No. 3/2321/47.
COLONIAL SECRETARIAT,
LOWER ALBERT ROAD
HONG KONG
23rd June, 1947.
Dear Sir Sidney,
The question of the Hong Kong Telephone Company's
franchise is coming up, and we are somewhat at a loss to
know how to deal with the matter in view of the disappearance
of all our pre-war records. I gather that the existing
agreement was negotiated by you personally with Taggart,
and it would be of great assistance to us if it would be
possible to let us have a copy of the 1940 correspondence
with the Colonial Office on the matter.
2.
The details of the present agreement, leaving out
all but the essential points, are that the Company charges
$117 per exchange line, and various other charges for other
They pay us in royalties:-
services.
(a) $4 on each exchange line;
(b)
half their profits in excess of an
3.
amount necessary to pay a dividend
of 12% on the paid up capital.
It seems that it was agreed, prior to 1940, that
the Company should be allowed to amortize its capital over
the period of its franchise and for this purpose was allowed
to appropriate annually to a Capital Reserve Fund the sum
of $92,577. This sum was thus deductible from profits
assessable for Royalty.
4.
In September, 1945, the Company was allowed as a
temporary measure to increase its charge for exchange lines to $15 a month, and ius other charges by 50%. We agreed
not to increase the Royalties. They came back in April
asking for a further unspecified increase in charges; this
Sir Sidney Caine, K.C.M.G.,
Colonial Office,
LONDON.