2006 Interim ResultsChina Telecom Corporation Limitedwww.chinatelecom-h.com

30 August 2006

2

Certain statements contained in this document may be viewed as “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E of the U.S. Securities Exchange Act of 1934 (as amended). Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of China Telecom Corporation Limited (the “Company”) to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company’s most recent Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the “SEC”) and in the Company’s other filings with the SEC.

Forward-Looking Statements

3

Executive Director, EVP & CFOMadam Wu Andi

Executive Director, President & COOMr. Leng Rongquan

Chairman & CEOMr. Wang Xiaochu

Management Team

4

Agenda

OverviewOverview

Business ReviewBusiness Review

Financial ResultsFinancial Results

Overview

6

Strong Free Cash FlowStrong Free Cash Flow

Supportive of corporate development and shareholders’value enhancement

Highlights

Effective CAPEX Control

Solid Operating Performance Amid Intensifying Competition

Strategic Transformation Gaining Momentum

Solid Operating Performance Amid Intensifying Competition

Continuous growth in revenue and net profit

Strategic Transformation Gaining Momentum

Fast growing Non-voice revenue; Voice challenges effectively abated

Effective CAPEX Control

Ensuring investment return and sustainable business growth

7

Note: * Net profit used hereinafter represents profit attributable to equity holders of the company** Free Cash Flow = EBITDA（Excl. connection fees）– CAPEX – Income TaxUnless otherwise stated, all financial data used hereinafter exclude upfront connection fees

1H20061H2005 Growth

2.6%0.1430.140EPS (RMB)

25.4%18,93415,101Free Cash Flow** (RMB Mil)

2.6%

-0.3pp

4.0%

4.7%

45.5%

8.1%

11,59011,293Net Profit* (RMB Mil)

52.4%52.7%EBITDA Margin

44,21742,518EBITDA (RMB Mil)

84,44280,620Operating Revenue (RMB Mil)

25.2617.37Broadband Subs (Mil)

218.71202.40Access Lines in Services (Mil)

Solid Results(Excl. Connection Fees)

Continuous growth in subscribers, revenue and net profit

8

0.1740.182EPS (RMB)

14,08414,696Net Profit (RMB Mil)

53.7%54.7%EBITDA Margin

46,71145,921EBITDA (RMB Mil)

86,93684,023Operating Revenue (RMB Mil)

IFRS-based Results(Incl. Connection Fees)

1H2005 1H2006

9

-397

Voice Business*1H2005 1H2006

RMB Mil

4.7% Contribution

Note: *Voice Business revenue includes Monthly Fees, Local Usage Fees, Upfront Installation Fees, DLD/ILD and Interconnection Revenue

1,979

2,616

-376

80,620

84,442

OthersInternet Access VAS

Revenue Growth Drivers

-0.5pp+2.5pp+3.2pp-0.5pp

+4.7%

10

RMB Mil

1H2004 1H2005 1H2006

60,591 61,574 61,198

Voice business revenue includes Monthly Fees, Local Usage Fees, Upfront Installation Fees, DLD/ILD and Interconnection Revenue

Voice ARPU（RMB）

59.5 52.8 47.6

Proactively Defend Voice Business

Intensifying Market Competition CT’s Voice Business Revenue

-0.6%

1H2004 1H2005 1H2006

Note: Calculated based on total voice revenue /total voice usage of the 2 mobile operators in China

0.285

0.2310.196

Firmly committed to profit-oriented development and avoid direct price competitionLeverage multi-services bundling & packaging to promote customers’ “stickiness” & usage

Effective Mobile Voice Tariff in China (RMB/min)

CAGR=-17.1%

11

Note: * Non-Voice revenue includes revenue from Internet access, VAS, managed data, leased line and others

RMB Mil

1H2004 1H2005 1H2006 1H2004 1H2005 1H2006

20.3%23.6%

27.5%

15,39019,046 23,244

61,19861,57460,591

Non-Voice Revenue*

Voice Revenue

Strategic TransformationGaining Momentum

Robust Non-Voice Revenue* GrowthNon-Voice Revenue as

a % of Operating Revenue

+22.0% +3.9pp

Expand new business & revenueEnhance customers’ “stickiness” & voice usage via effective multi-services bundlingSeize the competitive advantage for future comprehensive services operation

