SEC Division of Corporation Finance no-action letter: SUNDAY Communications Limited

Securities Exchange Act of 1934 Rule 13e-3

November 1, 2006

Response of the Office of Mergers and Acquisitions Division of Corporation Finance

William F. Barron, Esq. The Hong Kong Club Building 3A Chater Road Hong Kong

Re:

Proposed Sale, Withdrawal and Distribution Transaction of SUNDAY Communications Limited

Dear Mr. Barron:

We are responding to your letter dated November 1, 2006 to Brian V. Breheny and Celeste M. Murphy, as supplemented by telephone conversations with the staff of the Division of Corporation Finance, with regard to your request for no-action relief. Our response is attached to the enclosed photocopy of your letter to avoid having to recite or summarize the facts set forth in your letter. Unless otherwise noted, capitalized terms in this letter have the same meaning as defined in your letter.

Based on the representations in your November 1, 2006 letter, as supplemented by telephone conversations with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the "Commission"), the staff will not recommend that the Commission take enforcement action if the Proposed Sale, Withdrawal and Distribution Transaction is consummated as described in your letter without compliance with the requirements of Rule 13e-3 under the Securities Exchange Act of 1934 (the "Exchange Act"). In granting this relief, we considered the following facts, among others:

The U.S. holders of SUNDAY ordinary shares hold no more than ten percent of SUNDAY's ordinary shares as determined pursuant to Rule 800(h) under the Securities Act of 1933 (the "Securities Act"), Instruction 2 to paragraph (h)(8) and paragraph (i) of Rule 13e-4 under the Exchange Act and Instruction 2 to paragraphs (c) and (d) of Rule 14d-1 under the Exchange Act; and

SUNDAY and PCCW will comply with the conditions, to the extent applicable, set forth in Rule 802(a) under the Securities Act, Rule 13e-4(h)(8) and Rule 14d-1(c) under the Exchange Act.

The foregoing no-action position is based solely on the representations and facts presented in your letter dated November 1, 2006, as supplemented by telephone conversations with the Commission staff. The relief is strictly limited to the application of Rule 13e-3 to the Proposed Sale, Withdrawal and Distribution Transaction. You should discontinue the Proposed Sale, Withdrawal and Distribution Transaction pending further consultations with the staff if any of the facts or representations set forth in your letter change.

We also direct your attention to the anti-fraud and anti-manipulation provisions of the federal securities law, including Section 10(b) of the Exchange Act and any other applicable provisions of the federal securities laws. The Division of Corporation Finance expresses no views on any other questions that may be raised by the Proposed Sale, Withdrawal and Distribution Transaction, including, but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the Proposed Sale, Withdrawal and Distribution Transaction.

Sincerely,

Brian V. Breheny Chief, Office of Mergers & Acquisitions Division of Corporation Finance

Incoming Letter:

The Incoming Letters are in Acrobat format:

Incoming Letter 1

Incoming Letter 2

Incoming Letter 3

Incoming Letter 4

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DAVIS POLK & WARDWELL

450 LEXINGTON AVENUE AMERICAN LAWYERS 15, AVENUE NIATIGNON NEW YORK, N I I00 i 7 7500s PARIS

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  WILLIAM F BARRON
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  JOHN G CROWLEI
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  ADMITTED IN NEW YORK
  November 1, 2006
  Brian V. Breheny, Chief
  Celeste M. Murphy, Special Counsel
  Office of Mergers and Acquisitions
  Securities and Exchange Commission
  100 F Street, NE
  Washington, D.C. 20549
  Re: Proposed Sale, Withdrawal and Distribution Transaction of SUNDAY Communications Limited Dear Mr. Breheny and Ms. Murphy:
  We are writing on behalf of our client, PCCW Limited ("PCCW"),and its subsidiary, SUNDAY Communications Limited ("SUNDAY"), to request that the staff (the "Staff) of the Securities and Exchange Commission (the "Commission") grant no action relief from the provisions of Rule 13e-3 ("Rule 13e-3") under the Securities Exchange Act of 1934, as amended (the "ExchangeAct"), with respect to the proposed sale of substantially all of SUNDAY'S businesses and assets to PCCW or PCCW's subsidiary or subsidiaries followed by a withdrawal of the listing of SUNDAY's shares on The Stock Exchange of Hong Kong Limited (the 'SEHK"), a distribution to the shareholders of SUNDAY and the subsequent liquidation of SUNDAY, as described in this letter.
  I. Description of the Companies
  A. SUNDAY
  SUNDAY is a company incorporated under the iaws of the Cayman Islands. SUNDAY is a developer and provider of wireless communications and data services in Hong Kong, and its subsidiaries hold ZG and 3G licenses. SIJidDAY is a "foreign private issuer" as defined in Rule 3b-4(c) under the Exchange Act, and files annual reports on Form 20-F and furnishes current reports on Form 6-K and other information with the Commission. SUNDAY's ordinary shares, par val~ie HK$O.10 per share, are listed on the SEHK and SUNDAY's American depositary shares ("ADSs"), each representing

I00 SUNDAY ordinary shares, are quoted on the NASDAQ Global Market. As of August 31, 2006, 2,990,000,000 ordinary shares of SUNDAY were issued. B. PCCW PCCW is a company incorporated under the laws of Hong Kong, The principal activities of PCCW are the provision of local and international telecommunications services, internet and interactive multimedia services, the sale and rental of telecommunications equipment and the provision of computer, engineering and other technical services, mainly in Hong Kong; investment in, and development of, systems integration and technology￾related businesses; and investment in, and development of, infrastructure and properties in i-iong Kong and elsewhere in the People's Republic of China. FCC& holds its interests in SUNDAY through its indirect wholly owned subsidiary, PCCW Mobile Holding No. 2 Limited ("PCCW Mobile"), a company incorporated under the laws of the British Virgin Islands. PCCW is a "foreign private issuer" as defined in Rule 3b-4(c) under the Exchange Act, and files annual reports on Form 20-F and furnishes current reports on Form 6-K and other information with the Commission. PCCW's ordinary shares, nominal value HKg0.25 per share, are listed on the SEHK, and PCCW's ADSs, each representing ten PCCW ordinary shares, are listed on the New York Stock Exchange, As of August 31, 2006, according to its Schedule 13D on file with the Commission, PCCW, through PCCW Mobile, beneficially owned 2,372,672,256 SUNDAY shares, representing approximately 79.35% of the voting rights in SUNDAY, PCCW is an "affiliate" of SUNDAY within the meaning of Rule 13e-3.
XI. The Proposed Sale, Withdrawal and Distribution Transaction
Pursuant to two purchase agreements dated June 13, 2005 between PCCW and two shareholders of SUNDAY, on June 22, 2005, PCCW Mobile acquired an aggregate of 1,790,134,000 SUNDAY shares, representing approximately 59.87% of the issued share capital of SUNDAY, for an aggregate consideration of HK$1.,163,587,100 in cash, or HK80.65 per share (the "Acquisition"), Prior to the Acquisition, these selling shareholders held approximately 46.15% and 13.72°/u, respectively, of the issued share capital of SUNDAY and neither PCCW nor PCCW Mobile owned any of the share capital of SUNDAY. As a result of the Acquisition, PCCLV Mobile was required under The Hong Kong Code on Takeovers and Mergers (the "Takeovers Code") to make a mandatory unconditional cash offer to acquire all the SUNDAY shares not already owned or agreed to be acquired by it and parties acting in concert with it (the "Tender Offer"), A mandatory cash offer is required to be made under the Takeovers Code where a person or a group of persons "acting in concert" acquires 30°/o or more of the voting rights of the relevant company, or they aiready hold between 30% and 50% of the voting rights of the relevant company and increase their holding of such voting rights by more than 2% in any 12 month period. Where a person or group of persons "acting in concert" acquires more than 50°/o of the voting rights of the relevant company, the mandatory cash offer is required to be unconditional. The Tender Offer commenced on July 8, 2005 at a price of

