CO129-617-2 Hong Kong Telephone Company 22-2-1947 - 3-11-1947 — Page 22

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.