12

RMB Mil

2004 2005 2006E

36.9%

33.1%

FY CAPEX as a % of Operating Revenue

FY Budgeted51,000

1H CAPEX

25,018 22,86120,773

56,307 53,864

Effective CAPEX Control

CAPEX

-4.3% -5.3%

Stringent control on CAPEX to ensure investment return and sustainable business growth

Continued decrease in CAPEX (1H06: ↓ 9.1% yoy)

Further optimized CAPEX structure to transform existing network into intelligent network, broadband, IP based network and NGN

Proactively upgraded network’s integrated services capabilities to early prepare for future comprehensive services operation

To control CAPEX within full year budget

13

Near Term Focus

Voice &

Voice VAS

Internet&

Applications

IT Services &

Applications

Telecom & Internet

Convergence Services, like Best Tone…

Multi-services, multi-networks, multi-terminals

convergence offering

Enterprise Customers

Household Customers

Individual Customers

Differentiated branding & marketing

Telecom, Internet & IT Convergence Services, like

BizNavigator…

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Proactively cultivate unique competitive edge for future

comprehensive services convergence offering

Shareholders’ Value

Promising Prospect

Cultivate financial

strength and talents pool

Upgradenetwork’s integrated services

capabilities

Strengthen differentiated

branding & marketing

Fixed-MobileConvergence

Triple-Play

Integrated Comprehensive

Services

Consolidate business fundamentals

Proactively cultivate unique competitive edge for future

comprehensive services convergence offering

Business Review

16

1H2005(RMB Mil)

1H2006(RMB Mil)

GrowthShare of

Operating Revenue

13.2%30.6%11,1548,538Internet Access

47.1%-2.5%39,77240,810

100%

6.5%

7.8%

8.3%

17.1%

27.7%

17.7%

1.7%

4.7%84,44280,620Total

-6.7%5,5105,907Managed Data, Leased Line & Others

43.0%6,5804,601VAS

13.6%6,9756,141Interconnections

-1.2%14,45114,623Long Distance

-2.6%23,37824,005Local Usage Fees

-2.5%14,93615,326Monthly Fees

-1.4%1,4581,479Upfront Installation Fees

Local Voice

Revenue Breakdown

17

116.4 118.0 121.0

20.1 20.9 21.613.2 14.1 14.9

52.7 57.1 61.2

218.7202.4

210.1

Mil

2005.6 2005.12

Residential

Enterprise

Public Telephone

PAS

2006.6

Pulse Mil

1H2004 1H2005 1H2006

210,720 218,905 213,613

1H2004 1H2005 1H2006

40,527 40,810 39,772

RMB Mil

Local Voice Business

Access Lines in Services Local Voice Usage

Local Voice Revenue

-2.4%

-2.5%

18

Mil

26.0% 27.2% 28.0%

PAS Subs/Access Lines in Services

2005.6 2005.12 2006.6

61.2

52.757.1

1H2005

2005.12

1H2006

67.1% 69.5%

2006.6

4,706

1,590

RMB Mil

PAS

Subscribers CAPEX

Further improve operating return of PAS business

Network Utilization Rate

-66.2%

+2.4pp

19

Minute Mil RMB Mil

0.280.33

0.29

1.952.35 2.08

Market ShareILD Average Unit Price（RMB/Min）

15,051 14,623 14,451

Minute Mil812 819 799

1H2004 1H2005 1H2006

DLD Average Unit Price（RMB/Min）

46.5% 39.1%43.7%

39,393

45,145 46,761

58.8%50.0%51.2%

Long Distance Business

To stabilize development of long distance business through product bundling and targeted marketing

