This following information specifies certain forward-looking statements of our management. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict, and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

Forward-looking statements include, but are not limited to, the following:

? Statements relating to our future business and financial performance;

? Our competitive position;

? Growth of the telecommunications industry in China; and

? Other material future developments that you may take into consideration.

We believe it is important to communicate our expectations to our shareholders. However, there may be events in the future that we are not able to accurately predict or over which we have no control. The risk factors and cautionary language discussed in this report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations we described in our forward-looking statements, including among other things:

? Competition in the industry in which we do business;

? Legislation or regulatory environments;

? Requirements or changes adversely affecting the businesses in which we are engaged; and

? General economic conditions.

You are cautioned not to place undue reliance on these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results; accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

The following discussion should be read in conjunction with the information contained in the financial statements and the notes thereto, which form an integral part of the financial statements. The financial statements begin on page 3 above.

Overview and Business Operations

The present operations of China Tel Group, Inc. ("Company"), all of which are conducted through our wholly-owned subsidiary Trussnet USA, Inc., a Nevada corporation ("Trussnet"), consist of providing engineering and deployment services related to the build-out of a broadband wireless telecommunications network in several cities in the Peoples Republic of China ("PRC") for CECT-Chinacomm Communications Co, Ltd., a PRC company (together with its subsidiaries and affiliates, "Chinacomm"). Through our wholly owned subsidiaries, we hold a 49% equity interest in ChinaComm, Limited, a Cayman Island corporation ("ChinaComm Cayman"). The remaining 51% equity interest in ChinaComm Cayman is held by affiliates of Chinacomm.

Chinacomm holds licenses and permits from the PRC to build and operate a 3.5 GHz broadband wireless telecommunications network ("Chinacomm Network") in 29 cities in the PRC. These licenses currently run through February 2013. Chinacomm has commenced the build-out of the Chinacomm Network in Beijing, Shanghai, Shenzhen, Qindao, and Nanjing. Portions of the network are operational in Beijing and Shanghai.

Pursuant to an Exclusive Technical and Management Consulting Services Agreement dated May 23, 2008, Yunji Communications Technology (China) Co., Ltd. ("Yunji"), a PRC wholly-owned foreign enterprise of a subsidiary of ChinaComm Cayman, will operate and service the Chinacomm Network in exchange for a portion of the revenue generated by Chinacomm from the Chinacomm Network. Trussnet Gulfstream (Dalian) Co. Ltd. ("Trussnet Dalian"), a PRC wholly owned foreign enterprise of Trussnet, has entered into agreements with Yunji pursuant to which it will lease to Yunji equipment required in the deployment of the Chinacomm Network ("Equipment") and provide technical and management services to Yunji for the procurement, installation and optimization of the Equipment. Yunji and Trussnet Dalian will become operational only when we provide in excess of $50 million in cash in repayment of the $191 million owing on the promissory note for our acquisition of 49% of ChinaComm Cayman. The funds in repayment of $191 million promissory note will be used to acquire Equipment and capitalize Yunji and Trussnet Dalian. Until we provide this capital, Chinacomm will continue to operate the network and retain any revenue it generates from the network.

Substantially all of our business is conducted in the PRC and relates to the build-out of the Chinacomm Network. We are dependent upon Chinacomm's ability to maintain the necessary licenses for the operation of the Chinacomm Network. As the Chinacomm Network becomes operable, we will be dependent upon Yunji's ability to attract and retain subscribers on behalf of Chinacomm.

We have contracted with Trussnet USA, Inc., a Delaware corporation ("Trussnet Delaware") (under separate control from our subsidiary of the same name) engineering and deployment services for the Chinacomm Network. These services, which Trussnet Delaware generally performs itself or through subcontracts with vendors holding requisite local licenses, include radio frequency engineering, site acquisition, preparation and approval of architectural and engineering drawings, installations of the Equipment and network architecture and engineering. We continued to provide these services through the period of this report.

