Increases Stake in CMHK

Vodafone Group PLC
16 May 2002



16 May 2002



VODAFONE GROUP INCREASES ITS STAKE IN CMHK



Vodafone Group Plc ('Vodafone') announces that it, or its wholly owned
subsidiary Vodafone Holdings (Jersey) Limited ('Vodafone Holdings'), will
subscribe US$750 million for new ordinary shares in China Mobile (Hong Kong)
Limited ('CMHK') through a share issue by CMHK (the 'Subscription').  CMHK is
using the proceeds of the Subscription to help finance its proposed acquisition
(the 'Acquisition') of the mobile telecommunications companies in eight
provinces of the PRC (Anhui, Hunan, Hubei, Jiangxi, Sichuan, Chongqing, Shaanxi
and Shanxi) indirectly owned by its ultimate parent, China Mobile Communications
Corporation ('CMCC').  Following the Acquisition and the Subscription, Vodafone
Group (meaning Vodafone and its subsidiaries) will have increased its ownership
in CMHK from 2.18% to approximately 3.27%.



The strategic reasons underpinning Vodafone Group's decision to invest further
in CMHK are that the Subscription will:



•         increase Vodafone Group's exposure to the world's largest mobile
market in terms of customers, a key market for Vodafone Group's global strategy.
  Furthermore, Vodafone Group believes that mobile will be a bypass technology
for personal communications and the effects of this will be evident in the PRC
earlier than in Europe



•         strengthen the strategic partnership with CMHK, the leading operator
in the PRC, which will have over 100 million customers on completion of the
Acquisition.  Since the signing of the Strategic Alliance Agreement between
Vodafone and CMHK in February 2001, both companies have co-operated closely at
various operational levels on matters such as customer relationship management,
new product development, network optimisation and R&D.  The Subscription
demonstrates the commitment of both groups to maintain a close and long-term
partnership



•         increase Vodafone Group's partnership rights.  CMHK has granted
Vodafone or Vodafone Holdings the contractual right to appoint one non-executive
director to CMHK's Board.  Sir Christopher Gent has been an independent
non-executive director of CMHK since February 2001 at CMHK's invitation and it
is expected that he will continue to hold this position



In addition, Vodafone Group:



•         will be able to realise a cash return on its increased investment.
CMHK is announcing today that, in the absence of unforeseen circumstances, it
will commence the payment of dividends.  The first dividend will be in respect
of the financial year ending 31 December 2002



•         considers the terms of CMHK's Acquisition to be attractive.  CMHK
expects the Acquisition to be EPS enhancing for its shareholders



Commenting on the Subscription, Sir Christopher Gent, Chief Executive of
Vodafone said:



'This is an excellent opportunity for Vodafone Group to increase its stake in
CMHK and I expect further benefits to arise from an increasing level of
co-operation between the world's two largest mobile operators.  I am also
pleased that CMHK has committed to the payment of dividends, which, together
with our increased exposure to the world's largest mobile market, we expect will
create long-term value growth for Vodafone Group.'



The total purchase price payable by CMHK for the Acquisition will consist of
US$3.15 billion in cash, US$2.62 billion in shares indirectly issued to CMCC,
and US$2.80 billion of deferred consideration.  Part of the initial cash
consideration will be financed by the Subscription for 236.63 million new
ordinary shares in CMHK at a price of HK$24.72 per share amounting to a total
new cash investment of HK$5,850 million (US$750 million).



As a result, the percentage shareholding in CMHK held by Vodafone Group will
increase from 2.18% to approximately 3.41% immediately after the Subscription
and approximately 3.27% immediately after the Acquisition.



The Subscription price of HK$24.72 has been calculated based on the average CMHK
closing share price over the 30 trading days preceding today's announcement.
The Subscription price is also subject to a collar mechanism, which provides for
an adjustment subject to price movements beyond a 15% band, either up or down,
in the 10 trading days following this announcement; beyond the 15% band the
Subscription price will be increased or decreased by 50% of the share price
movement outside the band.  The Subscription will be financed from the existing
resources of Vodafone Group.



The Subscription is not conditional upon completion of the Acquisition and is
anticipated to complete before the Acquisition on 18 June 2002.  Customary
conditions precedent exist for an agreement of this nature, including a
condition that CMHK issues a formal paid announcement.



UBS Warburg acted as sole financial adviser to Vodafone and Vodafone Holdings.



                                     -ends-



For further information



Vodafone Group
Tim Brown, Group Corporate Affairs Director
Melissa Stimpson, Head of Group Investor Relations
Bobby Leach, Head of Group Financial Media Relations
Darren Jones, Senior Investor Relations Manager
Tel:  [phone]



Tavistock Communications
Lulu Bridges / John West
Tel:  [phone]



UBS Warburg
Warren Finegold (London)
Mark Lewisohn (London)
Tel:  [phone]



Rob Rankin (Hong Kong)
Tel:  [phone]



Notes to editors



About CMHK:



CMHK is the second largest mobile telecommunications company in the world with
74.59 million customers as at 20 March 2002.  CMHK is the leading mobile
operator in China and currently has operations in 13 of the PRC's 31 provinces
and municipalities, serving a geographically contiguous market covering all the
coastal regions of the PRC with 632.8 million inhabitants as of 31 December
2001.



About Vodafone:



Vodafone is the world's largest mobile telecommunications company with interests
in 28 countries across 5 continents with over 229 million venture customers and
over 101 million proportionate customers worldwide.  For further information
please visit www.vodafone.com.



About Vodafone Holdings:



Vodafone Holdings is a wholly owned direct subsidiary of Vodafone, incorporated
under the laws of Jersey.  It acts as a holding company within the Vodafone
Group and currently holds an interest in CMHK.





For purposes of translation, an exchange rate of HK$7.80 = US$1.00 has been
used.



                      This information is provided by RNS
            The company news service from the London Stock Exchange