TNAG-1779-FCO40-2539-Hong-Kong-international-telecommunications-1988 — Page 234

EXHIBIT 5.10 THE ECONOMICS OF CABLE TV IN HONG KONG: SUMMARY

Breakeven price which must be obtained from average

customer to recover costs, as a function of

(a) Cost

(b) Penetration of households

Total cost of cable TV

service (NPV at 1988

of all costs to 2007)

BREAKEVEN PRICE PER MONTH

Network cost at

4.8%

43% penetration

HK$101

HK$93

HK$83

Cost

penalty

HK$9,570 m HK$9,125 m

Network 2,470 2,025

costs

Programm-

ing plus 7,100

operational costs

7,100

HK$96

HK$87

HK$80

HCV network (separate) (Telco)

HKT network

38 43 48

100

% penetration of households (year 2002)

Note :

(1) Breakeven price includes provision only for 6% cost of capital, net of inflation; no profit

element is included.

(2) Horizontal broken lines slope upwards to the right, slightly, reflecting the incremental

cost of connecting additional households.

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