TNAG-2247-FCO40-3230-Business-interests-in-Hong-Kong-Cable-&-Wireless-1991 — Page 161

EXHIBIT 12

CHANGE IN BALANCE OF PAYMENTS ON INTERNATIONAL CALLS

VOLUME

Million minutes

1,801

1,734

782

Incoming traffic

811

Outgoing traffic

923

1,019

Before* 2N

After**

2N

1991/92 projected

●

CHANGE IN SETTLEMENT PAYMENTS HK$ millions

Before 2N⭑

$1,369

$5,316

3,947

$5,867

After 2N**

ESTIMATE

$2,022

FO

Balance-of-

payment deficit increases by

HK$654 million or 48%

3,845

Out- payment

In-

payment

Out- payment

In-

payment

Assumes 2N and HKT will offer 20% discount to key customers; takes into account impact of discounts on demand elasticity of incoming calls based on historical relationships between volume and prices of incoming and outgoing calls

Source: Hong Kong Telecom; McKinsey analysis

McKinsey & Company, Inc.

CONFIDENTAL