One of Cable & Wireless' most prized subsidiaries, Hong Kong Telecom, is opening itself up to competition - for compensation of #500 million.
The company has operated an exclusive international licence in the territory since 1981, but has agreed to surrender this eight years earlier than planned so the government can introduce competitors to the region.
This is will ensure that Hong Kong meets its commitment to the World Trade Organisation's bid to liberalise the global telecomms market this year.
Included in the compensation package thrashed out between Hong Kong Telecom and government officials is a two-stage cash payment of HK$6,700 million (#500 million). The operator will also no longer have to pay royalties to the government, which last year amounted to HK$532 million.
In return for terminating its licence before the originally agreed date of 2006, Hong Kong Telecom will be also be able to gradually increase its monthly line rental charge over a three-year period from HK$68.90 to $110 by 2001. Hong Kong residents enjoy free regional and local calls, which are subsidised by high rental charges.
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