Sinotel Technologies Limited

SINOTEL POSTS 15.0% RISE IN 2Q2009 NET PROFIT TO RMB41.6 MILLION

• Revenue surge 36.1% to RMB142.1million on the back of increasing demand for Wireless Network Solutions for 3G Infrastructure upgrade

Singapore, 31 July, 2009 - Sinotel Technologies Ltd. ("Sinotel" or the "Group"), an innovator in the provision of wireless telecommunications infrastructure and solutions in the PRC, is pleased to announce a 15.0% increase in net earnings for the 2^nd Quarter ("2Q09") ended 30 June 2009 to RMB41.6 million. Half year earnings ("1H09") rose 16.1% to RMB70.4million, compared to the same periods in 2008.

The Group posted a stellar increase in revenue by RMB37.7 million (+36.1%) and RMB56.4 million (+30.9%) for the periods 2Q2009 and 1H2009 respectively. The strong topline growth was achieved on the back of more contract wins and higher demand for Wireless Network Solutions in the midst of China's 3G infrastructure upgrade.

Overall gross profit margins for 2Q2009 and 1H2009 were 39.8% and 40.4%, which were marginal lower than the corresponding periods in 2008. This was partly attributed to the change in the telecom operators ("Telcos") procurement policy, which now encourages central bulk purchasing for certain contracts.   

The Group posted an increase in net earnings of 15.0% and 16.1% for the periods 2Q2009 and 1H2009, raising net profits by RMB5.4 million and RMB9.8 million respectively. Net profit margins were 29.3% and 29.5%, which were slightly lower than the corresponding periods last year.

Outlook and Future Plans

Despite going through an economic slowdown, China's telecommunication industry continues to enjoy progressive growth stimulated by the introduction of the Third Generation mobile technology ("3G") earlier this year. The Group anticipates that barring unforeseen circumstances, the Group's outlook will remain favorable for the rest of the financial year 2009.

During the official 3G launch on May 17, 2009, China's telecom operators boldly announced that they target to have 3G network coverage widely available across key cities by the end of 2009. China Mobile aims to have 3G services available in 238 cities, whereas China Unicom and China Telecom each target to have their 3G network running in 100 and 342 cities respectively by year's end.

This has given rise to massive upgrading projects running concurrently across the country, offering equipment vendors like Sinotel more expansion opportunities ahead.

Said Mr Jia Yue Ting ("贾跃亭"), Executive Chairman of Sinotel, "During the 1^st Half of 2009, the 3 Telcos have collectively spent more than RMB80 billion for capital expenditures. This is very close to what China's MIIT (Ministry of Industry and Information Technology) estimated at the beginning of the year when they projected that the Telcos will spend up to RMB150 billion in 2009. As such, we are likely to see the same, if not, even greater spending in the 2^nd Half of 2009 as the Telcos rush to meet their 3G roll-out deadlines."

Having just announced startling increases in mobile subscriber base, Telcos may also upgrade existing systems to handle greater call capacity. Owing to these two factors, the Group foresees that the company's primary growth in 2009 will continue to come from the Wireless Network Solutions segment.

Nonetheless, the Group will continue to develop its distribution arm, marketing 3G network cards and growing its proprietary Emergency Mobile Communication System (EMCS) business.

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