HKig0.65 per share in cash, the same price paid by PCCLV Mobiie in the Acquisition. As of September 9, 2005, the final closing date of the Tender Offer, PCCW Mobile had received valid acceptances in respect of 582,538,256 SUNDAY shares, bringing its holdings in SUNDAY to 2,372,672,256 SUNDAY shares, representing approximately 79.35% of the issued share capital of SUNDAY. The offering document prepared in connection with the Tender Offer was Fiied with the Commission on Form CB on July 11, 2005. On September 27, 2005, PCCW Mobile requested the directors of SUNDAY to put forward to SUNDAY shareholders (other than PCCW Mobiie) a proposal for the privatization of SUNDAY by means of a scheme of arrangement under Cayman Isiands law [the "Privatization Scheme"), under which all SUNDAY shares not held by PCCW Mobile (the "Scheme Shares") would be cancelled in exchange for HK$0.65 per share in cash. The Privatization Scheme was approved by approximately 82.8D0/0 of the Scheme Shares held by ail shareholders other than PCCW Mobile and parties acting in concert with PCCW Mobile under the Takeovers Code (the "Scheme Independent Shareholders")that were voted at the sharehoiders' meeting to vote on the Privatization Scheme. However, the votes against the Privatization Scheme constituted approximateiy 10.63% of all the Scheme Shares held by the Scheme independent Shareholders. Under the Takeovers Code, in addition to satisfying the requirements of the Companies Law Cap 22 (Law 3 of 1961 as consol~dated and revised) of the Cayman Isiands (the "Companies Law") (which requires the approval of a majority in number of shareholders voting at the Court Meeting (as defined below) who hold in value not less than 75% of SUNDAY's shares voted at the Court Meeting), the Privatization Scheme required the approval of Scheme Independent Shareholders representing not less than 75O/0 in nominal vaiue of the Scheme Shares heid by the Scheme Independent Shareholders present and voting either in person or by proxy at a meeting of the Scheme Independent Shareholders convened at the direction of the Cayman Islands courts to approve the Privatization Scheme and held on December 15, 2005 (the "Court Meeting"), provided that the Privatization Scheme was not disapproved (by way of poll) by Scheme Independent Shareholders at the Court Meeting holding more than 1O0/o in nominal vaiue of ail the Scheme Shares held by the Scheme Independent Shareholders. Accordingly, the Privatization Scheme was disapproved under the Takeovers Code and did not proceed. As the Privatization Scheme did not receive the requisite approval, under the Takeovers Code, PCCW is not allowed to announce another privatization scheme within one year of the lapse of the Privatization Scheme. SUNDAY believes that PCCW's current proposal to purchase substantially all the businesses and assets of SUNDAY, followed by a bvithdrawai of the listing of SUNDAY's shares on the SEHK, a distribution of ail the proceeds to SUNDAY's
shareholders and the subsequent liquidation of SUNDAY is a better alternative for creating shareholder vaiue than for SUNDAY to continue to operate as a stand aione provider of wholesaie capacity to PCCW, Pursuant to an offer letter dated September 25, 2006 from PCCW to SUNDAY, PCCW offered to acquire, either by itseif or through any of its subsidiaries, the entire issued share capital of one of SUNDAY's subsidiaries, SUNDAY Holdings jHong Kong) Corporation, which, at the time of purchase, would own substantially ail the operating businesses and assets of SUNDAY (the "Sale"). J

(HK) ih167:030 SFC'SFC.iioaction.Iclter.doc

The Saie requires the prior approvai of the board of directors of SUNDAY. Furthermore, pursuant to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Listing Rules"), the Sale wouid constitute a connected transaction and a very substantial disposal for SUNDAY. Accordingiy, the Sale is, therefore, subject to approval by the independent shareholders of SUNDAY (being in this context all shareholders other than PCCW Mobile and its associates (as defined in the Listing Rules) (the "Independent Shareholders") (by way of poli) representing a simple majority of the SUNDAY's shares held by the Independent Sharehoiders attending and voting at the EGM (as defined below) in respect of the resolution relating to the Saie. In view of the strategic importance of the decision whether or not to accept PCCW's offer (the "Offer"), the board of directors of SUNDAY wishes to ascertain the views of the Independent Shareholders before deciding whether or not to accept the Offer. Accordingly, SUNDAY has requested that PCCW ieave the Offer open for acceptance up to December 31, 2006 and to undertake to SUNDAY not to withdraw or vary the terms of the Offer prior to that date. On September 27, 2006, PCCW agreed to SUNDAY's request, In addition, pursuant to the Listing Rules, an independent committee of the board of directors of SUNDAY, comprising all of SUNDAY's independent non-executive directors, has been established to advise the Independent Shareholders in connection with the acceptance of the Offer and the Sale so far as the Independent Shareholders are concerned, and ING Bank N.V. j"INGU) has been appointed as an independent financial adviser to advise the independent committee of the board of directors of SUNDAY and the Independent Shareholders in connection with the Offer and the Sale. The aggregate consideration for the Sale is HK$1,943,500,000, equal to HKg0.65 per share, to be settled partly in cash as to HK$401,500,000 and part!y by the assignment of a promissory note in the principal amount of HK$1,542,000,000 to be issued by PCCW. The offer letter acknowledges that Mandarin Communications Limited ('Mandarin"), one of SUNDAY Holdings (Hong Kongj Corporation's subsidiaries, would be sold subject to an aggregate amount of indebtedness owed by Mandarin to PCCW and its subsidiaries (the "PCCW Group") on the completion of the proposed Saie. As of June 30, 2006, the aggregate amount of such indebtedness was approximately HK$1,403,780,000 and would be increased by any additional advances made by the PCCW Group to Mandarin after June 30, 2006 and prior to the compietion of the proposed Sale, If the Offer is accepted and the Sale is compieted, the board of directors of SUNDAY considers that it would be in the best interests of the shareholders of SUNDAY to return substantially all of those sale proceeds to those shareholders and allow the shareholders of SUNDAY to make their own individual decisions as to how those sale
proceeds should be invested. Accordingly, if the Offer is accepted by SUNDAY and subject to the fulfillment of the conditions for the Distribution described below, the board of directors of SUNDAY proposes to declare a distribution of HK$1,943,500,000, being all of the proceeds of the Sale, to its shareholders, with the promissory note being distributed to PCCW Mobile and the cash being distributed to the Independent Sharehoiders (the "Distribution"), SUNDAY wishes to distribute ail proceeds from the Sale to its shareholders. This will not be permitted in the Cayman Islands without recourse to the courts in the Cayman Islands pursuant to the Companies Law, but will be permitted in the British Virgin Islands under the British Virgin Islands Business Con~panies Act, 2004 (as 4 (HK) 16167'030 SZC'SECno actioiileiteidoc

