CONFIDENTIAL AND COMMERCIAL IN CONFIDENCE
To:
Mr Meadway
copy: Mr Salvidge
-
Head/OT2
Mr Love
OT2
Mr Murray
"
Mr Rogers
TP1
Ms Bishop
Mrs Mayer
TP2 TP7
From:
Neil McMillan
Hd/TP2
Room 214
BPR Red Zone
215 1769
9 March 1993
ल
IMPLICATIONS OF HONG KONG'S ECONOMIC AND FINANCIAL POSITION
Your minute of 4 March to, among others, Paul Salvidge, asked for an assessment of the impact of the sort described in Paul Gray's letter to you of 1 March on C & W's franchises in Hong Kong,
both for domestic telecommunications (Hong Kong Telco) and International (HKTI).
2. Firstly, it is perhaps worth mentioning that
that C & W's interests in Hong Kong have, given the continuing nature of their business interest in Hong Kong through their franchises, a rather different complexion from the mainly project-based activities undertaken by the other companies on your list. C & W's position is already vulnerable, given that the franchise for domestic services for Hong Kong Telecom runs out in 1995 and for international services in 2006. Furthermore the Hong Kong Government is already thinking about introducing at least domestic network competition after 1995. Hong Kong Telecom's monopoly position has anyway already been chipped away at by competition in, for instance, the mobile and value- added area over the last few years. Thus, C & W is already having to face up to the prospect of a less lucrative operation than at present in Hong Kong.
3. With those caveats, the effect on Cable and Wireless of a total loss of its franchise through Chinese action to dispossess it of Hong Kong Telco and HKTI would remove well over a third of C & W's worldwide turnover and a good two thirds of its profit. (In both cases 1992 figures).
In tabular form, these look like this, with 1991 for comparison:
min.2
тсь
icb.