EXHIBIT 10.7
INTERCONNECTION SETTLEMENT AGREEMENT
BY AND BETWEEN
CHINA NETCOM (GROUP) COMPANY LIMITED
AND
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION
INTERCONNECTION SETTLEMENT AGREEMENT
This Agreement is made and entered into on [-], 2004 in Beijing, People's
Republic of China ( "PRC") by and among the following two parties:
Party A: China Network Communications Group Corporation
Address: Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx, PRC
Legal representative: Zhang Xxxx Xxxxx
Party B: China Netcom (Group) Company Limited
Address: Xxxxxxxx X, Xx. 000, Xxxxxxxxxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx, PRC
Legal representative: Zhang Xxxx Xxxxx
WHEREAS,
(1) Party A is a state-owned enterprise duly incorporated and validly
existing under the laws of PRC;
(2) Party B is a limited foreign funded enterprise duly incorporated and
validly existing under the laws of PRC and is finally controlled by
Party A.
Based on fair and reasonable basis, following cooperative negotiation,
regarding relevant issues relating to interconnection settlement provided by
either Party to the other Party, it is hereby agreed by and between both parties
hereto as follows:
1. BASIC PRINCIPLES
1.1 For the services and/or facilities provide by either Party to the other
Party under this Agreement, the Party reserves the right to collect
reasonable service fees based on the principle of fairness for such
service and/or facilities it provides. The other Party shall make the
payment for the services/or facilities provided.
1.2 The terms of services and/or facilities offered by one Party to the other
under this Agreement shall not be worse than any other third party
offering the same or similar services and/or facilities.
1
1.3 Should either Party hereunder demand for more services and/or facilities
hereunder from the other Party, the other Party shall make its utmost
effort to provided such more services and/or facilities requested under
the conditions no less favorable than that under which this Party may
provide the same or similar services and/or facilities to a third Party.
1.4 The agreed services and/or facilities hereunder shall fully comply with
the purposes agreed upon under this Agreement and the standard set by the
State.
1.5 In the event of any breach of provision by either party under this
Agreement that leads to any damage suffered by the other party, the party
in default shall be liable for all immediate and full damages for
breaching this Agreement. However, this Party shall not be held
responsible for such losses in the event of Force Majeure.
1.6 Both parties shall provide all reasonable and essential assistance to the
other party for the purpose of fulfilling the obligations set out in this
Agreement.
1.7 It is agreed that both parties will take further actions to ensure the
realization of the principles and provisions in this Agreement. It is
further agreed that both parties will ensure that, Party B, being a
subsidiary of a company to be listed or listed, China Netcom Group (Hong
Kong) Limited (hereinafter "Listing Company"), shall comply with the
Listing Rules of the Hong Kong Stock Exchange for connected transactions.
2. INTERCONNECTION AND SETTLEMENT VARIETIES
2.1 The Parties agree to achieve the interconnections between various
telecommunication networks of the Parties.
2.2 The Parties agree to settle domestic long distance voice service and
international long distance voice service as is set forth in this
Agreement.
3. INTERCONNECTION TECHNICAL REGULATIONS AND STANDARDS, SHARE OF
INTERCONNECTION COSTS AND ENGINEERING CONSTRUCTION
3.1 All foresaid connections shall be made in accordance with the
interconnection technical regulations promulgated by national
telecommunication regulatory authorities.
3.2 The Parties shall negotiate on the settlement of interconnection costs and
engineering construction with reference to relevant regulations
promulgated by national telecommunication regulatory authorities.
2
4. OBLIGATIONS OF THE PARTIES
4.1 The parties shall warrant that the communication quality between networks
be not lower than the communication quality of the same service in their
own networks.
4.2 Under the premise of technical feasibility, when required, either Party
shall provide telecommunication services which has been provided for its
own customers to the other Party's customer unconditionally with service
quality guaranteed.
4.3 Party A shall be obliged to provide Party B's auditors with the accounting
records of Party A and its connected persons for any connected
transactions.
5. NETWORKS MANAGEMENT AND MAINTENANCE
5.1 Either Party shall give notice to the other Party six (6) months prior to
its enlargement and reconstruction of its network, which may negatively
affect the communication of other Party's customers.