amended from time to time) (the "BC Act"). SUNDAY wishes to enable the distribution of the proceeds of the Saie to its sharehoiders as quickly as possible and with the greatest amount of certainty that can be achieved. Therefore, SUNDAY intends to deregister in the Cayman Islands and continue as a company in the British Virgin Islands, but without prejudice to the rights, powers, authorities, functions and liabilities or obiigations of SUNDAY or any other person. In order to deregister in the Cayman Islands and continue as a company in the British Virgin Islands with a new memorandum and articles of association, under SUNDAY's existing articles of association and under the Companies Law, SUNDAY is required to obtain the approval of not less than 75% of the votes cast by all the shareholders of SUNDAY as, being entitled to do so, vote in person or by proxy at the EGM (as defined below), Therefore, tile Distribution is subject to the approval of not less than 75% of the votes cast by all the sharehoiders of SUNDAY as, being entitled to do so, vote in person or by proxy at the EGM (as defined below) in respect of the resolution relating to the Distribution. PCCW Mobile has confirmed that it will vote in favor of the relevant resolution in relation to the Distribution at the EGM. The board of directors of SUNDAY is also proposing that, in conjunction with and as a condition precedent to, the Distribution, the Independent Shareholders consider approving a voluntary withdrawal of the listing of SUNDAY's shares on the SEHK (the "Withdrawal"), As required by the Listing Rules, the Withdrawal is subject to the approval of Independent Sharehoiders (by way of poilj representing at least 75% of the votes attaching to the SUNDAY Shares held by Independent Sharehoiders voting either in person or by proxy at the EGM (as defined below) in respect of the resolution relating to the Withdrawal, provided that the number of votes cast against the resolution for the Withdrawai at the EGM (as defined below) is not more than 10% of the votes attaching to the SUNDAY Shares held by Independent Shareholders permitted to vote in person or by proxy at the EGM (as defined below) in respect of the resolution reiating to the Withdrawal. The independent committee of the board of directors of SUNDAY will advise the Independent Shareholders in connection with the Withdrawal proposal. ING wili also advise the independent committee of the board of directors of SUNDAY and the Independent Shareholders whether the Withdrawal proposal is fair and reasonable so far as the Independent Shareholders are concerned. in considering whether the Withdrawai proposal is fair and reasonable so far as the Independent Shareholders are concerned, the independent committee of the board of directors of SUNDAY and ING will take into account the amount of the Distribution, which is intended to serve as a reasonabie cash alternative under the applicable rules governing the voluntary withdrawal of a listing
on the SEHK (which require a reasonable cash alternative or other reasonable alternative to be provided). The Withdrawal proposal also requires Independent Shareholders' approval as described below. If approved by the Independent Sharehoiders, the Withdrawal would occur before the Distribution is actually paid to the sharehoiders. After the passing of the relevant resolution at the EGM in respect of the Distribution and upon the withdrawal of listing of SUNDAY's shares from the SEHK becoming effective, SUNDAY will make an application to the Registrar of Companies in the Cayman Islands (the "Cayman Registrar") to have SUNDAY de-registered from the Cayman Islands and to the Registrar of Corporate Affairs in the British Virgin Isiands ("BVI Registrar") for the

registration of SUNDAY as a British Virgin Islands business company in the British Virgin Islands. The Cayman Registrar is obliged to de-register SUNDAY if the requirements of the Companies Law have been complied with. SUNDAY will file an application for continuance in the British Virgin Islands with the BVI Registrar together with, inter alia, the new memorandum and articles of association. Upon registration by the BVI Registrar of the continuance and the adoption by SUNDAY of the new memorandum and articles of association, the BVI Registrar wiii issue a certificate of continuance and SUNDAY will become a company to which the BC Act and any other laws in the British Virgin Islands apply as if SUNDAY had been incorporated in the British Virgin Islands on the date of the registration of the continuance. Upon approval by the Cayman Registrar of the application for de-registration, the Cayman Registrar will issue a certificate of de-registration,
Section 227(1) of the Companies Law provides that from the commencement
date of the de-registration of a company, SUNDAY shall (1)cease to be a company for all purposes under the Companies Law; and (2) continue as a company under the laws of the jurisdiction in which its continuance has been registered provided that it will not operate to create a new legal entity in the relevant jurisdiction.
Section 183 of the BC Act provides that the continuation of a foreign company
does not affect the continuity of the company as a legal entity. if the Distribution is made and the Withdrawal occurs, the ADSs will be delisted from the NASDAQ Global Market. Subsequently, SUNDAY will be liquidated and dissolved and its shares deregistered under the Exchange Act. Pursuant to the requirements of the Listing Rules, SUNDAY will send to its shareholders a document (the "Circular") in connection with the Offer, the Sale; the Distribution and the Withdrawal proposal containing, among other things, further details of the Offer, the Sale, the Distribution and the Withdrawal proposal, the expected timetable, the recommendations of an independent committee of the board of directors of SUNDAY in respect of the Offer, the Sale and the Withdrawal proposal, a letter of advice from ING in relation to the Offer, the Sale and the Withdrawal proposal, and notice of the extraordinary general meeting at which Independent Shareholders will vote on the Sale and the Withdrawal proposal and all shareholders of SUNDAY wili vote on the Distribution in the manner described below (the "EGM"). The Circular is expected to be dispatched around November 7, 2006 and the EGM to be held in November 2006. Consummation of the Sale is subject to the foilowing conditions:
e implementation of an internal group reorganization, on completion of which SUNDAY Holdings (Hong Kong) Corporation would own substantially all the operating businesses and assets of SUNDAY; approval of the Sale by a resolution of the Independent Shareholders, passed at the EGM to be convened by a simple majority of the shares held by those Independent Shareholders attending and voting at the EGM in accordance with the Listing Rules; and

the Sale not being subject to any approvais under the Listing Rules other than the approval of the Independent Shareholders specified above. Acceptance of the Offer and completion of the Sale will not be conditional on

the Drstribution being approved by the shareholders or the Withdrawal

proposal being approved by the Independent Shareholders.

