Telecoms chief strikes back at Fok
Hutchison boss draws stinging rebuke after putting blame for HTIL job losses on government
The government's commerce and telecommunications chief yesterday lashed out at Hutchison Whampoa's claim that heavy-handed regulation by the Office of the Telecommunications Authority was at least partly to blame for company lay-offs.
In a hastily called press briefing yesterday, Secretary for Commerce, Industry and Technology John Tsang Chun-wah responded to remarks by Hutchison managing director Canning Fok Kin-ning that the government's telecommunications policy and a tough operating environment forced the group to lay off 750 employees.
'Hong Kong is a market-driven economy ... if someone says he is wary of competition, I don't think he should be operating any business at all,' Mr Tsang said. 'I don't think the city's operating environment has deteriorated, it is market-driven ... as a government we can't guarantee that every business is profitable, it is companies' own responsibility to make a profit.'
On Wednesday, Hutchison's telecommunications arm, Hutchison Telecommunications International Ltd (HTIL) said it was laying off 270 staff and moving 480 off its payroll to the company's information-technology outsource partners, NEC and Hewlett-Packard.
Mr Fok blamed an earlier decision by Ofta to revoke its CDMA (code division multiple access) licence by 2008 for the business restructuring. He said revoking the licence had cramped Hutchison's ability to compete with rivals.
He also said Hong Kong's telecommunications policy had made the operating environment even worse than during the 1998 financial crisis.
Mr Fok said the possibility of more 3G licences being issued by the government after 2008 had forced the group to cut costs to prepare for more competition resulting in lay-offs.
Mr Tsang said he could not see how Ofta's decision to revoke the licence had caused the staff cuts, which accounted for 19 per cent of the company's original workforce of 3,900 in Hong Kong.
'We made the decision to revoke its licence last year because its use on the CDMA spectrum is too low, with only 260,000 subscribers,' he said. 'We made this decision after striking a balance between the benefits for Hong Kong consumers, and the operations of the companies involved.'
Apart from Hutchison, Ofta is also withdrawing CSL's TDMA (time division multiple access) licence by 2008.
'It is exactly our market-oriented approach that has given Hong Kong consumers a mobile tariff that is probably among the lowest worldwide; and a mobile penetration rate that exceeds 100 per cent,' Mr Tsang said.
Dennis Lui Pok-man, HTIL's chief executive, said on Wednesday that revenue from loss-making CDMA represented only a 'small fraction' of the company's total.
For the first half of last year, HTIL's Hong Kong mobile division made a net loss of $195 million, reversing a net profit of $84 million, mostly on 3G start-up costs, analysts said. The company said the lay-offs and outsourcing would save up to $300 million a year.
Mr Tsang said yesterday that whether a fifth 3G licence would be issued after 2008 would depend on the government's overall spectrum policy review, which should be made known later this year.
The news did not help HTIL's share price - it closed 2.94 per cent lower at $6.60 yesterday.
