AVIC Group obtains final critical national and international link for its cellular network in China in province around capital.

NEW YORK--(BUSINESS WIRE)--Dec. 19, 1996--AVIC Group International, Inc. (ASE: AV) announced today that an agreement has been reached with the Hebei Ministry of Posts and Telecommunications (MPT) to connect its Global Service Mobile (GSM) cellular network in Hebei Province to the central government's public telephone network.

The agreement between the Hebei branch of China UNICOM and MPT allows the GSM network to connect its subscribers to the MPT public switched telephone network for calls throughout China and internationally. The interconnection was the final step needed by UNICOM to begin offering commercial service on a national and international basis. The GSM network was successfully tested in October and is now ready to begin commercial operations in January 1997.

AVIC Group owns a 31% stake in the joint venture company currently building the network, which includes Nippon Telegraph and Telephone International and local partners in Hebei Province. The cellular network will be the first in Hebei operated by China UNICOM, which was established in 1994 as the second authorized operator of public telephone networks in China.

Joseph R. Wright, Chairman and Chief Executive Officer of AVIC Group, stated "While we expected interconnection for Hebei would be completed at this time, I am pleased that our team of NTT, the Hebei Electronics Industry Commission, and AVIC have continued to progress on schedule on our first project. This will make us a real competitor of MPT, offering mobile phone service to a population of 63 million, almost one fourth of the United States, who currently have limited available mobile and fixed wire phone service."

Telecom analysts predict that China's mobile phone market will experience an explosion in subscriber growth as more cellular networks begin commercial operations. The cellular market in China is expected to generate over $10 billion in annual service revenues by the year 2000, around six times the level last year. In 1995, subscribers more than doubled from 1.5 million to 3.9 million at year-end, generating revenues of $1.7 billion. Unlike other major markets in East Asia, the vast Chinese market is expected to continue growing beyond 2005, driven by business development and increased personal use.

AVIC Group International, Inc. develops telecommunications and information systems in the People's Republic of China, including cellular, paging and fixed-wire telephony.

Forward-looking statements in this press release are necessarily subject to risks and uncertainties which may affect the accuracy of such statements. Such risks may include any political instability in China, the state of US-China bilateral relations, any delays in network construction and market acceptance of and demand for the company's products. For a full discussion of such risks, please refer to the company's Form 10-KSB for the fiscal year ended March 31, 1996 and subsequent filings.

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