TNAG-2247-FCO40-3230-Business-interests-in-Hong-Kong-Cable-&-Wireless-1991 — Page 47

LORD YOUNG'S CALL ON THE PRIME MINISTER

Hong Kong

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Lord Young may raise with the Prime Minister Cable and

Wireless's substantial business interests in Hong Kong.

Through their subsidiary, Hong Kong Telecommunications, they

have two exclusive licences to run local telephone services

(which expires in 1995) and international communications (which expires in 2006). Their Hong Kong operations

contribute about half of Cable and Wireless world-wide group

profits. The Hong Kong Government is currently reviewing its telecommunications policy and, in common with many countries including the UK, is considering liberalisation

and/or stricter control over profit levels, and access to

systems. No decisions have yet been reached, but the Governor has given a personal assurance to Lord Young that

the Hong Kong Government does not intend unilaterally to

terminate the franchises in advance of their expiry dates. If Lord Young asks that HMG keep an eye on this major

contribution to the UK balance of payments, the Prime Minister may wish to say

Hong Kong recognises the excellent service provided by Hong Kong Telecom but needs to keep policy abreast of international developments.

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We recognise that this is an important matter and

the Foreign Secretary and Lord Caithness are taking a close interest in developments.

BOYAAX/1

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