Thumbs up likely for Telecom deal

PUBLISHED : Friday, 27 February, 1998, 12:00am
UPDATED : Friday, 27 February, 1998, 12:00am

A multi-billion-dollar deal to buy out Hongkong Telecom's monopoly is expected to be approved by the Finance Committee this afternoon.

Some members who had voiced reservations said last night they were willing to back the $6.7 billion compensation package.

This followed repeated assurances during a subcommittee meeting yesterday from Secretary for Economic Services Stephen Ip Shu-kwan of its value for money.

Mr Ip said Hongkong Telecom's market share in international calls had been cut by 40 per cent since the introduction of callback services. It is also expected to see a significant drop in domestic services over the next five years.

He said the three new players in local fixed telecommunication network services would encourage competition and force down prices.

The three companies use 20 per cent of Hongkong Telecom's residential exchange lines. The agreement requires the company to gradually release at least 50 per cent of its network.

'We would see an acceleration once the basics are in place, to boost the share to 50 per cent in the next 10 months,' said Alex Arena, former director-general of telecommunications and a special adviser in the negotiations. .

A suggestion by Elsie Tu to compensate the firm in phases was rejected.

It would surrender the licence on March 31 and compensation would be granted on July 1 if approved.