TNAG-2247-FCO40-3230-Business-interests-in-Hong-Kong-Cable-&-Wireless-1991 — Page 222

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BRITISH TRADE COMMISSION

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26 February 1991

cc MR McLAREN

MR BAYIVE

MR BURNS

It is relevant that China has a

2020 stake in Cable and Wireles

CABLE AND WIRELESS

My letter of 7 February 1990 to David Love, copied to you, suggested that the maintenance of Cable and Wireless' very strong position in Hong Kong should be one of our foremost commercial objectives. I said then that that position was coming under threat, particularly from the Americans, and that I thought that Ministers should keep an eye on this and support Cable and Wireless' position whenever possible. I did not receive a reply to that letter but was glad to see that you supported my conclusions in your letter of 2 March 1990 to David Love.

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2. The Americans, who of course are very active and very successful in this market overall, are clearly continuing to make assaults on Cable and Wireless' position. I think we can reasonably assume that they regard the dislodging of Cable and Wireless as one of their major commercial objectives here. There have been two further recent developments. US and Hong Kong Governments have recently signed an agreement which the head of the commercial side of the US Consulate General here has described as "a major step forward in deregulating Hong Kong's telecommunications market". understand, from Cable and Wireless, concerns the liberalisation of the use of internal leasing circuits. It apparently mirrors a comparable agreement made between the UK and USA Governments. Cable and Wireless do not view it as a major threat, nor indeed as a major step towards deregulating the telecommunications market. They do see it however as a relatively small move in that direction. I asked whether a comparable agreement between the British and Hong Kong Governments would be advantageous. Their Chairman here said he had not considered this but would now give it some thought.

3. Much more significant, and regarded as so by Cable and Wireless, is the appointment of an American firm of consultants by the Hong Kong Government to consider whether Hong Kong Telecom's domestic franchise monopoly, due to expire in 1995,

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/should be.