Since our inception we have incurred accumulated losses of $112.6 million. As of March 31, 2009 we had cash of $6,787 and had current liabilities of $279 million (Reference in this report to "Since our inception" refers to April 4, 2008, the date Trussnet was formed and the date used for financial activities for accounting purpose in this report.) We have expressed substantial doubt about our ability to continue as a going concern as described in Note 2. In order to continue to operate our business, we will need to raise substantial amounts of additional capital.

The Company is actively pursuing additional equity financing through discussions with investment bankers and private investors. There can be no assurance that the Company will be successful in its effort to secure additional equity financing.

Agreement with Olotoa Investments, LLC

On March 10, 2009, we entered into an agreement to sell 49% of our Series A common stock, on a fully diluted basis, to Olotoa Investments, LLC ("Olotoa"), a private investment group, for a purchase price of $300 million. Pursuant to the terms of the agreement, Olotoa has agreed to pay the purchase price between March 9, 2009 and September 9, 2010 in amounts and on dates as requested by our Board of Directors. On May 1, 2009, we requested Olotoa to pay $50 million of the purchase price. Olotoa has not yet made the requested payment.

Acquisition of Interest in ChinaComm Cayman

Trussnet was formed in April 2008 and had no operations prior to our acquisition of Trussnet in May 2008. Trussnet's principal asset was a Framework Agreement dated April 7, 2008 with Chinacomm pursuant to which Trussnet had the contractual right to acquire a forty-nine percent (49%) interest in ChinaComm Cayman and provide services for the build-out of the Chinacomm Network.

On March 9, 2009, we acquired 49% of the authorized shares of ChinaComm Cayman for a purchase price of $196 million from Trussnet Capital Partners (HK) Ltd. Trussnet Capital Partners (HK) Ltd., of which our President, Tay Yong Lee is the sole shareholder, provided bridge financing for this transaction due to our lack of funds. We paid $5 million of the purchase price in cash and paid the balance of $191 million by delivering a promissory note secured by the ChinaComm Cayman shares acquired in the transaction. The promissory note bears interest of 8% per annum, payable quarterly, has a due date of March 9, 2010 and is non-recourse, except for the pledged collateral. Upon our payment of this note, Trussnet Capital Partners (HK) Ltd. will deliver the funds to ChinaComm Cayman which will in turn capitalize Yunji and Trussnet Dalian.

Pending Strategic Transactions

The Company has entered into, but not closed, the following strategic transactions:

Agreement with Runcom Technologies, Inc.

On October 6, 2008, we entered into a Strategic Frame Agreement with Runcom Technologies, Inc.("Runcom"). The agreement sets forth the terms and conditions under which Runcom was to design, manufacture and sell product to us and was to be our preferred provider of such products. Runcom agreed to invest a total of $100 million into the Company, in exchange for approximately 28% of the Company's issued and outstanding Series A common stock on a fully diluted basis according to the terms to be mutually agreed upon under a stock purchase agreement. The investment amount was to be paid in two equal payments; the first fifty percent (50%) was to occur within ninety days of the signing of the Stock Purchase Agreement, and the remaining fifty percent (50%) within six months thereof.

We have not entered into the contemplated stock purchase agreement with Runcom, but Runcom has expressed a continued interest in making an investment in the Company in the future. Discussions in that regard are ongoing.

Acquisition of Perusat S.A.

On February 22, 2009, through a wholly owned subsidiary of Trussnet, we entered into a stock purchase agreement, as amended, to acquire a 95% interest in the common stock of Perusat S.A. for a purchase price of $2,775,000. The purchase price is to be paid by the Company issuing 1,000,000 shares of China Tel Group, Inc. Series A Common Stock, valued at $2.50 per share, and cash in the amount of $275,000. We have delivered the share consideration for the acquisition of the Perusat shares. The $275,000 is payable as follows: (i) $50,000 at the closing of the transaction ("Closing"); (ii) $50,000 at June 30, 2009; (iii) $50,000 at the end of each of the three following quarters; and (iv) the balance of the purchase price due at the end of the next quarter. We have not yet paid the initial $50,000 due at the Closing.

