forecasts for cable penetration rates should err on the side of caution, until the obstacles such as slow construction rates, programming problems and low levels of audience awareness have been
overcome.
It is estimated that penetration rates will start at 10% in Year 1, rising to 38% by Year 15 and to 43% by year 19.
The ending customers derived from these figures are therefore:
Year 1
1989
Year 10 1998
22,600 596,000
Year 19 2007
929,000
EXHIBIT 3.5 HOMES PASSED AS A PERCENTAGE OF THE HOMES IN THE FRANCHISE AREA AND SUBSCRIBER CONNECTION RATES
HOMES PASSED AS A % OF HOMES IN FRANCHISE AREA
CONNECTION RATES AS A % OF HOMES PASSED
Year 1
15
10
Year 2
40
15
Year 3
65
18
Year 4
85
20
Year 5
95
22
22
Year 10
100
32
Year 15
100
38
Year 20
100
43
* 100% of homes in the franchise area are passed by Year 6.
Source: HKT, CWHK, HCV and BAH
3.2.9 Financial viability
In many countries cable television has established a reasonable audience share by providing one or two premium entertainment and film channels for which there is a known willingness to pay between
HK$100-HK$200/month. BAH's conclusion is that such a demand exists in Hong Kong and that it can be provided by a new cable company. However the time taken to establish a sound revenue base may be longer than that forecast in the cable television proposals. It will be a risky business for the first five years with a twenty year IRR of only 14.3%.
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