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Press Release
14 Oct 2002
Response to Albert Cheng's Article "Policy Encouraging Telecoms Investment Would Help Avoid Outages" in SCMP
In response to Mr. Albert Cheng's article "Policy encouraging telecoms investment would help avoid outages" published in his column in the SCMP on 19 September, Wharf New T&T would like to clarify with facts and figures on the viewpoints made by Mr. Cheng so that the public would not be misinformed or misled.

Mr. Cheng attributed the severe breakdown of Hong Kong's telephone service on 11 September, when typhoon 'Hagupit' threatened Hong Kong and typhoon signal number 8 was hoisted shortly after noon, to the reluctance of PCCW's competitors to invest in telecom infrastructure. The Office of the Telecommunications Authority has corrected that in its letter published in the SCMP on 25 September. Wharf New T&T wishes to provide further clarification.

Contrary to Mr. Cheng's accusation, Wharf New T&T has invested no less than the mobile operators in telecom infrastructure in Hong Kong. Importantly, Wharf New T&T invests where investment is most needed. That strategy was clearly validated on the day of the typhoon (11 September), when there was little or no congestion for our customers making calls to other customers within our network, or when our customers' calls were handed over to competitors' networks to reach their customers. Our customers were much better served than those of our major competitor PCCW.

As for customers of PCCW, we believe inadequate processing power to meet the sudden surge in calls, rather than inadequate physical connections to the customers, was more likely to have brought down PCCW's service for hours on the day of the typhoon.

By and large, there is today no shortage of physical connections to a customer's home. The public has been misled to believe otherwise. The typhoon clearly demonstrated that fixed network investment is most needed not at the customer end but at the operator end, i.e. more capacity to process more calls.

To illustrate this point with an analogy, there is no need to construct more roads to bring more traffic from Chek Lap Kok Airport into Central but there is a serious need to invest in more capacity for Central to handle more traffic. If Central is overloaded, Central is where new investment should go to, rather than building a new Tsing Ma Bridge and a new Western Tunnel.

To put things into better perspective, Wharf New T&T has invested over $4.2 billion since 1995. In the first half of 2002, our Capex (capital expenditure) investment was equivalent to $484 per $1,000 of revenue earned from customers (vs. PCCW's $57), $1,026,000 per 1,000 lines served by us (vs. PCCW's $173,000) and $318,000 per employee (vs. PCCW's $44,000). We have relied on PCCW's interim results announcement for this comparison. In other words, we re-invest a much larger proportion of the revenue we earn from our customers to serve our customers. We also invest much more per employee to enhance our employees' ability to better serve our customers.

PCCW has called its competitors parasites on various occasions and accused them of not investing. On typhoon day, 11 September, the customers of one such "parasite" were much better served than the customers of the "host", because the "parasite" invests more generously than the "host"! We hope the information above would help to clarify any paradox.
About Wharf New T&T

Wharf New T&T, licensed in 1995, is the fastest growing network operator after the opening of Hong Kong's fixed telecommunication market. Since its launch, the Company has continually sought to upgrade its services and deliver competitive products at competitive prices to Hong Kong businesses and consumers.

Wharf New T&T is a member of The Wharf Group of companies, one of the largest groups of companies in Hong Kong. The Group also owns i-CABLE Communications Limited, the No. 1 Television Station in Hong Kong for News, Movies and Sports, as well as a leading Internet access service provider.

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