Consummation of the Withdrawal proposal is subject to the following

conditions:

. approval of the Withdrawal proposal (by way of poll) by Independent Shareholders representing at least 75% of the votes attaching to the shares of the Independent Shareholders voting either in person or by proxy at the EGM in respect of the resolution relating to the Withdrawal proposal; provided that the number of votes cast against the resolution for the Withdrawal proposal at the EGM is not more than 10% of the votes attaching to the shares held by Independent Shareholders permitted to vote in person or by proxy at the EGM in respect of the resolution relating to the Withdrawal proposal in accordance with the Listing Rules; and

• the resolution approving the Sale having been passed at the EGM.
  Consummation of the Distribution is subject to the following conditions:
  acceptance of the Offer and completion of the Sale having occurred; the conditions of the Withdrawal proposal having been fuifilfed and the listing of SUNDAY'S shares having been withdrawn from the SEHK; and
• the Distribution having been approved at the EGM by a special
  resolution of shareholders, being a resolution passed by not less than 7S0/0 of the votes cast by such shareholders as, being entitled to do so, vote in person or by proxy at the EGM, such resolution including a resolution whereby SUNDAY is deregistered in the Cayman Islands and continued as a company in the British Virgin Islands under the British Virgin Islands Business Companies Act. Assuming the requisite Independent Shareholders' approval for the Sale is obtained, the Offer will be accepted immediately following the EGM, and PCCW and SUNDAY would then enter into the definitive transaction documents setting out the detailed terms and timetable for completion of the Sale. The respective forms of the definitive transaction documents would be described in the Circular convening the EGM. Assuming that the conditions of the Withdrawal proposal and the Distribution have been each fulfilled, the Withdrawal and the Distribution would be made at substantially the same time, the Distribution occurring not more than 14 days after the Withdrawal. it is expected that the quotation of the SUNDAY ADSs on the Nasdaq Global Market will be withdrawn and that the SUNDAY ordinary shares will be liquidated and deregistered under the Exchange Act pursuant to Section 12tgjj4) of the Exchange Act. All the steps from the Sale to the liquidation and deregistration of SUNDAY are referred to as the "Proposed Sale, Withdrawal and Distribution Transaction".

111. Discussion of Issues
     A. Definition of Rule IJe-3 Transaction
     Ruie 13e-3 under the Exchange Act requires, among other things, that an issuer or affiliate engaging in a Ruie 132-3 transaction file with the Coinmission (i) a Schedule 13E-3, including all exhibits, (ii) amendments to the Schedule 13E-3 reporting promptly any material changes in the information set forth in the schedule previously filed and (iii) a final amendment to Schedule 13E-3 reporting promptly the results of the Rule 132-3 transaction. Rule 132-3(a)(3) defines a "Rule 13e-3 transaction" to include (A) a purchase of any equity security by the issuer of such security or by an affiliate of such issuer; (8)a tender offer for any equity security made by the issuer of such security or by an affiliate of such issuer; or (C) a solicitation subject to Regulation 14A under the Exchange Act of any proxy of, or a distribution subject to Regulation 14C under the Exchange Act of information statements to, any equity security holder by the issuer of such security or by an affiliate of such issuer, in connection with a merger, consolidation or similar transaction. As described above, the liquidation of SUNDAY is proposed to be consummated through the Acquisition, the Tender Offer and the Proposed Sale, Withdrawal and Distribution Transaction. The Acquisition was not subject to the provisions of Ruie 13e-3 because, among other reasons, neither PCCW nor PCCW Mobile was an affiliate of SUNDAY prior to the consummation of the Acquisition. As a result of the Acquisition, PCCW and PCCW Mobile were affiliates of SUNDAY at the time the Tender Offer commenced. The Tender Offer was exempt from the provisions of Rule 13e-3 pursuant to Rule 13e-3(g)(6), which provides exemptions for certain "cross-border" transactions. Ruie 13e￾3(g)(6) provides that Rule 13e-3 shall not apply to any tender offer or business combination made in compliance with Rule 802 ("Rule 802") under the Securities Act of 1933, as amended (the "Securities Act"), or Rules 13e￾4(h)(8) ("Rule1Je-4(h)(8)") or 14d-l(c) ("Rule 14d-l(c)") under the Exchange Act. Rule 802 provides an exemption from the registration requirements of Section 5 of the Securities Act for any exchange offer for the securities of a foreign private issuer, or an exchange of securities for the securities of a foreign private issuer in any business combination, if (i) U.S. ownership of the target company is 10 percent or less of the securities that are the subject of the exchange offer or business combination (excluding from such calculation greater-than-10 percent U.5. and non-U.S. shareholders), (ii) the issuer permits U.S. holders to participate in the exchange offer or business combination on terms at least as favorable as those offered any other holder of the subject securities, subject to certain exceptions, (iii) the issuer meets certain information requirements with respect to the offer and (iv) any inforn?ational document published or disseminated to U.S. holders contains a specific legend.

Similarly, Rules 13e-4(h)(8) and 14d-l(c) provide an exemption from Rules 13e-4 and 14d-1 under the Exchange Act, as applicable, for any tender offer for the securities of a Foreign private issuer if (i) U.S. hoiders hold 10 percent or iess of the class of securities sought in the offer (excluding greater-than-10 percent U.S. and non-U.S. shareholders), (ii) the issuer permits U.S. holders to participate in the offer on terms at least as favorable as those offered any other holder of the same class of securities that is subject to the tender offer, subject to certain exceptions, (iii) the issuer meets certain information requirements with respect to the offer and (iv) the issuer of the securities that are the subject of the tender offer is not an investment company registered or required to be registered under the Investment Company Act of 1940. Because SUNDAY determined, pursuant to Instruction 2 to paragraphs (c) and (d) of Rule 14d-1 under the Exchange Act, that U.S. hoiders held iess than 10 percent of the outstanding SUNDAY shares (excluding greater-than-10 percent U.S. and non-U.S. shareholders) as of June 8, 2005, the date 30 days prior to the commencement of the Tender Offer, and the other requirements of Rule 14d-l(c) as described in the preceding paragraph were complied with, the Tender Offer was exempt from the requirements of Rule 13e-3 pursuant to Rule 14d-l(c). In addition, the Commission granted a no action letter to PCCW and SUNDAY on November 7, 2005 for an earlier attempt to privatize SUNDAY, the Privatization Scheme, because, although it was not exempt under 13e-3(g)(6), U.S. holders held 10 percent or less of the class of securities sought in the offer as of Iune 8, 2005 (excluding greater-than-10 percent U.S. and non-U,S. sharehoiders) and PCCW and SUNDAY agreed to comply, to the extent applicable, with the conditions of Rule 802, Rule 13e-4(h)(8) and Rule 14d￾I(c). In connection with the Privatization Scheme, PCCW and SUNDAY complied, to the extent applicable, with the conditions of Rule 802, Rule 13e￾4(h)(8) and Rule 14d-l(c), Because (i) the Proposed Sale, LVithdrawal and Distribution Transaction does not constitute a tender offer and (ii) the solicitation of proxies by SUNDAY and PCCW in connection with the Proposed Sale, Withdrawal and Distribution Transaction is not subject to Regulation 14A because SUNDAY is a foreign private issuer, neither clause (8) nor clause (C) of the definition of a Rule 13e-3 transaction wouid apply to the Proposed Saie, Withdrawal and Distribution Transaction. However, our understanding is that the Commission would consider the Proposed Saie, Withdrawal and Distribution Transaction as a "purchase of equity securities" under clause (A) of the definition of a Rule 13e-3 transaction (see, e.g., Equant N.V., SEC No-Action Letter (April 18,
2005) (stating that Exchange Act Release No. 16075 (August 9, 1979)
suggested that an asset sale followed by a liquidating distribution to the shareholders of the seller is a Rule 13e-3 transaction)). Because we understand that the Commission would view the Proposed Sale, Withdrawal and Distribution Transaction as a "purchase of equity securities" and the Proposed Sale, Withdrawal and Distribution Transaction is expected to result in the withdrawal of the SUNDAY ADSs from quotation on the NASDAQ Global Market and the liquidation of SUNDAY shares, absent the requested relief, the Proposed Sale, Withdrawal and Distribution Transaction would seem to be subject to the provisions of Rule 13e-3.