Perusat provides local and international long distance telephone services, including fixed line service (voice over IP) to approximately 6,500 customers in nine cities in Peru (Lima, Arequipa, Chiclayo, Trujillo, Piura, Santa, Cusco, Ica and Huanuco). Based on its status as a licensed telephone operator, Perusat has recently been granted a license in the 2.5 GHz spectrum covering these cities other than Lima and its surrounding metropolitan area. We believe this license is suitable to deploy a broadband wireless telecommunications network in the licensed area.

Critical Accounting Policies and Estimates

Our Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our condensed consolidated financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.

These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included herein for the period ended March 31, 2009.

Development Stage Company. We are a development stage company, as defined in Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises".

Loss Per Share. In accordance with SFAS No. 128, "Earnings Per Share", basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of March 31, 2009, we had approximately 97.7 million shares of Series A common stock related to the issuance of debt instruments that could be converted into shares of the Company's Series A common stock. Diluted loss per share is not presented, because the issuance of these additional common shares would be anti-dilutive.

Convertible Instruments. When we issue convertible debt with detachable instruments, we allocate the proceeds received on a relative fair value basis pursuant to EITF Issue No. 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios". Then, we apply the amount allocated to the convertible instrument, and an effective conversion price is calculated and used to measure the intrinsic value, if any, of the embedded conversion option. The intrinsic value of the embedded conversion option and the relative fair value of the detachable instruments are recorded as discounts to the convertible debt and amortized over the term of the debt.

When we issue convertible debt with non-detachable instruments, we compute the intrinsic value of the conversion option based on a comparison of the proceeds of the convertible instrument allocated to the common stock portion of the conversion option and the fair value at the commitment date of the common stock to be received by the holder upon conversion pursuant to EITF Issue No. 0027, "Application of Issue No. 98-5 to Certain Convertible Instruments". The excess of the fair value of the common stock at the commitment date over proceeds is the intrinsic value of the embedded conversion option that we recognize at the issuance date for the convertible debt. We record the intrinsic value of the embedded conversion option as a beneficial conversion feature to the convertible debt and amortize it over the term of the debt.

Goodwill and Identifiable Intangible Assets. In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", goodwill and intangible assets with indefinite lives are not amortized, but instead are measured for impairment at least annually in the fourth quarter, or when events indicate that impairment exists. As required by SFAS 142, in the impairment tests for indefinite-lived intangible assets, we compare the estimated fair value of the indefinite-lived intangible assets, using a combination of discounted cash flow analysis and market value comparisons. If the carrying value exceeds the estimate of fair value, we calculate the impairment as the excess of the carrying value over the estimate of fair value and, accordingly, record the loss.

Intangible assets that are determined to have definite lives are amortized over their useful lives and are measured for impairment, only when events or circumstances indicate the carrying value may be impaired in accordance with SFAS 144 discussed below.

Impairment of Long-Lived Assets. In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144), we estimate the future undiscounted cash flows to be derived from the asset to assess whether or not a potential impairment exists when events or circumstances indicate the carrying value of a long-lived asset may be impaired. If the carrying value exceeds our estimate of future undiscounted cash flows, we then calculate the impairment as the excess of the carrying value of the asset over our estimate of its fair value.

The following discussion and analysis summarizes the significant factors affecting our consolidated results of operations, financial conditions and liquidity position for the three months ended March 31, 2008 and should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this filing.

Liquidity and Capital Resources

As of March 31, 2009, we had cash of $6,787 and had liabilities of $279.1 million, of which $279 million are deemed to be current liabilities. We expect to continue to incur net losses for the foreseeable future. There is substantial doubt about our ability to continue as a going concern. In order to continue to operate our business, we will need to raise substantial amounts of additional capital.

