a

The licensee should pay royalty calculated on the following scale but subject to an overall ceiling of 10% on gross receipts -

(b)

(c)

(a)

next

first $500 million @

$500 million @ 3%;

1%;

next

$500 million @

6%;

9%,

next

$500 million @

next $500 million @ 12%;

exceeding $2,500 million @ 15%

In the case of HCV, the inadequacies in their royalty proposal

as highlighted in paragraph 32(b) (vii) above will need to be rectified.

Financial commitment

The successful bidder should assure Government that it does have guaranteed access to funds to undertake the project. For either bidder, the guaranteed access to funds should be in the order of $5.5 billion. This commitment

should be provided in an appropriate form of guarantee acceptable to Government.

Road works

The licensee must meet the

requirements of the Director of Highways. Any agreement for duct sharing with Telco must be subject to the approval of the Telecommunication Authority.

Telecommunications Services

bidder

There are no specific requirements as

to how the successful

must develop its non-franchised telecommunications services. However, in the proposed negotiations with the two parties, we intend to seek more definitive and detailed proposals on how such services are to be introduced and developed so as to provide a better basis for making a choice.

(e) Microwave

(E)

A maximum of four

microwave

Frequencies in the 2.3 GHz band and four frequencies in the 2.1 GHz band will be granted for a limited period only. A large number of frequencies in the 17-19 GHz band may be granted indefinitely for providing fixed link relays to remote areas and islands.

Licence exclusivity

than

with

respect

The licences other to

non-franchised telecommunications services will be exclusive for a period of three years.

CONFIDENTIAL

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