Hongkong Telecom (HKT) reveals its interim profits today amid concerns the company will post disappointing results following a slowdown in international traffic. However, in something of a contrarian view, Indosuez WI Carr considers these fears could be overstated. 'Our bottom-up analysis tells us that Telecom will grow by 7 per cent. Our gut tell us differently - it is inconceivable that Telecom will post a robust result following the botched attempt at salary cuts. That would be politically incorrect,' analyst Fredson Bowers said. 'We expect provisions and unusual items to drag down a resilient result.' His main reasoning is that the IDD (international direct dial) business is not as weak as the headline contraction in volumes suggests. Telecom has moved key corporate customers to virtual private network (VPN) services as a way of discounting corporate tariffs. These services are classified not as IDD but leased-line transactions. It means that the anticipated 4 per cent volume reduction in IDD could be compensated for by enhanced lease-line revenues. In the second half of last financial year the company showed a 45 per cent increase in leased-line and data revenues. Mr Bowers reckons earnings per share (EPS) growth before exceptionals for the first half could be 7 per cent. However, he predicted that Telecom would try to use 'rainy day' provisions as a way of cutting that to EPS growth of 2 per cent, or lower. Research by Deutsche Bank forecasts a 1-2 per cent growth in net profit to about $6.1 billion. Its full-year figure is for EPS growth of 4 per cent and net profits of $13.14 billion.