Domestic Long Distance Usage Long Distance Business Revenue

International Long Distance Usage

1H2004 1H2005 1H2006

1H2004 1H2005 1H2006

20

10,843

RMB Mil

6,602

8,538

Broadband AccessDial-up & Other Access

11,154

5,8548,048

748

490

311

1H2004 1H2005 1H2006

RMB Mil

1H2005 1H2006

Vnet

IDC services

Other services

IP-VPDN services

411

709

208359

87

105

11217

105

28

Booming Internet Business

Internet Access Revenue Internet VAS Revenue

+30.6%

+29.3%

+72.5%

Enhance differentiated marketingStrengthen interactive promotion of access & applications business

21

12.8%10.0%

7.7%

Mil

Broadband ARPU (RMB)

7878

86

1H2005 2H2005 1H2006

17.368

21.024

25.262

3.529

3.656

4.238

Net Adds

Broadband Access Revenue/Operating Revenue

RMB Mil

1H2004 1H2005 1H2006

5,854

8,048

10,843

Rapid Broadband Growth

Broadband Subs Broadband Access Revenue

+45.5%

+34.7%

+37.5%

Double broadband subscribers in 3-4 yearsLeverage product bundling (BizNavigator, Internet VAS…) to stimulate broadband usageModerate ARPU decline via differentiated marketing & product packaging

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Fast Growing VAS

RMB Mil

1H2004 1H2005

2,949

4,601

3.9%5.7%

VAS Revenue/Operating Revenue

1H2006

6,580

7.8%

1H2006

Caller ID

Telephone Information

Services

SMS

Color Ring Tone

Integrated Information

Services*

Others

Note: * Integrated Information Services include Internet VAS, Best Tone, BizNavigator and IT services & applications

As a % of VAS revenue; growth (yoy)

( 23.1%)

( 30.5%)

( 46.6%)

( 250.9%)

( 98.7%)

( 5.8%)

VAS Revenue VAS Revenue Composition

Comprehensive deployment of VAS with vigorous growth momentum

+43.0%

7.7%

39.3%

12.2%

14.2%

7.8%

18.8%

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Enhanced Marketing &

Customer Management

Fostering Market Competitiveness

IT Support

Branding

Distribution Channel

Product, pricing &marketing management

Improve Business Supporting System (BSS) & Customer Relations Management System (CRM)

Differentiate branding for enterprise, household and individual customers (e.g. BizNavigator)

Enhance dedicated & direct sales channel

Expand community & e-channels

Establish pricing guidance and authorization system to enhance control on service pricing

Financial Results

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1H2005（RMB Mil）

1H2006(RMB Mil)

Change

5.5%65,70462,280

4.0%

2.6%

2.2%

18.5%

14.7%

0.5%

2.0%

5.4%

4.7%

44,217

11,590

18,738

2,991

10,407

13,315

13,512

25,479

84,442

42,518EBITDA

11,293Net Profit

18,340Operating Profit

2,524Interconnection & Other Operating Expenses

9,074SG&A

13,254Personnel

13,250Network Operations & Support

24,178Depreciation & Amortization

Operating Expenses

80,620Operating Revenue

Key Financial Information

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RMB MilRMB Mil

EBITDA Margin

48.0%52.7%

42,51839,307

1H2005 1H20062H2005

11,293

9,838

52.4%

44,217 11,590

1H2005 1H20062H2005

12.0%14.0% 13.7%

Net Profit Margin

Profitability

EBITDA Net Profit

27

Operating Expenses

Depreciation & Amortization

Network Operations & Support

SG&A

Personnel

80.2% 77.8%

Interconnection & Other Operating Expenses

30.5%

18.7%

15.4%

12.2%

3.4%

30.2%

16.0%

15.8%

12.3%

3.5%

2005 1H2006

Cost Structure

Operating Expenses as a % of Operating Revenue

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Cost Initiatives

Depreciation & AmortizationStringent control on CAPEX to reduce depreciation expenses as a percentage of operating revenue continuously

Network Operations & SupportStrengthen centralized management on network maintenance to enhance quality & capability

PersonnelControl personnel expenses growth below revenue growth, progressively improving competitiveness of remuneration scheme to attract and retain talents

SG&AIncrease investment to retain and gain customers, more promotion & marketing for growth business

