Chesin-1 telephone currently used in Korea is quite similar in design to early Japanese model of Type-4 telephone which is now being replaced by Type-600 having much improved characteristics. Chesin-1 telephone has a relatively high side-tone level, since the line impedance was taken as a purely resistive component for simplicity in the design of its transmission networks. To meet a current trend of using a smaller diameter of wire for telephone line, it is necessary to improve the present type which has a limited receiving efficiency. A new telephone set has been designed to have an amplifier and a R-C coupled side-tone balancing network. The set offers 8dB gain in the overall performance of transmitting and receiving without any unbearable side-tone disturbances. The paper describes both theoretical and experimental characteristics of the new set.