Hong Kong's telecom regulator said yesterday that it has no intention to cut the number of licences to ease intensified competition in the sector.

"The future of the Hong Kong telecom industry lies not in reducing the level of openness of the market or to adopt some regulatory measures with protectionism flavours," M.H. Au, Director-General of the Office of the Telecommunication Authority (OFTA), told a seminar.

On criticism by some telecom operators that Hong Kong's small market, overcrowded licences and low profit margins are discouraging investment, Au said that the market could adjust by itself if there is overheated competition.

"A liberalized telecommunications market means that there are no regulatory barriers for entry or exit," Au noted.

Hong Kong's biggest telephone company PCCW said on Monday that the government's current telecom policy has discouraged operators from investing Hong Kong.

It has applied to be removed from the dominant status - which entails certain conditions such as government approval for tariff hikes - in Hong Kong's fixed-line business phone market and would not carry out any large-scale investment until the government has established a clear-cut telecom policy.

However, Au encouraged the local telecom operators to tap the potential of the local market.

"The penetration level of certain services may approach saturation, but this does not necessarily mean saturation of revenue," Au remarked.

He suggested the operators increase investment, improve efficiency, and explore high-quality, innovative and high value-added services that consumers would pay extra money for.

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