Reference
The Hong Kong Government publicly stated in February that there was no intention to terminate Hong Kong telecom- munications domestic monopoly, but said that if very compelling and overriding factors in favour of the consumer existed they would contemplate dissolving the international monopoly. As internal telephone calls are virtually free (bar a monthly standing charge of £4), revenue from international calls is a particularly significant factor in the financing of the current network.
Nevertheless, in his statement to C & W's AGM on 16 July the Chairman, Lord Young said "I have received the personal assurances of the Governor that there is no intention of the Hong Kong Government abrogating or cancelling our franchises before the due date".
While any liberalisation programme would in theory, open the door for British Telecom to enter the market, the likelihood is that there would be pressure within Hong Kong to introduce non-British companies into the telephone network rather than maintaining it as a wholly British interest. Any change would be at the expense of Cable & Wireless and UK interests would be likely to be net losers.
In the light of the UK's pro-competitive stance on telecommunications and determination to ensure that overseas Governments open up their own markets, it would be extremely difficult for Ministers to press the Hong Kong Government to continue Cable & Wireless's current monopoly position. However, Ministers should be aware of the importance of the Hong Kong telecommunications market to Cable & Wireless and their equipment suppliers and the considerable UK interest at stake. If the Hong Kong Government moves to end the current monopoly, these interests are likely to lobby DTI Ministers to intervene on their behalf.
Background
Cable & Wireless in Hong Kong, through their subsidiary Hong Kong Telecommunications Ltd, currently have an exclusive licence to run Hong Kong local and international telecom- munications. The internal licence is due to expire in 1995 and the external licence in 2006. Hong Kong Telecom imports significant amounts of British equipment, including satellite earth station equipment, broadcasting towers, fibre-optic cables and pay telephones. It is the private sector's largest employer with approximately 17,000 staff and is the largest company listed on the Hong Kong Stock Exchange. As well as Cable and Wireless '58% stake, major shareholders include CITIC (an external agency of the Chinese Government, with a 20%
2
No comments yet.
Private notes are available after approval.