B. Request for No Action Relief from Rule 13e-3 PCCW and SUNDAY are requesting that the Staff confirm that it will not take action if they do not comply with the requirements of Rule 13e-3 in connection with the Proposed Sale, Withdrawal and Distribution Transaction based on the cross-border exemptions pursuant to Rule 13e-3(g)(6) appiicable to transactions similar to the Proposed Saie, Withdrawal and Distribution Transaction. Rule 13e-3(g)(6) would not, on its face, be available for a transaction, such as the Proposed Sale, Withdrawal and Distribution Transaction, which meets the other requirements of the exemption but is structured neither as a tender offer (which could be exempt under Rule 13e￾4(h)(8) or Rule 14d-l(cj regardless of the form of consideration used), nor as a statutory merger or other form of business combination for consideration including securities (which could be exempt under Rule 802). PCCW and SUNDAY are applying for such no action relief subject to the conditions that (i) U.S. holders of SUNDAY shares hold no more than 10 percent of SUNDAY's outstanding shares (as determined pursuant to Rule 800(h) under the Securities Act, Instruction 2 to paragraph (hj(8) and paragraph (i) of Rule 13e-4 under the Exchange Act and Instruction 2 to paragraphs (c) and (d) of Rule 14d-1 under the Exchange Act) and (ii) PCCW and SUNDAY otherwise comply, to the extent applicable, with the conditions set forth in such Rules.' if the Staff grants no action relief to PCCW and SUNDAY from co~nplying with the provisions of Rule 13e-3, PCCW and SUNDAY will comply, to the extent applicable, with the conditions of Rules 802, 13e-4(h)(8) and 14d-l(c) as if such Rules app!ied to the Proposed Sale, Withdrawai and Distribution Transaction. In particular, as discussed in more detail in Section iV below, U.S.hoiders of SUNDAY'S shares hold no more than 10 percent of such shares (as determined pursuant to Ruie 800(h) under the Securities Act, Instruction 2 to paragraph (h)(8) and paragraph (i) of Rule 13e-4 under the Exchange Act and Instruction 2 to paragraphs (c) and (d) of Rule 14d-1 under the Exchange Act). In addition, PCCW and SUNDAY will:
permit U.S. shareholders to participate in the Proposed Sale, Withdrawal and Distribution Transaction, including the Distribution, on terms at least as favorable as those offered to other shareholders;

• disseminate the Circular to U.S. shareholders, including any

ainendments thereto, in English, on a comparable basis to that

provided to shareholders in Hong Kong; and

e furnish the Circular, including any amendments thereto, in English, to the Commission on Form CB and Form 6-K by the first business day after dissemination. Assuming these conditions are met, we believe that the structure of the Proposed Sale, Withdrawal and Distribution Transaction, in particular its structure as a saie of assets foilowed by a withdrawal of the listing of We note that the Staff has previously granted such relief in similar situations. Please see Equant N.V., SEC No-Action Letter (April 18, 2005) and PCCW Limited, SEC No-Action Letter (November 7, 2005). 10

(HK) lhi671030.SEC'SEC.no.uc6on.leiiei.doc

SUNDAY'S shares on the SEHK, a distribution to the shareholders of SUNDAY and the liquidation of SUNDAY, should not disqualify it for the availability of cross-border relief from Rule 13e-3, The earlier two steps, the Acquisition and the Tender Offer, which allowed PCCW Mobile to obtain approximately 79.35% of the issued SUNDAY shares, did not subject PCCW or SUNDAY to the requirements of Ruie 13e-3. The earlier attempt to privatize, the Privatization Scheme, was granted no action relief from compliance with Rule 136-3. Furthermore, other than periodic and beneficial ownership reporting requirements under the Exchange Act, the Proposed Sale, Withdrawal and Distribution Transaction does not otherwise implicate dissemination and disclosure requirements under U.S. law. Moreover, this set of circumstances may not have been contemplated by the Commission at the time it proposed and adopted the cross-border tender offer and business combination rules. We further submit that the Proposed Saie, Withdrawal and Distribution Transaction does not present the concerns that Rule 13e-3 seeks to address, namely overreaching by the issuer or its affiliates and the coercive effect of going-private transactions not subject to meaningful regulatory protections. The Proposed Saie, Withdrawal and Distribution Transaction would result in the independent Shareholders of SUNDAY receiving HKg0.65 per share in cash, the same price as paid in the Acquisition and in the Tender Offer. The Independent Shareholders also enjoy meaningful protections under the Listing Rules. U.S. and other SUNDAY shareholders will be provided with disclosure regarding the Proposed Sale, Withdrawal and Distribution Transaction that is reviewed by the SEHK and the disclosure will include the recommendation of an independent committee of the board of directors of SUNDAY and the advice of ING. Furthermore, Independent Shareholders have the right to appear, be heard and vote on the Sale and the Withdrawai proposal and, along with ail the other shareholders of SUNDAY, on the Distribution at the EGM, The Sale and the Withdrawal proposal must also be approved by the independent Shareholders and the Distribution by the shareholders of SUNDAY as described in Section I1 above. We note that the Staff has previously granted no action relief from Rule 13e-3 in connection with the sale of substantially all of the assets of the issuer, followed by a liquidating distribution to the shareholders of the issuer.' The rationale for the relief granted in that no action ietter was that 10 percent or less of the shareholders (excluding from such calculation greater-than-10 percent U.S. and non-U.S. shareholders) of the issuer were U.S. persons and the issuer would comply, to the extent applicable, with the conditions of Rule 802, Ruie 13e-4jh)(8) and Ruie 14d-l(c). PCCLV and SUNDAY wiii meet both conditions in the Proposed Sale, Withdrawal and Distribution Transaction. For the foregoing reasons, we believe that granting
relief in the context of the Proposed Sale, Withdrawal and Distribution Transaction is consistent in all respects with the policy underlying Rules 802, 13e-4(h)(8) and 14d-l(c) and the extension of the exemptions provided by those Rules to transactions subject to Ruie 13e-3 and, assuming compliance with the other conditions set forth in such Rules, would not be subject to abuse. "lease see Equant N.v., SEC NO-~ctionLetter (April 18, 2005).