5.2 Except for Force Majeure, either Party shall give notice to the other
Party thirty (30) days prior to its adjustment of route system, relay
circuit, signaling mode, station data and software version, which may
negatively affect the communication of other Party's customers.
5.3 When required, either Party shall, in a timely manner, cooperate with the
other Party when the latter adjusts the route system, relay circuit,
signaling mode, station data and software version to ensure the
communication quality between networks.
5.4 The Parties agree to perform maintenance on their own networks to assure
the normal operation of the whole networks according to the applicable
regulations promulgated by national telecommunication regulatory
authorities from time to time.
5.5 Should there be any communication breakdown and problems, the Parties
shall take effective measures to resume communication.
6. SETTLEMENT PRINCIPLES AND METHODS BETWEEN NETWORKS
6.1 Settlement relationships for domestic long distance voice service: Party A
and Party B make settlement with each other, except for domestic long
distance voice service between Party A's subsidaries in Heilongjiang,
Jilin, Shanxi and Inner Mongolia and Party B's subsidaries in Beijing,
Tianjin, Henan, Hebei, Shandong and Liaoning.
3
Settlement price for domestic long distance voice service: settlement
based on voice termination - operator from whose network calls are
originated makes settlement to the operator from whose network calls are
terminated. The price is RMB 0.06/minute if calls are terminated in the
network of Party A or Party B and RMB 0.09/minute if terminated in
networks other than in those of Party A and Party B.
6.2 Settlement relationship for international long distance voice service:
settlement between Party A and Party B.
Settlement principle for international long distance voice service (see
Appendix to this Agreement for detailed price):
(1) Outgoing international calls: Party A shall be responsible for any
charges which Part B shall pay to overseas telecommunications
operators. Incomes of Party A shall be distributed between Party A
and Party B based on estimated cost proportion of Party A and Party
B in provision of outgoing international long distance voice service
after the amount of payment made by Party B to overseas
telecommunications operators has been deducted from the total
income.
(2) Incoming international calls: Incomes of Party B receivedfrom
overseas telecommunication operators shall be distributed between
Party A and Party B based on estimated cost proportion of Party A
and Party B in provision of incoming international long distance
voice service after the amount of payment toParty A (RMB 0.06/minute
when calls are terminated in Party A's network; RMB 0.09 when calls
are terminated in other operator's network) has been deducted from
the total income. The above-mentioned rate shall be subject to
adjustment at any time according to applicable standards, fixed
tariffs and policies published by relevant Chinese regulatory
authorities.
6.3 Data processing and checking principles
Billing and settlement center of Party B shall be responsible for data
processing. If the difference between the xxxx of the center and billing
data of both parties (billing data difference = difference between the
relevant two parties/the averaged data of the relevant two parties *100%)
is equal to or lower than 3%, the xxxx of the center shall prevail. If the
difference is higher than 3%, a preliminary settlement shall be made based
on the xxxx data of the center. The parties shall submit a written request
for dispute arbitration to operational management department of Party B
within 10 working days from the 20th of each month.
Operational management department of Party B shall give a written disposal
suggestion within 3 months upon receipt of the written dispute arbitration
request. The settled amount that needs
4
adjustment shall be adjusted in the statement of account of next month.
6.3 Settlement Procedures
Place of settlement: Beijing, China
Settlement period, commence date and termination date: once per month,
settlement and billing period (based on the ending time of calls) is from
0:00 (inclusive) of 21st of the previous month to 0:00 (exclusive) of 21st
of this month. Since there are quite a number of uncertainties in the
international business settlement characterized by the committed period.
Within the settlement period, the internal settlement of international
service shall be made on the basis of the completion of settlement with
overseas telecommunication operators. Interconnection settlement will
begin from 0:00 of December 21, 2003.
Method of payment: the payer party of the month shall pay the net
settlement amount to the payee party of the month.
