CONFIDENTIAL
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RJT McLaren
Date: 10 June 1987
Mr Hum, HKD
RECEIVED IN REGISTRY 1 5 JUN 1987
REGISTRY Action Taken
Cc: Mr Gillmore
Mak
FFICER PA
Mr Braithwaite Mr Maud
Mr Smith, TRED
3.
Clo 18
CABLE AND WIRELESS,
HONG KONG
1. I was given lunch today by Mr Brian Pemberton (Managing Director) and Mr Rod Olsen (Financial Director) of Cable and Wireless. Their main purpose was to explain, from C & W's viewpoint, the situation in Hong Kong regarding the second network for which British Telecom have been pressing.
2. Mr Pemberton began by describing the poor state of relations between C & W and BT, originating in C & W's unsuccessful attempt to muscle in on BT's patch in the Isle of Man. Since privatisation BT had been pursuing business overseas, but instead of looking for opportunities where British firms were not already involved, they were deliberately and "vindictively" trying to win business in C & W's territories. This had already had unfortunate effects in Gibraltar and Belize. BT were now trying the same approach in Hong Kong where, as you will know, they are seeking a franchise for the construction of a second network which would initially provide facilities for Cable TV and other services. They had joined with Hutchinson in a bid for Cable TV. It was now up to the Hong Kong Government to decide what to do.
3. Mr Pemberton said he had just spent nearly a month in Hong Kong lobbying government officials, EXCO members and others concerned. He thought he had had some success. The fact was that no other city in the world had two separate networks. The construction of a second network in Hong Kong would cost US$2-3 billion, causing vast disruption. It would make little commercial sense: hence the lack of proposals from any of the other telecommunications majors. The Hong Kong Government nonetheless seemed to be finding it difficult to decide what to do. Mr Pemberton had heard that after the failure of previous attempts to reach departmental agreement in Hong Kong, a paper was to be put to EXCO setting out the proposals of the two sides and seeking advice.
4. In answer to my question, Mr Pemberton said that C & W had had contacts with FCO and DTI oficials and ministers regarding their rivalry with BT. Some had said that it had never been intended that competition overseas should work out in this way. Others had suggested that C & W and BT should get together to resolve their differences.
CONFIDENTIAL
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