IV.Calculation of the Percentage of SUNDAY Shares Held by U.S.

Holders

In accordance with Rule 800(h), Instruction 2 to paragraph (h)(8) and paragraph (ij of Rule 13e-4 and Instruction 2 to paragraphs (c) and (d) of Rule 14d-I, SUNDAY calculated the U.S. ownership of SUNDAY as of August 31, 2006, which is expected to be the date 68 days prior to the distribution of the Circular, the first step of the Proposed Sale, Withdrawal and Distribution Transaction. Such rules require a company, in calculating U.S. ownership, to "look through" nominees in (i) the United States; (ii) the jurisdiction of incorporation of the issuer or target (in the case of SUNDAY, the Cayman Islands); and (iii) if different, the jurisdiction in which the issuer's or target's primary trading market is located (in the case of SUNDAY, Hong Kong). As a Cayman Islands company, SUNDAY is required to maintain its principal share register in the Cayman Islands. As a company whose shares are listed on the SEHK, SUNDAY is also required to maintain a branch register in Hong Kong. Only those shares listed on the branch register in Hong Kong may be traded on the SEHK. Shares listed on the principal register in the Cayman Islands can only be issued in certificated form in the name of the relevant sharehoider, Shares of SUNDAY listed on the branch register in Hong Kong can either be issued (i) in certificated form, in which case the shares are registered in the branch register in the name of the relevant shareholder; or (ii) in electronic form through the Central Clearing and Settlement System ("CCASS") maintained and operated by the Hong Kong Securities and Clearing Company Limited ("HKSCC"), in which case the shares are registered in the branch register in the name of HKSCC Nominees Limited ("HKSCC Nominees"). Shares registered in the name of HKSCC Nominees are credited to the account of the relevant person admitted to participate in CCASS, and transfers of shares are effected by way of book entries between such CCASS participants. In order to assist in determining whether U.S. holders of SUNDAY's shares held no more than 10 percent of such shares (excluding greater-than-10 percent U.S. and non-U.S. shareholders), SUNDAY hired The Thomson Corporation Hong Kong Limited ("Thomson") to conduct a share investigation. Thomson conducts share investigations in the United States and abroad in a wide range of circumstances and is experienced in such investigations. Thomson has informed SUNDAY that in conducting its investigation it followed the procedures set forth below, based on the instructions provided by SUNDAY prior to the commencement of the investigation. To identify U.S. holders of SUNDAY shares, Thomson reviewed SUNDAY'S shareholders' registers and the list of holders provided by CCASS. Because the CCASS list of holders includes first-level intermediaries who hold securities on behalf of others, many of whom are often themselves nominee holders for other beneficial owners, Thomson conducted a "look-through" analysis to determine the beneficial ownership of
SUNDAY shares held by the nominee holders included on the CCASS list. Thomson conducted the "look￾through" analysis by mailing informational requests to its contacts at the financial intermediaries between August 31, 2006 and September 25, 2006. Based on its own database, at the same time it sent out information to the

first-level nominees identified in the CCASS list, Thomson also sent informational requests to second-ievel nominees who Thomson understands often have their shares held by the first-level nominees identified in the CCASS list. Thomson then began following up with phone calls to financial intermediaries that did not respond to the informational requests or whose responses required clarification. Based on the information provided by the depositary for SUNDAY's America Depositary Receipts, SUNDAY determined that 2.3% of SUNDAY'S shares (excluding from such calculation greater-than￾10 percent U.S. and non-U.S. shareholders) were held in the form of American Depositary Receipts as of August 31, 2006. Based on the results of Thomson's investigation, less than 0.1% (excluding from such calculation greater-than-10 percent U.S. and non-U.S. shareholders) of SUNDAY's shares were held directly by U.S. holders, Thomson could not determine the identity of the holders of 12.1% of SUNDAY's shares (excluding from such calculation greater-than-10 percent U.S. and non-U.S. shareholders). For the purposes of calculating U.S. ownership in accordance with Rule 800(h), Instruction 2 to paragraph (h)(8) and paragraph (i) of Rule 13e-4 and Instruction 2 to paragraphs (c) and (d) of Rule 14d-1, SUNDAY assumed that all of the American Depositary Receipts were held by U.S. holders, and with respect to the 12O/0 of the shares (excluding from such caiculation greater-than-10 percent U.S. and non-U.S. shareholders) for which ownership could not be determined, SUNDAY assumed that the proportion held by U.S. holders was the same (2.3Yo) as for those shares for which Thomson was able to determine ownership. As a result, SUNDAY determined that as of August 31, 2006, U.S. holders held approximately 2.6% of SUNDAY's shares (exciuding from such caiculation greater-than-10 percent U.S. and non-U.S. shareholders), significantly less than ten percent limit that determines for the cross-border exemptions set out in Rule 13e-3(g)(6). PCCW and SUNDAY beiieve that it is appropriate to rely on the calculation of U.S. ownership of SUNDAY shares made as of August 31, 2006 for the purposes of their present request for no action relief from the requirements of Rule 13e-3 for the Proposed Sale, Withdrawal and Distribution Transaction, Rule 802 requjres that the caicuiation be made as of 30 days before the commencement of an exchange offer or the solicitation for a business combination. Rule 13e-4(h)(8) and Rule 14d-l(c) require that the calculation be made as of 30 days before the commencement of the tender offer, which is the date when the bidder has first published, sent or given the means to tender to security holders, In aii three cases, the calcuiation is made as of 30 days before the date when a decision regarding the transaction can be made. By analogy, in the present case, the event that determines when the calculation should be made would be the distribution of the Circular, which will
contain the proxy that allows the shareholders to vote on the Sale, the Distribution and the Withdrawal proposal, SUNDAY chase August 31, 2006 as the reference date for the share ownership caiculation. This reference date for calculating the share ownership is expected to be 68 days before the Circular is distributed, which is greater than the 30 day period required under Rule 800(h), Instruction 2 to paragraph (hj(8) and paragraph (i) of Rule 13e-4 and Instruction 2 to paragraphs (c) and (d) of Rule 14d-I. SUNDAY chose this reference date based on several factors, Thomson advised SUNDAY that the reference date for the share ownership calculation should be the final day of a month, 13 (HKI liri67~030~SEC~SECiio.a~ti0~~.leite~.dd~

