VODone not affected by lottery rule changes

The Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sport in the PRC issued the Rules on 2 January 2008. According to the Rules, all lottery institutions are restricted from engaging in the sale of lottery via the Internet from that same day.

As a state-owned enterprise, VODONE has fully complied with the regulation upon its issuance.

Due to the short period since the launch of the Lottery Channel, its contribution to VODONE's income at this initial stage is very little. The prohibition of the sale of lottery through the Internet will not adversely affect the income of VODONE. Furthermore, the VODONE Broadcasting Union System ("VODONE BUS") constitutes VODONE's core business as well as its major source of income. Currently, more than 6 million of VODONE's broadcasting units have been placed on the websites of VODONE. The number of individual Internet protocols has reached 6.5 million, while the number of PV per day has exceeded 70 million.

Dr. Zhang Lijun, Chairman of the Company, said, "The discontinuation of Lottery Channel sales will have virtually no impact on VODONE's business due to the strong growth of VODONE BUS and the contribution of new business initiatives. Meanwhile, the tightened standards of the internet lottery business will further strengthen the internet industry and our business by eliminating illegal websites."

"In the meantime, we are developing a Media Centre for the Beijing Olympic Games 2008, as well as the casting polling show for the Classical Chinese "Water Margin" TV series. With these two projects, we will further enhance our brand awareness and increase exposure through website page views, which in turn, will attract additional advertising income," added Dr. Zhang.

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