TNAG-2126-FCO40-3036-Investment-in-Hong-Kong-1990 — Page 196

Direct line

Doff

Jebruss in

dickated

The Rt. Hon. Nicholas Ridley MP Secretary of State for Trade and Industry

dti

the department for Enterprise

CONFIDENTIAL

The Rt Hon John Major MP Chancellor of the Exchequer

HM Treasury

Parliament Street

London

SW1P 3AG

215

Our ref

Your ref

Date

NP1AMN

4442

29 January 1990

Дчи дост

Mr Panel, HKD

Mr Paul

Miss Marsden

This is the result of the dowerment I

gave you earlier today. I am prepoin a draft.

GARtiful for advic by

midday 2011

fiss

Josh

Este Mande

PS/Pons.

Mi Gillmer M. Mclaren Mr Lidington FED

2911

Department of Trade and Industry

1-19 Victoria Street London SW1H (ET

Enquiries

01-215 5000

Telex 8811074/5 DTHQ G

Fax 01-222 2629

Mkc 121/2

RECEIVED IN

DES/

INDEX

27 FEB 1990

Lord Sharp has asked for my approval, under the special share arrangements, for Cable and Wireless to dispose of a 20% stake in its subsidiary, Hong Kong Telecommunications Limited to the China International Trust and Investment Corporation Hong Kong (Holdings) Limited.

I would be grateful for your agreement to my giving such approval. I am under some pressure from Cable and Wireless for an early decision to enable it to complete the deal. would therefore like to be in a position to give my consent on Wednesday.

I

I have no basis on commercial grounds to object to the company's wishes. It is one of Cable and Wireless' long term aims to reduce its dependence on Hong Kong. The proceeds from the sale, which will amount to £768 million, will largely be invested in the UK, in Mercury and Mercury Personal Communications. By virtue of having aligned itself with a Chinese partner in Hong Kong, the sale could put Cable and Wireless in a stronger position to build on its existing interests in China by bidding for the substantial investment which the Chinese will be making over the next few years in telecommunications infrastructure. It does not infringe the Madrid declaration following the events in Tiananmen Square.

There are nevertheless political sensitivities, given the current state of negotiations over the future of Hong Kong. would therefore welcome Douglas Hurd's views on the course of action I propose, as to both the principle and the timing.

I am sending copies of this letter to the Prime Minister, to Douglas Hurd and to Sir Robin Butler.

I

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