because the greater logistical difficulties involved in using a reference date other than month-end would be likely to produce a significantly lower response rate among intermediaries and nominee holders, which could materially and adversely affect the accuracy of the calculation. SUNDAY wished to determine whether more than 10 percent of its shares (excluding from such calculation greater-than-10 percent U.S. and non-U.S. shareholders) were held by U.S. holders before making the announcement of the Proposed Sale, Withdrawal and Distribution Transaction (the "Announcement": since this determination could indicate whether the Proposed Sale, Withdrawal and Distribution Transaction would be required to comply with Section 13e-3 (which could have a significant impact on the time needed to prepare and clear the Circular), and, under the Listing Rules, the making of the Announcement would trigger a deadline for the distribution of the Circular, The Listing Rules require that the Circular be sent to SUNDAY'S shareholders and the SEHK and published within 21 days after the Ailnouncement is made (uniess this 21-day period is extended at the discretion of the SEHK). Thomson informed SUNDAY that it requires at least three weeks to make the necessary investigations and inquiries of brokers and other nominee holders in the relevant jurisdictions. In addition, given the complexity of the proposed transactions, SUNDAY anticipated that the process of clearing with the SEHK the disclosure documents relating to the Proposed Sale, Vv'ithdrawai and Distribution Transaction, including the Announcement and the Circuiar, could require a significant amount of time. In light of these factors, SUNDAY believed that a later reference date, such as September 30, 20C6, might not allow sufficient time to ensure proper calculation of U.S. ownership (pursuant to Rule 800(h), Instruction 2 to paragraph (h)(8) and paragraph (i) of Rule 13e-4 and Instruction 2 to paragraphs (c) and (d) of Rule 14d-I) prior to the Announcement (which was made on October 4, 2006). Consequently, SUNDAY believes August 31, 2006 to be the nearest practicable date upon which to base the share ownership calculation for purposes of the Proposed Sale, Withdrawal and Distribution Transaction. This reference date for caicuiating the share ownership is expected to be 68 days before the Circular is distributed, which is greater than the 30 day period required under Rule 800(h), Instruction 2 to paragraph (h)(8) and paragraph (i) of Rule 13e-4 and Instruction 2 to paragraphs (c) and (d) of Rule 14d-1. We note that the Staff has previously granted no action relief from Rule 13e-3 in connection with a proxy solicitation in which the calculation of U.S. ownership was made as of 52 days before the date of the distribution of the proxy materials." in addition, SUNDAY has no reason to believe that U.S. ownership of its shares would have been materially different if the reference date for the calculation were the 30th
day prior to the distribution of the Circular. Accordingly, PCCW and SUNDAY believe the calculation made as of the August 31, 2006 reference date remains relevant, and may be appropriately relied upon, for the determination of U.S. ownership in the context of the Proposed Sale, lnlithdrawal and Distribution Transaction. 'Please see Equant N.V., SEC No-Action Letter (April 18, 2005). 14 (HK) 16167 030~'SEC:SEC.na.actio~~.letttt.doc

V. Conclusion
For the reasons set forth above, to the extent that the requirements of Rule 13e-3 apply to the Proposed Sale, Withdrawal and Distribution Transaction, PCCW and SUNDAY respectfully request that the Staff grant no action relief from such requirements if PCCW and SUNDAY comply with the conditions set forth in the relevant rules as described above. Should you have any questions relating to this no action request, please do not hesitate to contact the undersigned at (852) 2533-3303. Very truly yours, ,- William F, Barron cc: Paui M. Dodek, Secur!ties and Exchange C,, ^81?n?1ss!on Aiexander A. Arena

Ptiiiana Poon

Vicky Lee

3eanle Chan

iliibert Chak,

PCCW Limited

Mark Lehmkuhlei

Christopher Woo,

Davis Polk & Wai-dwell

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Conyers Dill & Pearman ATTOINLIS AT L*W
1 November, 2006
Brian V. Breheny, Chief
Celeste kl. Murphy, Special Counsel
Office of Mergers and Acquisitions
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Ladies and Gentlemen:
We are special legal counsel in the Cayman Islands to PCCW Limited ("PCCW), and its subsidiary, SUNDAY Communications Limited ("SUNDAY") in connection with the transactions (the "Transactions'3 described in the letter (the "Application Letter")dated 30 October, 2006 from Davis Polk & Wardwell requesting, on behalf of PCCW and SUNDAY, no action relief from the provisions of Rule 13e-3 under the United States Securities and Exchange Act of 1934, as amended. we have reviewed the Application Letter and are of the opinion that the Application Letter contains a true and accurate summary of the laws of the Cayman Islands by which the Transactions will be effecfed. We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other than the Cayman Islands. This opinion is to be governed by and construed in accordance with the laws of the Cayman islands and is limited to and is given on the basis of the current law and practice in the Cayman islands. This opinion is provided solely for the benefit of the addressees in connection with the 'fransactions and may not he used or relied upon by any other person or for any other purpose. Yours faithfully Bermuda BritishVirgin Islands Cayman Islands Dubai Hons Kong London Singapore

Ah-islns on aiiunsdidionsoraermuds. Brh ~i@nislands and Cayman islands

---

Conyers Dill & Pearman
B~nnisrrils% AIiosrs
290,ONL EXC*INELSQYARB. 8 CDNhAO=WiPUCE. CENTRAL *Oh6 XOWG :EL 1851i 2624 7105 Fa:(852)2845 9268M18.5212596 OnlB EUIIII. ~cN~x~~~BNIE~~~~~~~DPEEA~.ccc wc"~Rsa!Lu~~~~.R~~.co~ .-aRvNses~

Llilr* S.C.woo
DAVID M, LLwa

Cxailmrwca W.H. RlCXLEi

1 November, 2006
Brian V. Breheny, Chief

Celeste M. hlu~phy, Special Counsel

Office of Mergers and Acquisitions

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Ladies and Gentlemen:
We are special legal counsel in the British Virgin Islands to PCCW Limited ("PCCW), and its subsidiarv. .. SL%7)AY Communications Limited ("SUNDAY") in connection with the t~111j$3cii~!ii~ (:x.il'~~~~3~ti~n~") ccsirib~ijin rlic !cttcr Ithe ".lpplication Lertcr") dated .i0 0~:obcr.?:)O~I iwm I,!'o!k & U'uJ~cll rr:).tesling, o!i bckdlf afl'CC\V aid SC:Xl>AY, no action relief from the provisions of Rule 13e-3 under the United States Securities and Exchange Act of 1934, as amended. We have reviewed the Application Letter and are of the opinion that the Application Letter contains a true and accurate summary of the laws of the British Virgin Islands by which the Transactions will be effected. We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other than the British Virgin Islands. This opinion is to be governed by and construed in accordance with the laws of the British Virgin Islands md is limited to and is given on the basis of the current law and practice in the British Virgin Islands. This opinion is provided solely for the benefit of the addressees in connection with the Transactions and may not he used or relied upon by any other person or for any other purpose. Yours faithfully c '.il ~k 4ULU,, Conyers Drll& Pearman Adaxing eo the junrdictlanr of Esnnuda,Bii1i.h Wrgin islands and Capaa Islands 1

