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UK bus operator wins pounds 55m franchise

FIRSTGROUP, Britain's largest bus operator, has won a franchise worth about pounds 55m in annual revenues to run Hong Kong's second-largest bus service serving 88 routes.

A subsidiary of the FirstGroup joined forces with the lead bidder, the Hong Kong-owned New World group, to win the franchise in the face of stiff competition from five other consortia, including its UK rival Stagecoach.

It will take over a bus service run for the past 65 years by the China Motor Bus (CMB) company, which tried to hang on to its franchise by joining up with Stagecoach. CMB stood little chance of retaining the business because its operations, based on an elderly British-made bus fleet, are highly unpopular.

FirstGroup and New World have pledged to spend up to HK$2bn (pounds 155m) on new facilities, which will include the purchase of 500 new buses. British bus makers also stand to benefit from this business.

New World, a diversified conglomerate run by the politically well-connected Cheng family, has no experience of bus operations and will have to rely heavily on FirstGroup's expertise.Nicholas Ng, the transport secretary, laid emphasis on FirstGroup's experience in Britain as a reason for the joint venture's successful bid.

Bus operations have been highly lucrative in Hong Kong where all routes are monopolies although large buses face competition from mini-bus operators covering the same territory.

The new company will have to get the new service running by 1 September. It will begin operations with CMB's fleet before putting new vehicles on the roads.

The award is the first to a UK company since the end of British rule in Hong Kong and can be taken as a sign the new regime is not discriminating against the former colonial power.