TNAG-2079-FCO40-2959-Hong-Kong-press-coverage-and-reports-1990 — Page 54

3.5

This 30% drop in operating margin increases peak funding (which is a major determinant of investor risk) and drops the real rate of return (i.e. after deducting inflation). As follow:

(A)

(B)

Peak Funding

$5.9 Billion

$6.5 Billion

Real Rate of Return

5.2%

0.1%

3.6

In essence an investment in this cable system in a market where SMATV has an earlier start (situation (B)), is not viable.

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