PCCW will need to refund an estimated HK$300 million to local telecommunications operators after the Office of the Telecommunications Authority (Ofta) reduced charges for its international-direct-dialling (IDD) service. Operators hailed the regulator's decision, calling it a 'Christmas gift from Ofta' because they will receive refunds for the additional charges paid to PCCW over 30 months as universal service contributions (USC) for the provision of payphones and residential telephone lines. City Telecom and New World Telephone said they would each get a cash refund of HK$90 million from PCCW, possibly early next year. Wharf New T&T said it would recoup part of the more than HK$100 million in charges it had paid to PCCW over the past seven years. Last month, Ofta retroactively phased out the per minute USC charge for IDD calls to zero, from the previous 6.8 HK cents, for leading overseas destinations, including China. The decision affects payments dating back to January 2000. PCCW will refund the difference, which it formerly charged all fixed-line, mobile and IDD carriers. Ofta said the total net USC for 2000 was HK$170.7 million. 'PCCW should provide the excess payment to the USC contributing parties,' it said in a statement. PCCW declined to confirm the amount it would pay to operators but said the retrospective arrangement was not unexpected. 'We have been very conservative in the accounting treatment,' said a company spokesman, adding that Ofta's ruling would not have much impact on the company's accounts. Wharf New T&T vice-president Tony Cheung Tung-lan and DBS Vickers Securities analyst Wallace Cheung estimated that PCCW would need to refund HK$300 million, based on the amount it gave to City Telecom, which had a near 30 per cent market share in IDD. On Tuesday, City Telecom said it would receive a refund of HK$41 million for providing universal network services in 2000. It expected to receive another HK$56 million for the period from 2001 to June 30, 2002. The lump sum of HK$97 million is close to the company's profit of HK$91.1 million last year. Chairman Ricky Wong Wai-kay declined to say whether CTI would declare a dividend with the additional income. He said: 'Ofta has given everyone, except one, a Christmas gift.' Shares of PCCW tumbled 6.53 per cent yesterday to HK$1.43, stalling a rally which had seen its shares jump 63 per cent since mid-October. Meanwhile, PCCW is seeking to refinance a US$900 million loan - the last tranche of a US$4.7 billion loan taken out to finance the Hongkong Telecom (HKT) acquisition - before the end of the year, according to a banker. The refinancing would ease restrictions on how it could use profits from PCCW-HKT, its core fixed-line business. Under the curbs, PCCW can use no more than 75 per cent of profits from PCCW-HKT. PCCW chairman Richard Li Tzar-kai told Bloomberg this week that the company was hunting for investments which would generate US$500 million in annual sales by 2007.