Hongkong Telecom is facing keen competition from a rival set to invest $8 billion in the market following the break-up of its monopoly.
Without revealing the rival's name, Secretary for Economic Services Stephen Ip Shu-kwan said it had committed investment of $8 billion and the creation of 1,000 jobs.
But provisional legislators questioned if the liberalisation would generate genuine competition and drive down tariffs as promised.
Liberal Party leader Allen Lee Peng-fei was worried competitors would join hands to push up tariffs.
Director-General of Telecommunications Anthony Wong Sik-kei said licences had provisions against anti-competition malpractices.
Mr Ip urged lawmakers to accept the deal which, he insisted, had more gains than losses.