Hongkong Telecom's share price hit its highest level for nearly a year yesterday as the company announced 1996 profits grew by 12.5 per cent, but news of a possible sale of a stake to a mainland company failed to materialise despite recent speculation a deal was imminent. Net profits for 1997 were $11.17 billion, slightly ahead of most expectations. Earnings per share rose to 97.2 cents, up 9.5 per cent. Making his first public appearance for Hongkong Telecom, Cable & Wireless (C&W) chief executive Dick Brown remained tight-lipped about a deal with China but conceded it was in the company's interest to enhance its dealings with the mainland. C&W owns 59 per cent of the company. 'Clearly it does interest Hongkong Telecom to enhance workings with China as with the rest of the Asia-Pacific,' he said. 'There are many ways to do this, and it would be premature to make any specific comments now. 'Anything we do will be based on enhancing shareholder value for C&W and Hongkong Telecom.' Following the revelation on Wednesday that China Unicom - the mainland's second national operator - was interested in acquiring a stake in Telecom and had been involved in talks, chief executive Linus Cheung confirmed that Unicom had made contact, but he declined to give further details. He said China Unicom president Li Huifen 'has been in touch with us, as well as the MPT [Ministry of Posts and Telecommunications] in different provinces in China. 'Hongkong Telecom has maintained a much closer relationship with the MPT than with China Unicom.' Mr Cheung said the annual results showed the company was in a healthy position. The company said the 12.5 per cent growth in profit was driven in part by international revenue growth of 5.2 per cent, recovering from 1.3 per cent in the 1996 financial year. Turnover grew by 10.8 per cent to $32.57 billion. A final dividend of 41.7 cents was recommended, giving a full year dividend per share of 76.3 cents - a rise of 12.5 per cent. Peregrine Research Institute telecoms analyst Craig Racine said the results were pretty much in line with expectations. 'There were few surprises. 'In my view, pressure remains on the international and cellular businesses that will inhibit future earnings growth,' he said. Many analysts said they were disappointed by the detail of the information provided by the company. At the interim announcement, the company said it had lost an average of 15 per cent market share of long-distance traffic to its rivals, who mostly use call-back. Mr Cheung said the company had chosen not to disclose this figure again because it was commercially sensitive in a highly competitive industry. Since the launch of its own call-back service last month, he said, it had signed up thousands of customers.