HONGKONG Telecom yesterday announced plans to go head-to-head with Wharf Holdings in a bid to dominate cable TV and telecommunications in the territory. According to Peter Howell-Davies, deputy chief executive at Telecom, the Hong Kong telephone monopoly holder has applied to the Government for a cable TV licence to operate a multi-media network as soon as Wharf Cable's exclusivity period expires at midnight on May 31, 1996. The announcement that Telecom was planning to spend in excess of $1 billion on a cable TV network came only two days after Wharf Holdings' wholly-owned subsidiary, Wharf Cable, began transmissions on its own $5 billion cable TV network. However, when Telecom's own immensely profitable exclusive franchise to carry local telephony expires in mid-1995, Wharf Holdings is just one of half-a-dozen companies that have vowed to move into the local telephone business. To build its full telephone network, Wharf Holdings has apparently allocated between $6 billion and $11 billion, according to one of its executives. In its announcement, Telecom also confirmed plans to launch a video-on-demand system in 1995, after having completed a $30 million trial in 400 Hong Kong homes in mid-1994. An additional $30 million would also be spent on researching and planning the cable TV network, said Mr Howell-Davies. The video-on-demand system, which according to government regulations Telecom could launch immediately, will be carried over the telephone network's traditional copper phone wires. This will allow Telecom's 1.9 million residential customers to dial a number and have a specific video delivered to a television set via a home decoding box at any time they choose. The full Telecom cable television network will be carried from a hi-tech fibre optic trunk to a customer's television set via coaxial cables, the kind of wiring currently connected to most television sets. As with its planned video-on-demandservice, the Telecom cable TV system will be in Cantonese with additional services in English and Putonghua. Even so, Mr Howell-Davies was reluctant to name any potential programme providers for the network. ''I can only tell you that Hongkong Telecom won't be going into the programme-making business,'' he said. The Telecom cable television network will provide such products as ''home shopping, electronic games on demand, electronic bank ing, and many other fully interactive services'', Mr Howell-Davies said. Telecom believed the move into interactive services would bring benefits to Hong Kong as a regional trading centre, he said. ''If it enhances standards of living and business efficiency, then these comprehensive, interactive multimedia services must be a positive for the territory,'' he said. In 1986-87 Telecom was the leading company in the Cable Television Hong Kong consortium that was forced to withdraw its bid for the territory's exclusive cable TV franchise. In the event, the Government felt that too much power would be in the hands of the British Cable & Wireless subsidiary and looked at other candidates. The losses to Telecom were never revealed, but they were estimated to be up to $100 million. Even so, since then Telecom has been investing about $4 billion a year in a telephone network that now has many of the elements needed for a full cable television network. Mr Howell-Davies pointed out that Telecom already provided extensive video services through teleconferencing networks and news channels to many local companies. ''It is the right strategic step for us to extend the range of our video services to meet the needs of medium-sized and domestic customers as well as the major corporations,'' he said. ''We see this development of our services as helping our customers to stay competitive and one which will keep Hong Kong ahead of the pack as a regional business centre.'' Reaction from industry insiders was one of surprise that Telecom was announcing its plans at this time, even though it was a logical step. ''I'm sure they have had this in mind for quite a while,'' said a telecommunications consultant. ''But they still have to face a number of regulatory questions about cross-subsidisation and that could yet trip them up.'' Stephen Ng, deputy managing director of Wharf Cable, greeted the challenge equably. ''This doesn't surprise me at all,'' he said. ''When we accepted our 12-year licence in late May, we knew our exclusivity only ran for three years and that the Government would consider other licences after that. ''Who they award them to is up to them. It could be Hongkong Telecom or somebody else. We aren't too concerned.''