XN000022-1975-02-05 — Page 9

8

WEDNESDAY, FEBURARY 5, 1975

HE SAID THERE WERE SUGGESTIONS THAT THE SUBSCRIBERS' ASSISTANCE SHOULD BE IN THE FORM OF A LOAN OR A DEPOSIT WHILE SOME OTHERS TALKED ABOUT THE POSSIBILITY OF ISSUING PREFERRED STOCKS OR REDEEMABLE SHARES TO SUBSCRIBERS.

HE RECOMMENDED THAT THESE SUGGESTIONS BE GIVEN CAREFUL AND THOROUGH CONSIDERATION BY THE COMMISSION OF INQUIRY.

TURNING TO THE OPERATION OF THE COMPANY, DR. CHUNG DESCRIBED IT AS A VERY COMPLICATED ONE.

THE ADVISORY COMMITTEE ON TELEPHONE SERVICES EVEN WITH THE EXPERTISE AT ITS DISPOSAL IN TELEPHONE COMMUNICATION TECHNOLOGY, COST ACCOUNTING, FINANCING, MANAGEMENT, AND EVEN AFTER THREE MONTHS INQUIRY, STUDY AND DELIBERATION COULD NOT GET ALL THE ANSWERS IT WANTED TO ITS QUESTIONS DESPITE THE CO-OPERATION OF THE TELEPHONE COMPANY, HE ADDED.

HOWEVER, DR. CHUNG SAID THAT IN HIS CAPACITY AS A MEMBER OF THE ADVISORY COMMITTEE ON TELEPHONE SERVICES HE HAD HAD THE ADVANTAGE OF CLOSELY STUDYING THE FINANCIAL POSITION OF THE COMPANY FOR THE PAST MONTH,

WHILE ADMITTING THAT HIS KNOWLEDGE OF ITS AFFAIRS WAS STILL INCOMPLETE, DR. CHUNG ASSURED MEMBERS OF THE COUNCIL AND THE PUBLIC THAT +SOME POSITIVE ACTION MUST BE TAKEN AS SOON AS POSSIBLE AS THE COMPANY IS VERY SHORT OF CASH AND ITS FINANCING COSTS ARE MOUNTING.

AT THE SAME TIME, HE EMPHASISED THAT SUCH ACTION IF TAKEN SHOULD BE OF AN INTERIM NATURE AND SUBJECT TO REVIEW IN THE LIGHT OF THE FINDINGS OF THE COMMISSION OF INQUIRY WHOSE TASK WOULD BE TO MAKE RECOMMENDATIONS FOR A SUBSTANTIVE SOLUTION WHICH WOULD BE FAIR TO ALL CONCERNED.

HE ADDED THAT THE POSITIVE ACTION MUST TAKE THE FORM OF PROVIDING THE COMPANY IN THE INTERIM WITH MORE CASH.

THE FINANCIAL SECRETARY HAD SAID THAT THE COMPANY IN ORDER TO OVERCOME ITS CASH SHORTFALL IN 1975 WOULD NEED AN ADDITIONAL SUM OF ABOUT $100 MILLION APART FROM THE WAIVING OF ROYALTY PAYMENT OF $6 MILLION, THE FOREGOING OF DIVIDEND PAYMENT OF $48 MILLION, AND THE NEW LOAN FROM THE COMPANY'S DANKERS AMOUNTING TO $90 MILLION.

SPEAKING ON THE SAME MOTION, ANOTHER UNOFFICIAL MEMBER, THE HON. LO TAK-SHING SAID THAT BASED ON THE FIGURES SHOWING MAIN ITEMS OF EXPENDITURE AND INCOME OF THE TELEPHONE COMPANY THE COMPANY COULD NOT POSSIBLY REACH AN EIGHT PER CENT DIVIDEND RETURN ON PAID UP CAPITAL AND CONSEQUENTLY IT WAS ENTITLED TO AN INCREASE.

/HOWEVER,