Hong Kong licence fees too expensive says CSL

February 12, 2004

Hong Kong's CSL may be launching 3G mobile services in the second half of the year, but the operator believes it will struggle to recover the expensive licence fees.

Chief executive Hubert Ng said 3G revenue for the "next few years" is unlikely to cover the HK$50 million spectrum utilisation fee charged each year by the government.

The four 3G operators in Hong Kong have to pay fees of HK$50 million every year for the first five years. After the five years, operators will have to pay a scaled up minimum spectrum utilisation fee, or 5% of their 3G revenue, whichever is higher.

Ng said it would be very difficult to quickly break even on 3G investment and does not see how the telecom authority can justify such a licence fee in the short term.

CSL is cutting as much as 90% of the intended HK$2 billion investment and will only provide a "demand driven" 3G coverage.