Since our inception through March 31, 2009, we raised approximately $32 million related to our offering of our convertible notes. The notes bear interest of 10% per annum and are either past due or due ninety days after our receipt of a notice of redemption.

To avoid forfeiture of our interest in ChinaComm Cayman, which is pledged to secure payment of our $191 million promissory note to Trussnet Capital Partners (HK) Ltd., we must make quarterly interest payments of $3.8 million on June 9, 2009, September 9, 2009 and December 9, 2009, and make the final quarterly interest payment and repay the entire $191 million principal amount on March 9, 2010. The payment of the $191 million principal amount also is necessary to maintain our rights to participate in the operation of the Chinacomm Network.

On March 10, 2009, we entered into an agreement to sell 49% of our Series A common stock, on a fully diluted basis as defined in the agreement, to Olotoa for a purchase price of $300 million. Pursuant to the terms of the agreement, Olotoa will pay the purchase price between March 9, 2009 and September 9, 2010 in amounts and on dates as request by our Board of Directors. We expect the cash proceeds from this investment to be used primarily to capitalize Yunji and Trussnet Dalian, repay our $191 million promissory note to Trussnet Capital Partners (HK) Ltd. and to provide operating capital for the deployment of the Chinacomm Network. On May 1, 2009, we requested Olotoa Investments to pay $50 million of the purchase price. To date, Olotoa has not made the requested payment.

Sources and Uses of Cash

The following table presents a summary of our sources and uses of cash for the
three months ended March 31, 2009:

Net cash provided by operating activities:         $     209
Net cash used in investing activities                     --
Net cash provided by financing activities                 --
Increase (decrease) in cash and cash equivalents   $     209

Operating Activities. Cash provided by operating activities of $209 was net of a loss for the three months ended March 31, 2009 of $3,626,481 and gain on change in fair value of debt derivative of $14,686,805, net with amortization of financing costs of $789,931, accretion of debt discount $3,099,033, common stock issued for services rendered of $2,946,211, collection of note receivable of $124,400 and increase of our accounts payable and other accrued liabilities of $11,353,920.

Investing Activities. No activity in the three month period ending March 31, 2009.

Financing Activities. No activity in the three month period ending March 31, 2009.

Results of Operations

Revenues. We had no revenues during the three months ending March 31, 2009.

Operating Expenses. We had operating expenses of $14.3 million during the three months ending March 31, 2009. These expenses were attributable to selling, general and administrative expenses of approximately $4.6 million and research and development cost of $9.7 million.

Selling, General and Administrative Expenses. The $4.6 million in selling, general and administrative expenses are due to consulting fees, marketing fees, and legal and professional fees.

Research and Development Expenses. For the three month period ending March 31, 2009 we incurred $9.7 million in costs relating to the design and development of the broadband wireless telecommunications network in the PRC. These costs are charged to expense in the period incurred.

Other Income and Expenses. We incurred other income and expenses of $10.7 million. This consists of a gain on changes in the fair value of the debt derivative of $14.7 million offset by interest expense of $4.0 million.

Gain on changes in fair value of the debt derivative relates to the amended and restated convertible notes that have an embedded derivative. The derivative is calculated at the fair value as of the inception date of the notes. The fair value of the derivative liability as of December 31, 2008 was $26.2 million. The liability as of March 31, 2009 is $11.5 million. The net derivative reduction is $14.7 million which is presented as other income. Interest expense consists of the amortization of the debt discount (accretion) of $3.1 million and accrued interest on the convertible notes of approximately $1.0 million.

Loss from Operations. For the three months ended March 31, 2009, our loss from operations was $14.3 million. We expect to continue to incur losses for the foreseeable future related to the design, development, installation and operation of the Chinacomm Network and the broadband wireless telecommunications network we will be deploying in Peru ("Peru Network"). Until we capitalize Yunji and Trussnet Dalian, we do not anticipate generating any significant revenues from the Chinacomm Network. In Peru, we do not anticipate generating any significant revenue within the next twelve months.