While major political parties and other broadcasters said new competition would give the public more choice, activists running an unlicensed radio station said the government should further open up the public airwaves.

In a statement, the government announced that the Chief Executive in Council had approved 'in principle' the application by Wave Media, headed by Mr Cheng, for a 12-year licence to run a 24-hour Cantonese- language channel.

Mr Cheng said the fact that he was a personal friend of Chief Executive Donald Tsang Yam-kuen was not a reason for the apparently smooth approval process, which took about six months.

'It has nothing to do with 'bow tie' [Mr Tsang] and I will continue to criticise the government. This is a commercial radio station. I might stop criticising the government if it pays us HK$500 million to support our operation,' Mr Cheng said.

The government said the station, which would be managed by 'personnel with broadcasting expertise and experience', was considered to be financially capable of establishing and maintaining service.

Major shareholders of Wave Media include Wong Cho-bau, a delegate to the Chinese People's Political Consultative Conference, and legislator David Li Kwok-po, chairman of the Bank of East Asia.

The planned investment for the station is HK$140 million. The company has voluntarily committed to providing a performance bond of HK$2 million to ensure it can start broadcasting within 24 months after the granting of the licence, which will be submitted for approval soon.

Mr Cheng said the station, which would use the AM 810 frequency, would provide comprehensive programmes, including a news service and talk shows. The former veteran talk show host, who left Commercial Radio in 2004, said he would return to the airwaves in programmes.

But Tsang Kin-shing, organiser of Citizens' Radio, questioned the legality of the government approval for Mr Cheng's station. A court earlier this year ruled that certain provisions of the Telecommunications Ordinance were unconstitutional when officials sought an injunction to ban Citizens' Radio - which failed to obtain a licence - from broadcasting.

Commercial Radio and Metro Radio welcomed the competition, while RTHK said it could help increase service quality. But the staff union at RTHK feared a possible exodus.

Democrat Sin Chung-kai hoped Mr Cheng's new station would provide a channel for the public to express opinions, while Tam Yiu-chung, chairman of the Democratic Alliance for the Betterment and Progress of Hong Kong, said it might be difficult to receive AM broadcasts.