7. REPRESENTATIONS AND WARRANTS
Each party represents and warrants to the other party that:
(1) It has the power and authority (including but not limited to any
approval, consents or permission granted by the government
departments ) to sign this Agreement;
(2) No provision in this Agreement violates the constitutive documents
or the laws and regulations of PRC;
8. FORCE MAJEURE
If any unforeseeable Force Majeure incident whose occurrence and impact
cannot be prevented or avoided has affected or has led to the fail of the
either party in performing this Agreement in accordance with the agreed
terms, the affected Party shall immediately inform the other Party within
fifteen (15) days after the said incident, and provide the other Party
details of the incident and effective certification documents explaining
why all or part of the related obligations under this Agreement and the
relevant appendixes can not be performed, or need to performed in a
prolonged time frame. Based on the extent of the influence of such
incidents on the performance of such affected obligations, the parties
shall negotiate to decide whether or not to terminate, postpone or
partially exempt the performance of such obligations.
5
9. CONFIDENTIALITY
With the exception of requests by the legal or governmental departments or
any other relevant securities regulatory authorities or for the purpose of
the Listing Company seeking listing, unless with written approval by the
other party, neither party can make public announcements nor supply or
reveal any business information regarding this Agreement of the other
party to any companies, enterprises, organizations or individuals,.
10. TRANSFER
Without the written approval of the other party, neither party may
transfer any single right and obligation as agreed upon under this
Agreement.
11. NON-WAIVER
Unless otherwise specified by law, the failure or delay of exercising the
right, power or privilege as endowed by this Agreement on the part of
either Party A or Party B cannot be deemed as the waiver of such rights,
power or privileges. Besides, the partial exercise of such rights, power
or privileges should not hinder the exercise of such rights, power or
privileges of this Party in the future.
12. NOTICES
12.1 All notices required to be delivered pursuant to this Agreement shall be
in writing, and delivered to the address as stated at the beginning part
of this Agreement, or to addresses or facsimile numbers designated by one
Party to the other Parties in writing from time to time.this Agreement.
12.2 Any notice above shall be delivered either by hand, registered mail, or
facsimile. Any notice shall be deemed to have been delivered at the time
of actual receipt if delivered by hand; on the date of return receipt if
delivered by registered mail; and at the time of transmission if delivered
by facsimile.
13. GOVERNING LAWS
This Agreement shall be governed, interpreted and implemented in
accordance with laws of the People's Republic of China.
14. DISPUTES RESOLUTION
In case of disputes as to the power, interpretation or implementation of
this Agreement, both parties shall seek to settle the matters of dispute
by friendly negotiation. If the matters of dispute cannot be settled by
negotiation within thirty (30) days from the day the matters of dispute
arise, either party
6
has the right to resort to litigation at the people's court which has
jurisdiction over where Party B situates.
15. EFFECTIVENESS OF AGREEMENT AND OTHERS
15.1 This Agreement shall come into effect once signed by the legal
representatives or authorized representatives of both Parties and affixed
with their official seals. This Agreement shall be effective till June 30,
2007. If Party B wishes to renew this Agreement and notifies Party A with
3 month's notice, this Agreement shall be renewed automatically for
another 3 years on the same terms. There are no limits on the number of
renewal.
15.2 Upon the agreement of both parties, both parties can amend this Agreement
or enter into supplementary agreement to this Agreement. The amendments or
supplementary agreements of this Agreement shall come into effect once
signed by the legal representatives or authorized representatives of both
Parties and affixed with their official seals.
15.3 This Agreement is severable, that is, if any provision of this Agreement
is held to be illegal or unenforceable at any time, the effectiveness and
performance of other provisions of this Agreement shall not be affected.
15.4 This Agreement is made into six (6) duplicate originals. Each party holds
three (3) copies, and each copy shall have the same legal binding effect.
7
Signature page:
CHINA NETWORK COMMUNICATIONS GROUP CORPORATION (SEAL)
By: __________
Legal Representative or Authorized Representative
CHINA NETCOM (GROUP) COMPANY LIMITED (SEAL)
By: __________
Legal Representative or Authorized Representative
8
APPENDIX: SPECIFIC SETTLEMENT PRICES FOR INTERNATIONAL LONG DISTANCE VOICE
SERVICE
(1) Outgoing international calls (including outgoing INMARSAT calls originated
from China and incoming international calls reverse settlement): Party A
shall make settlement to Party B, RMB [M+(N-M)*R]/minute, if N