HKs Cable TV, New T&T Seen Moving Closer

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Hong Kong -- The chairman and managing director of Hong
Kong's pay TV monopoly, Cable TV, has assumed day-to-day operational control of its
parent company's telecommunications operator, New T&T, amid the possibility of a
deregulated and more competitive market.

The appointment of Stephen Ng has fueled speculation that
Wharf Holdings Inc.-owned Cable TV and sister company New T&T will soon merge. The
news follows the Hong Kong government's proposals earlier this month to allow pay TV
providers and telecommunications companies to provide each other's respective
services.

The government also suggested allowing an unlimited number
of pay TV providers and mandating compulsory access to Cable TV's hardwire-cable
distribution system for the newcomers.

Ng is due to take control at the end of this month, when
New T&T president Leslie Harris returns to the United Kingdom, although Ng is already
nominally chairman and managing director.

Wharf insisted that it was too early to discuss the
possibility of a merger of the two companies, since staff with each company were still
discussing their response to the government proposals before the Oct. 3 deadline for
comments.

"It's premature to speak of mergers," Cable
TV spokesman Garmen Chan said. "Obviously, with the tone of the proposals, there
could be synergies between Cable TV and New T&T. But at this stage, we are still
seeking clarification from the government on a number of points, including the issue of
interconnectivity between operators."

The government wants to reclaim Cable TV's microwave
frequencies, which currently deliver 20 channels of programming to 240,000 of its 400,000
customers. Citing "economic reasons," the company ceased building its
hardwire-cable system in June, after reaching a target in its license of 600,000 homes.

The microwave frequencies are needed to roll out digital
direct-to-home TV channels that were allocated to Hong Kong by the International
Telecommunications Union in December 1997. Chan said the original agreement on the
microwave frequencies expired in 1996, but Cable TV had repeatedly asked for extensions.

"We are talking with the government about how to
resolve this constructively as we develop alternative distribution methods," Chan
added.

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