This paper aims to explore how an organization changes to fit the dynamic environment. The paper's approach is a case study on a Chinese telecom company. Data have been collected through 2 questionnaire surveys as well as 15 interviews. The results show that the organizational transformation of Anhui Telecom has enhanced the vigor of it and employees by stimulating dynamic capabilities and forming a high performance system, as well as promoted the organizational capabilities, thus maintaining its sustainable competitive advantage. Nowadays, Chinese telecom industry is reconstructing. For each telecom operators, the organizational environment it faces has changed. Unfortunately, very little research on organizational change of Chinese telecom industry has been done. The study has significant reference for the business transformation of China Telecom.