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Wednesday, January 9, 1974
TELEPHONE CHARGES RAISED
The Legislative Council today approved an application by the Hong
Kong Telephone Company to raise its telephone charges with effect from January 15.
The revision is the first in about 10 years. The charges for a
business line are increased from $350 to $410 per annum, and those for a
residential line from $235 to $280 per annum.
For a private wire, the charges will go up from, $200 to $300 per annum
for a cable pair not exceeding one mile in distance, and from $10 to $15 per
annum for each additional 220 yards.
In explaining the increases, the Financial Secretary, the Hon. C.P.
Haddon-Cave said they were necessary to provide the company with an adequate
return on its capital and thus enable it to raise funds in the capital market
to provide for the required expansion in the telephone system.
The installation of new telephone lines had grown at a rapid rate in
recent years, and this had required substantial increases in capital investment
by the company in recent years, from an average of $79 million each year
between 1965 and 1967 to an average of $164 million each year between 1970
and 1972.
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To continue to meet expenditure of this magnitude, the company was
obliged to raiso funds in the capital market.
With the approved increases, Mr. Haddon-Cave anticipated that the
return to the company on average capital employed would not exceed 11 per cont
after tax in any year that is below the permitted annual 12-per-cent maximum
return.
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He further pointed out that these increases had been accepted by the
government on the advice of the Advisory Committee on Telephone Services.
In tendering