WHILE most analysts said they were not surprised by the 14.8 per cent increase in interim net profits chalked up by Hongkong Telecom, the feeling is that the territory's largest telephone service provider will be hard pressed to repeat the double-digit growth rates which have become commonplace and expected by shareholders. The very nature of the telecommunications industry as well the regulatory framework now in place are working to ensure that more competition - not less - is the norm. This, in the long run, will affect Hongkong Telecom's revenue projections, unless it is very astute in controlling costs. International telephone traffic has always been a money-spinner for the company, but a combination of reduced tariffs on overseas calls and the hugely popular call-back services have cut into revenues. According to one analyst, call-back traffic to the United States rose 44 per cent during the past six months. There are few doubts this sort of service will become more popular, which could put a significant damper on profits. China traffic grew a disappointing eight per cent during the same period, compared with 21 per cent last year. A combination of fiscal austerity measures, a 50 per cent jump in charges levied by the mainland government for overseas calls, and a five-day work week have conspired to cut traffic between Hong Kong and China. Hongkong Telecom's mobile telephone service hauled in a treasure trove in the first half, as subscriptions rose 57 per cent, making its mobile telephone network the most popular in the territory. There is a limit to the number of customers any network can handle. Growth cannot continue at this pace, as the network will soon experience overcrowding. Hongkong Telecom has proven itself to be an intelligent manager. It has trimmed layers of bureaucracy, cut staff and made cost savings. While the company is heralding its new multimedia division, it is still an unproven sector. In the long run, if one is bullish on China and Hong Kong, then one could do worse than betting on Hongkong Telecom.