CN Communica Telecom Services : (1) ISSUE OF NEW SHARES TO A CONNECTED PERSON UNDER SUBSCRIPTION SPECIFIC MANDATE AND

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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, 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 announcement.

1. ISSUE OF NEW SHARES TO A CONNECTED PERSON UNDER SUBSCRIPTION SPECIFIC MANDATE

   AND

2. ISSUE OF NEW SHARES TO INDEPENDENT INVESTORS UNDER PLACING SPECIFIC MANDATE

The Board is pleased to announce that on 3 May 2016 (after trading hours), the Company entered into:

1. with CCI, the CCI Subscription Agreement, pursuant to which the Company will allot and issue, and CCI will subscribe for, 100,000,000 new Shares at the Subscription Price; and

2. with six Investors, each of whom is an Independent Third Party and not related to each other, the Investor Subscription Agreements, respectively, pursuant to which the Company will allot and issue, and the Investors will subscribe for, an aggregate of 261,000,000 new Shares at the Subscription Price.

Completions of the CCI Subscription Agreement and the Investor Subscription Agreements are conditional on, among other things, the Listing Committee of the Stock Exchange granting the listing approval. Application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Aggregate Subscription Shares.

If the CCI Subscription Agreement and the Investor Subscription Agreements are completed, the maximum gross proceeds and net proceeds (after deducting professional fees and other related expenses) will be raised from the issue of the Aggregate Subscription Shares (i.e. 361,000,000 new Shares) at the Subscription Price are expected to be approximately HK$180.5 million and approximately HK$179.9 million, respectively. In such case, assuming that the professional fees and other related expenses of approximately HK$0.6 million are fully allocated to the issue of the Aggregate Subscription Shares, the net Subscription Price will be approximately HK$0.498 per new Share.

The net proceeds from the issue of the Aggregate Subscription Shares will be used in the following manner: (i) for settlement of the Consideration of the Acquisition; (ii) for payment of the Service Fee under the Service Agreement by the Target Company (being a member of the Enlarged Group after completion of the Acquisition); and (iii) for general corporate purpose of the Group. Details of the intended use of the proceeds from the Subscriptions are set out in the section headed ''Use of Proceeds'' in this announcement.

GEM LISTING RULES IMPLICATIONS

As at the date of this announcement, CCI, which directly holds approximately 27.54% of the issued share capital of the Company, is a substantial Shareholder and accordingly a connected person of the Company.

The CCI Subscription Shares and the Investor Subscription Shares will be allotted and issued to CCI and the Investors pursuant to the Subscription Specific Mandate and the Placing Specific Mandate, respectively. Independent Shareholders' approvals have been obtained for, among other things, the Subscription Specific Mandate and the Placing Specific Mandate at the EGM held on 16 February 2016.

Capitalised terms used in this announcement shall have the same meanings as those defined in the Circular unless the context otherwise requires.

INTRODUCTION

Reference is made to the Circular and the Announcement. On 16 February 2016, the Independent Shareholders have approved, among other things, the grant of the Subscription Specific Mandate and the Placing Specific Mandate.

The Board is pleased to announce that on 3 May 2016 (after trading hours), the Company entered into:

1. with CCI, the CCI Subscription Agreement, pursuant to which the Company will allot and issue, and CCI will subscribe for, 100,000,000 new Shares at the Subscription Price; and

2. with six Investors, each of whom is an Independent Third Party and not related to each other, the Investor Subscription Agreements, respectively, pursuant to which the Company will allot and issue, and the Investors will subscribe for, an aggregate of 261,000,000 new Shares at the Subscription Price.

   Principal terms of each of the CCI Subscription Agreement and the Investor Subscription Agreements are set out below.

   CCI SUBSCRIPTION AGREEMENT

   Date : 3 May 2016

   Parties : (i) the Company; and

   (ii) CCI

   CCI is a wholly-owned subsidiary of CCC, which directly holds approximately 27.54% of the issued share capital of the Company. Further information of CCI is set out in the section headed ''Information of each of the Subscribers'' below in this announcement.

   Issue of CCI Subscription Shares to CCI

   Pursuant to the CCI Subscription Agreement, the Company will allot and issue, and CCI will subscribe for, 100,000,000 new Shares at the Subscription Price.

   The amount of 100,000,000 new Shares represents (i) 7.72% of the issued share capital of the Company as at the date of this announcement; and (ii) approximately 6.04% of the issued share capital of the Company as enlarged by the issue of the Aggregate Subscription Shares (i.e. 361,000,000 Shares). The aggregate nominal value of the CCI Subscription Shares to be issued to CCI is HK$1,000,000.

   The CCI Subscription Shares to be issued to CCI pursuant to the CCI Subscription Agreement, when fully paid, will rank pari passu in all respects with the Shares in issue as at the date of the CCI Subscription Agreement, including the right to rank in full for all distributions declared, made or paid by the Company at any time after the date of the CCI Subscription Agreement.

   Subscription Price

   The Subscription Price under the CCI Subscription Agreement shall be HK$0.50, equivalent to that under the Investor Subscription Agreements.

   As stated in the Circular, the Subscription Price for the CCI Subscription Shares shall be issued at the price per Share at which the Investor Subscription Shares will be issued, which shall be no less than the higher of (1) HK$0.43 per Share and (2) a discount of not more than 15% to the higher of:

3. the closing price per Share as quoted on the Stock Exchange on the date of any relevant Placing Agreement(s) or other agreement involving the proposed issue of the Placing Shares under the Placing Specific Mandate; and

4. the average closing price per Share of the Company as quoted on the Stock Exchange for the last five consecutive full trading days prior to:

5. the date of announcement of the placing or the proposed transaction or arrangement involving the proposed issue of the Placing Shares under the Placing Specific Mandate;

6. the date of any relevant Placing Agreement or other agreement involving the proposed issue of the Placing Shares under the Placing Specific Mandate; and

7. the date of EGM.

The Subscription Price (i.e. HK$0.50 per CCI Subscription Share) represents:

1. no premium or discount to the closing price of HK$0.500 per Share as quoted on the Stock Exchange on the date of the CCI Subscription Agreement;

2. no premium or discount to the average closing price of approximately HK$0.500 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of this announcement;

3. no premium or discount to the average closing price of approximately HK$0.500 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the date of the CCI Subscription Agreement;

4. a discount of approximately 3.85% to the closing price of HK$0.520 per Share as quoted on the Stock Exchange on the date of the EGM; and

5. a discount of approximately 3.85% to the highest of (A) to (D) above.

The Subscription Price was arrived at after arm's length negotiations between the Company and CCI with reference to the prevailing market price of the Shares. The Directors consider that the Subscription Price is fair and reasonable and in the interests of the Company and its shareholders as a whole.

Subscription monies

Based on the Subscription Price and the 100,000,000 CCI Subscription Shares to be allotted and issued by CCI, the total subscription monies payable by CCI to the Company pursuant to the CCI Subscription Agreement amount to HK$50,000,000.

Conditions precedent

Completion of the CCI Subscription Agreement is conditional on:

1. the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment and/or despatch of certificates for the CCI Subscription Shares) the listing of, and permission to deal in, the CCI Subscription Shares (and such listing and permission not subsequently revoked prior to the completion of the CCI Subscription Agreement);

2. the Company obtaining all necessary written consents and approvals (if any) from the relevant authorities in respect of the transactions contemplated under the CCI Subscription Agreement, if applicable;