Key questions and answers from the third quarter fiscal 2008 earnings call conducted by AsiaInfo Holding, Inc. (ASIA: chart) on October 30, 2008.

Donald Lu (Goldman Sachs): My first question is on the margin side. I don’t see the margin guidance for the fourth quarter.

Steve Zhang: Our operating margin of net revenue in the third quarter was 12.4% and we didn’t give out the guidance on the fourth quarter. I think it will be certainly higher than our third quarter net margin number.

Eileen Chu: Actually, historically, we never give out guidance on our operating margin, but if you look at our 2007 quarterly operating margin, you can see that Q1 and Q2 is always our lowest season and Q3 and Q4 is our high season.

Donald Lu (Goldman Sachs): Based on your current tender result at China Telecom, China Unicom, what is your current outlook for growth margins and operating margins for those new accounts?

Steve Zhang: We normally won't give our next quarter’s guidance. But for next year, traditionally we have been growing our revenues with the rate of 30% with a gross margin on net revenue pretty stable around 55%. And that’s our target also for next year.

You can see over the last three, four years, our gross margin on our net revenue has been relatively stable around 55%, so that will continue.

Donald Lu (Goldman Sachs): Recently we have heard in the China Telecom’s tender the price competition has been very severe. This Huawei basically offer free coupon at a loss. Have you seen similar kind of cut throat competition?

Steve Zhang: I think on the IT side, we didn’t see that kind of cut throat competition. It’s because China Telecom knows that lower price won't generate good results. So, we are happy with our tender results, and we are happy also with the pricing we got from China Telecom.

Donald Lu (Goldman Sachs): You have given us some very impressive design wins for China Telecom and China Unicom. For China Unicom, are they going to start really considering you a supplier for their billing system in each province?

Steve Zhang: China Unicom opened up eight provinces in the southern part of China for bidding. And the bidding was basically done and we expect to get the official results pretty soon. It should happen in this quarter. We are continuing to aggressively pursue the Unicom opportunity and I think the challenge for China Unicom is in the northern provinces because they need to formulate a plan to integrate a very complex wireless billing system with a very complex fixed line billing system. And we are still working with our customers to formulate a design for that work.

Karl Keirstead (Kaufman Brothers): I had a question for you about all of these new deals that you’ve won from Telecom and that you are hoping to win from Unicom. I am wondering how many of those recent wins actually did you derive revenues from during the third quarter or do most of those recent wins not kick in and affect your P&L until the fourth quarter or the fourth quarter, may be you could talk a little about how we convert recent bookings into revenues?

Steve Zhang: First of all, for our China Telecom wins, probably we only derived 10% of the contract value in our third quarter. We haven’t start booking the revenue yet. And so the China Unicom, since we haven’t signed the official contract yet, we cannot book any revenue.

Karl Keirstead (Kaufman Brothers): And yet in the third quarter you mentioned that China Telecom was one of the main growth drivers, it must have been some existing deals that contributed to your growth. Could you talk a little bit about what drove Telecom so strongly in the third quarter?

Steve Zhang: For our China Telecom, we signed a deal in the second quarter to support their OCS deployment in Zhejiang province and Zhejiang is probably the second largest in terms of subscriber in the whole China Telecom group. So we are very close to get that project on line in production in the third quarter. So we are booking the revenues of that contract. And we are also helping another subsidiary of China Telecom, Xinjiang Telecom, to get ready their CRM system to support the future CDMA business. So one of the major reason our China Telecom revenue grew very quickly in the third quarter was we were starting to booking the contracts we signed in the first quarter and the second quarter.

Karl Keirstead (Kaufman Brothers): I think you mentioned in the past that your big contract win earlier with China Mobile in the Henan province, you would cut over subscribers in the Novembers 2008 timeframe and that would give you a revenue boost. Is that still on target?

Steve Zhang: Yes, that’s still on target. We expect some time in November we will cut our one city in Henan province and basically once the first city is successfully cut over, hopefully we can finish the cut over within the next two months.

Brendan Barnicle (Pacific Crest Securities): I am trying to get a better sense on the profitability around the new contracts. You have been able to improve your margins considerably over the last couple of years. As you are planning for next year, are we going to be able to see that same level of margin improvement or should we expect may be something more in the 100 to 200 basis point type range?

Steve Zhang: Over the last several years we have been improving our margins. I think throughout the margin impairment over the last several years was driven the economies of scale and also better management on the cost side. I think going forward you’ll probably see our margin still improve, but not on the scale probably you have seen in the last several quarters, probably we’ll continue. Our long term margin target is 15%. I believe this year on a yearly basis our margin is probably between 11% to 12% and next year probably we’ll see another – while we don’t give the guidance, but we’ll continue to try and make our effort to improve our margins.

Brendan Barnicle (Pacific Crest Securities): And that 15% target, how many years do you think it takes until you get to that level, what would you project right now?