Guangzhou Global Telecom Review 2008 2Q Results

GUANGZHOU, China, Aug. 19 /Xinhua-PRNewswire/ -- Guangzhou Global Telecom Inc. (OTC Bulletin Board: GZGT), a mobile phone handset, pre-paid calling card distributor and provider of value-added mobile services in the PRC, reported $8,745,541 in 2nd Quarter revenues as compared to $4,789,850 during the same period ended in 2007, representing an increase of $3,955,691 or 83%. Revenues for this year were $16,417,968 as compared to $8,552,268 for the same period in 2007, a jump of almost 100% and a clear indicator of the company’s ongoing market expansion.

Gross profit increased from $265,248 during the three months ended June 30 2007 to $848,458 in the same period of 2008. The increase of gross profit is mainly generated from the increased revenue. Meanwhile, the gross margin saw a marked improvement from 6% during the quarter ended June 30, 2007 to 10%. Continued focus and initiatives on sales expansion, together with certain rebates, contributed to the higher margins.

General and administrative expenses were $254,091 as compared to $223,105 for the same period ended in 2007, an increase of 15%. The increase is consistent with the expansion in operations.

Operating profit of $594,367 was recorded during the three months ended March 31, 2008, as compared to a gain of $42,143 during the same period in 2007. The steep increase was the result of improved revenues, gross margins, management policies and programmes put in place.

Interest expenses of $59,320 during the three months ended June 30, 2008, which mainly included the interest payment of convertible debt.

Net gain of $502,355 was recorded during the three months ended June 30, 2008, as compared to a profit of $16,122 during the same period in 2007. The year-on-year performance saw an increase of $57,062 from $28,536 to $85,598. The strong profit gain for Q2 helped offset losses in Q1.

The company’s rapid expansion in different regions of China benefited the quarter’s data revenue and profit growth and this growth will stay for the year. The focus will not only be on expansion, but also measures such as cost reduction and retaining market presence. The company is constantly seeking to enlarge its customer base and network, placing extra importance on the growing affluence of the middle class in China. The six months of 2008 added more than 45 million mobile subscribers, based on government data. This growth figure continues to be the main driver behind the company’s rapid expansion in China.

“Considering this more challenging operating environment, we have fulfilled expectations with our improved financial figures in Q2. We will continue to see strong growth across the set of financial data for the year and our management has developed strategic plans for the mid-long term in facing with rising costs. As 3G technology begins to enter the market, we will experience a new trend in mobile phones usage. This is a new market segment which we are looking at and the recent acquisition of Guangzhou Ren Wo Xing not only provides an equipped platform, it also enlarges our mobile communications market presence in the Guangdong province. Our outlook for the mobile industry remains positive and Guangzhou Global Telecom will look to continue and improve on this quarter’s performance,” commented CEO Li Yankuan.

About Guangzhou Global Telecom

Guangzhou Global Telecom, Inc. is a national mobile phone handset and pre-paid calling card distributor and provider of mobile handset value-added services. Maintaining cooperative relationships with China Telecom, China Mobile and China Unicom, the Company seeks to become the largest sales and distribution center of mobile phones, mobile phone parts and prepaid mobile phone cards in China. GTL plans to introduce new software and services through an expanded network of regional and neighborhood service centers, shops and virtual stores. For details, please visit our website at http://www.guangzhouglobaltelecom.com .

Safe Harbor Statement

Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People’s Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.

For more information, please contact:

Glenn Yang

Tel: +86-139-2224-7039 or +65-9847-4716

Email: glennyang@guangzhouglobaltelecom.com