OFTA’s interconnection proposal to hit PCCW’s profits

17 Jul 2006

An announcement by Hong Kong telecoms regulator OFTA that it is launching a three-month consultation on revamping interconnection tariff structures could have serious negative consequences for the Special Administrative Region’s dominant fixed line operator PCCW. In an effort to boost competition, OFTA is proposing to scrap interconnection fees paid by mobile operators to fixed line carriers, a move which could deny PCCW around HKD400 million (USD51 million) in annual revenues according to analysts. The move could also deal a further blow to attempts by Australia’s Macquarie Group and US private equity firm TPG Newbridge to buy PCCW’s core assets. The pair have continued to remain hopeful of striking a deal despite opposition from the Chinese government and PCCW’s chairman Richard Li’s surprise decision to sell a 23% stake to investment banker Francis Leung earlier this month.

Hong Kong, HKT (incl. CSL)