Tower Corporation Limited) of the Group represented 68.3% of the total
revenues of the Group; of which, the revenue from the largest customer of the Group represented 48.3% of the total revenues
of the Group. The purchases from the five largest suppliers of the Group accounted for less than 5.3% of the total annual
purchases of the Group.
To the knowledge of the Board, other than China Telecom and China Mobile (both of them being the shareholders holding more
than 5% of the issued share capital of the Company) and Mr. Sun Kangmin, Mr. Si Furong, Mr. Li Zhengmao and Mr. Zhang
Junan (positions of them setting out in the “Profiles of Directors, Supervisors and Senior Management” section of this annual
report), none of the directors of the Company, their close associates, or any shareholder (holding more than 5% of the issued
share capital of the Company) has any interests in such suppliers or customers.
PREFERENTIAL TREATMENT AND NON-COMPETITION ARRANGEMENT WITH
CHINA TOWER CORPORATION LIMITED (“THE TOWER COMPANY”)
In July 2014, China Telecom Corporation Limited, a subsidiary of China Telecom, jointly established the Tower Company with
China Mobile Communication Company Limited and China United Network Communications Corporation Limited. Pursuant to
the relevant arrangements for the establishment of the Tower Company, the Tower Company has indicated to the Company
that:
1.
on condition that it will not result in a breach by China Telecom and the Company of the Non-Competition Agreement
signed between them, when the Tower Company invites public tender for the design, construction, supervision and
maintenance of its telecommunications towers and related ancillary facilities, the Tower Company will select the Company
on a preferential basis, provided that the terms are the same;
2.
in the event of an injection of telecommunications assets into the Tower Company (acquisition by the Tower Company),
the existing maintenance agreements entered into between the Company and the respective promoters of the Tower
Company will remain valid. Upon the expiration of such maintenance agreements and when the Tower Company invites
tender for the maintenance services, the Tower Company will consider the Company on a preferential basis, provided that
the terms are the same; and
3.
the Tower Company will not compete in contravention of the contents of the Non-Competition Agreement.