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RICHARDS BUTLER
Brian V. Breheny, Chief
CelesteM. Murphy, Special Counsel
Office of Mergers and Acquisitions
Securitiesand Exchange Commission
100F Street, NE
Washington, D.C. 20549
INTERNATIONAL LAW FIRM
!@ 4fl $8 * 6+ 47 your ref our ref F:\Ca1-porate\P\P277\121\07jE-I.doc 20th Floor Alexandra House 16-20Chater Road Hong Kong telephone (852) 2810 8008 facsimile (852) 2810 0664 (Corporate) (852) 2810 8713 (Finance) (852) 2810 1607(Litigationishipping) (852) 28109635 (Property) (852) 2810 1648(Intellectual Property) direct line 2507 9717 direct e-mail gracele@richardsbutler.com.hk website www.richadsbutler.com.hk 1 November 2006 Dear Sirs,

1. We act as legal advisers in respect of the laws of the Hong Kong Special AdministrativeRegion of
   the People's Republic of Chna ("Hong Kong") to SUNDAY Communications Limited ("SUNDAY) whose issued share capital is listed on the NASDAQ Global Market in the form of American Depository Shares.
2. We have been asked to render this opinion as to Hong Kong law in connection with the letter (the
   "Application Letter") dated 1 November 2006 from Davis Polk & Wardwell requesting on behalf of SUNDAY no action relief from the provisions of Rule 13e-3 under the United States Securities and Exchange Act of 1934, as amended. Capitalised terms used herein shall have the same meanings as set out in the Application Letter unless otherwise stated herein.
3. For the purposes of this opinion, we have examined the following documents:
   (i) the Application Letter;
   (ii) two purchase agreements dated 13 June 2005 between PCCW Limited ("PCCW"), the controlling shareholder of SUNDAY, and two former shareholders of SUNDAY in relation to the Acquisition; PARTNERS:
   C G Howre AKBmwn M R D Pepper D G Harrington KC Mok W I G Baher D Kan Emma Crrdagli DM Nomn G P Winter Nmelte Kwong S l Bin lanet Clleung LILi Linda Fung AD Morrison Denise long Arlta Shama Alice Hutchens Ivy hi CSKTang K R Bowem C I William l N Green Deiplla Ho AD Ho~ton A P Apo~tolis A W M Kaung Doreen Kong BElJlNG LONDON . PARIS . BRUSSELS . ABUOHABl MUSCAT SiOPAULO . PIRAEUS Bcljing omcc address: Room 7038 Hupu lntenlatiollal Plaw. I9 Cbao\vai Avenue, Chaoyvnj District, Beijing 100020. PRC @ At 3i iF Z! W-LS Z! 9% * % I 9 9+B s t4 7 0 3 B B I00020 trlepiione (861 10 6280 309011 facsimile (86) 10 6580 2701 e-mail rb@hi.rol.cli.llet

RICHARDS BUTLER Page 2
To: Office of Mergers and Acquisitions
Securities and Exchange Commission 1 November 2006 (iii) the offering document prepared in connection with the Tender Offer which was filed with the Commission on Form CB on 11 July 2005; (iv) the circular issued by SUNDAY dated 22 November 2005 in respect of the Privatisation Scheme; (v) the letter dated 25 September 2006 from PCCW to SUNDAY in relation to the Offer and the Sale, as supplemented by a letter dated 27 September 2006 from SUNDAY to PCCW and a further letter dated 27 September 2006 from PCCW to SUNDAY, (vi) the announcement dated 3 October 2006 issued by SUNDAY in relation to the Offer, the Sale, the Distribution and the Withdrawal; and (vii) a draft of the Circular dated 1 November 2006, (collectively the "Documents").
4. Other than the Documents, we have not for the purposes of giving this opinion examined any
other contracts, instruments, other documents or respective drafts thereof.
5. Based upon the assumptions and subject to the qualifications set out below and to any matters not
disclosed to us, it is our opinion that the statements made in the Application Letter relating to Hong Kong law and practice are a fair and accurate summary of such matters.
6. In our examination of the Documents and in giving this opinion we have assumed without
verification that:
(i) all filings, registrations, consents, authorisations, approvals, payments or notices required to be filed by SUNDAY under the laws of all relevant jurisdictions have been or will be made or obtained in due form when and by the time and date required and will remain in full force and effect; and (ii) SUNDAY:
(a) has either complied and will comply with all laws and regulations relating to its business or, to the extent it has not done so, such failure to comply will not have any implication in relation to the opinions expressed herein; @) has either not contravened and will not contravene any law or regulation or any contractual or other obligation to, or restriction in favour of, any third party or, to the extent it has done so, such contravention will not have any implication in relation to the opinions expressed herein,

RICHARDS BUTLER Page 3
To: Office of Mergers and Acquisitions
Securities and Exchange Commission 1 November 2006
7. This opinion is subject to the following qualifications:
(i) to the extent that the laws of the Cayman Islands andlor the British Virgin Islands may be relevant, we have made no independent investigation thereof, and our opinion is subject to the effect of such laws; (ii) where actions are taken in respect of any obligations that are governed by the laws of a jurisdiction other than Hong Kong, they may not be enforceable by the courts of Hong Kong to the extent that such performance would be illegal or ineffective under the laws or regulations, or contrary to public policy, in that jurisdiction and/or Hong Kong; (iii) where any obligations governed by Hong Kong law are to be performed, observed or based upon a matter arising in a jurisdiction outside Hong Kong, they may not be enforceable by the courts of Hong Kong to the extent that such performance would be illegal or ineffective under the laws or regulations, or contrary to public policy, in that jurisdiction.
8. This opinion relates solely to Hong Kong law (as applied by The Basic Law of Hong Kong (the
"BasicLaw")) at the date of ths opinion.
9. We have made no investigation of, and no opinion is given or implied with respect to, any laws or
regulations (or public policy) of any other jurisdiction. We do not undertake to advise you of any change in facts or law relevant to this opinion or the opinions expressed herein.
10. The Basic Law provides that the laws of Hong Kong in force at 30th June, 1997 are to be applied in
Hong Kong only in so far as they are not declared by the Standing Committee of the National People's Congress of the People's Republic of China (the "Standing Committee") to contravene the Basic Law.
11. The Basic Law does not appear to include any provision whch would be contravened by any Hong
Kong law in force today and which is relevant to this opinion. However, the interpretation of the Basic Law is a matter for the Standing Committee and we express no opinion as to how it will act.
12. This opinion:
(i) is strictly limited to the matters stated in it and no opinion is implied or may be inferred beyond the matters expressly stated; (ii) is addressed to the addressees herein in connection with the transactions set out in the Application Letter and may not be relied upon by any other person and, in particular, this opinion is not intended to confer any rights of enforcement or otherwise on any third party; and

RICHARDS BUTLER Page 4
To: Office of Mergers and Acquisitions
Securities and Exchange Commission 1November 2006 (iii) shall be governed by and construed in accordance with Hong Kong law and the courts of Hong Kong shall have exclusive jurisdiction to hear and decide any suit, action or proceedings, and to settle any disputes arising out of or in connection with it. Yours faithfully, RICHARDS BUTLER