EXPANSION plans by Hongkong Telecom linked to the new airport will increase its network size by about 10 per cent. Director of network engineering David Connoly said yesterday that the company's planned services to the port and airport scheme would add 300,000 lines to its capacity. Much of the equipment is bought from Japan, but Mr Connoly said the company was protected from the rising value of the yen by currency agreements with suppliers. The expansion figures exclude the planned Central and Wan Chai reclamation on Hongkong Island, subject of a heated dispute between the British and Chinese governments. Mr Connoly said that planned expansion would cost between $3 billion and $4 billion and would have a payback of about 10 years. ''It's very capital-intensive and it's a fairly long time before you get a payback,'' Mr Connoly said. ''What we're proposing today would frighten most telephone companies. We're building massive, massive exchanges.'' Mr Connoly said the company was just finishing installing digital technology throughout the network and therefore had the staff to do the job. The digitilisation will end this month, after an investment put at $5 billion, giving Hongkong one of the largest all-digital networks in the world. The exchange planned for the reclaimed land near Yau Ma Tei will be bought from Japanese suppliers. Mr Connoly said contracts with the suppliers protected the company from currency movements, and if necessary the company used currency futures to ensure it got a good price for its equipment. Chek Lap Kok island currently has a tiny 500-line exchange connected by radio to Castle Peak to service contractors. The exchange was floated across by barge. The airport island will have 30,000 lines and the company is planning 100,000 more lines for Yau Ma Tei. The sleepy fishing village of Tung Chung will be transformed into a town of 150,000 residents who will want telephones. Operations director Peter Skerrett said the company had experience of similar projects by supporting developments such as those at Junk Bay and Sha Tin. ''The first building [built on reclaimed land] has to be a telephone exchange, because the second building wants a telephone line,'' said Mr Connoly. The company has laid a unique cable under the seabed to Lantau Island, and will use the planned network of bridges and tunnels to carry optical fibre cables, along the lines of the road and rail routes. This double link will mean that any disaster hitting one of the links will not leave the airport, port and other facilities stranded. Last year the company installed nearly 180,000 exchange lines. At the peak of the digitalisation programme it converted 500,000 lines in a year. According to Mr Connoly, the cost of the company's huge capital investment is kept low by suppliers keen to use Hongkong as a showcase with an eye on the China market.