Strict cost control and enhanced

balancing to ensure stable

EBITDA marginPersonnel

Depreciation & Amortization

Network Operations & Support

SG&A

29

Note: * Others include communication infrastructure and other capital expenditure

1H2005 1H2006

19.9%

20.6%

5.0%

17.6%

23.6%

27.1%

7.7%

6.0%

23.6%

25.6%

22,861 20,773

RMB Mil

CAPEX

13.3% 10.0%

Optimized CAPEX Structure

CAPEX Composition Decreased CAPEX for fixed line switches to enhance operating return

Decreased CAPEX for PAS, persisting in profit-oriented development

Increased CAPEX for access and local transmission to strengthen “last mile”advantage

Increased CAPEX for Internet and data, optimizing resources allocation for growth business

Increased CAPEX for IT support to foster integrated services capability

Others*

IT Support

Internet & Data

Access & Local Transmission

PASFixed Line Switches

30

Free Cash Flow

RMB Mil

41.6% 40.2%

11,056

15,101

18,93438.6%

Solid financial strength and strong cash flow well support the Company’s sustainable growth and continuously enhance shareholders’ value

2005.6 2006.62005.12 1H2004 1H20061H2005

Solid Financial Strength

Total Debt/Total Capitalization

31

Continue to strengthen internal control per international best practices, Sarbanes-Oxley Act (Section 404) and Hong Kong Listing Rules

Perfecting Corporate Governance

Reducing Corporate Risk

Enhancing Operating Efficiency

Establish internal control

responsibility system th

rough

authority settin

g, cascade of

duties & grade assessment

Leverage internal control to

promote precision

management

Enhance internal control incorporating comprehensive risk management

Strengthen Internal Control

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Maximize Shareholders’ Value

Perfecting comprehensive

budget management and allocating

resources effectively to ensure successful implementation of

strategic transformation

Implementing precision

management and stringent cost

control to maintain EBITDA margin at a

relatively stable level

Strengthening treasury

management and maintaining solid

capital structure to reduce cost of

capital

Controlling and optimizing CAPEX

effectively to increase free cash flow

Enhancing internal control establishment

and execution to reduce corporate risk

33

Thank You

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Unaudited1H2005

Unaudited1H2006

14,08414,696Equity Holders of the Company

Attributable to:

18,62719,269Profit Before Taxation

(65,704)(62,280)Operating Expenses

33

14,117

(4,510)

(13)

(2,592)

2,494

86,936

17Minority Interests

14,713Profit for the Period

(4,556)Income Tax

(6)Investment Loss, Share of Profitfrom Associates

(2,468)Net Finance Costs

3,403Upfront Connection Fees

84,023Operating Revenue

Appendix 1: Extracted from unaudited statement of incomefor the 6 months ended 30 June 2006(incl. upfront connection fees)

RMB Mil

35

Audited31.12.2005

1,4581,444Minority Interests

227,848234,175Total Liabilities

418,629417,136Total Assets

189,323

190,781

62,539

165,309

374,628

44,001

181,517Equity Attributable to EquityHolder of the Company

182,961Total Equity

77,199Non-Current Liabilities

156,976Current Liabilities

380,473Non-Current Assets

36,663Current Assets

Appendix 2: Extracted from unaudited balance sheetas at 30 June 2006(incl. upfront connection fees)

RMB Mil

Unaudited30.6.2006

36

Unaudited1H2005

1,4921,481Managed Data

2,0982,265Leased Line

6,9756,141Interconnections

6,5804,601VAS

1,9202,161Other Businesses

86,93684,023Total

23,37824,005Local Usage Fees

12,88912,918DLD

39,77240,810Local Voice Business

11,154

1,562

14,936

1,458

2,494

8,538Internet Access

1,705ILD

15,326Monthly Fees

1,479Upfront Installation Fees

3,403Upfront Connection Fees

Appendix 3: Detailed operating revenue breakdownfor the 6 months ended 30 June 2006(incl. upfront connection fees)

Unaudited1H2006

RMB Mil