WRAPUP 1-Telenor flags emerging mkt woes, KPN upbeat at home

AMSTERDAM/OSLO, July 23 (Reuters) - Norwegian telecoms group Telenor (TEL.OL) followed Vodafone and cut its revenue outlook on Wednesday while Dutch KPN (KPN.AS) gave investors in the sector some relief with higher expectations for its home market.

After Vodafone (VOD.L) spooked markets on Tuesday by warning its revenue would be at the lower end of forecasts, mainly hit by a sharp fall in the Spanish market, Telenor's comments on weakness in emerging markets were another reminder that carriers are not immune to the wider economic malaise.

Vodafone sought to reassure investors after its shares slumped to a 20-month low, saying the fall had left the company undervalued and announcing a surprise 1 billion pound ($2 billion) share buyback. [nL23939638]

Telenor has shareholder authorisation to buy back shares but has not done any purchases so far this year and has a policy of not giving guidance on timing or scope of buybacks.

The DJ Stoxx telecoms index .SXKP rose 0.9 percent by 1205 GMT on Wednesday, underperforming the wider DJ Stoxx 600 .STOXX that was up 1.6 percent. Shares in Telenor were the biggest losers with a 3.4 percent drop, while KPN shares rose 5.3 percent. Vodafone had recovered to be up 0.5 percent.

Telenor said soaring food and energy costs have squeezed consumers' budgets particularly in relatively poor countries such as Bangladesh, Pakistan and Thailand.

In local currency terms, Telenor's average revenue per user slumped by 14 percent year-on-year in Pakistan, 17 percent in Thailand and 24 percent in Bangladesh.

"We do not believe these problems are short-term ... as they are fundamentally linked to adverse economic conditions which are difficult to escape for both Bangladesh and Pakistan, two of the main growth drivers of the company," Dexia Bank said.

Telenor cut its 2008 revenue growth target to around 3 percent from 5 percent, but said strong performance of deconsolidated Ukrainian unit Kyivstar would keep the group's underlying revenue growth unchanged at around 6 percent.

EMERGING MARKET EXPOSURE

KPN, which does not have any emerging market exposure, raised the outlook for its home market, saying new services introduced in the Netherlands such as Internet telephony, digital TV and wireless data were growing rapidly while declines in traditional businesses were slowing. [nL23871165]

As Dutch cable TV companies seek to poach customers with combined offers of television, broadband Internet and telephony, KPN has countered aggressively with combined broadband and phone deals of its own, and it is undercutting cable on price with a digital terrestrial television offer.

Analysts say KPN has good control of costs, and they also expect competition in the Dutch mobile market to lessen as two players, Orange Netherlands and Telfort, have been bought up, leaving KPN, Vodafone and Deutsche Telekom's (DTEGn.DE) T-Mobile.

KPN said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the Netherlands to be flat on a like-for-like basis in 2008. Its previous forecast was for EBITDA in the Netherlands to fall by as much as 3 percent.

The company also was upbeat on its German unit E-Plus, which it expected to continue to outperform rivals with a focus on price-sensitive customers -- a potential advantage in difficult economic times -- and sharp cost control.

Telenor showed an EBITDA margin of 36.3 percent in its mature home mobile market, some 6 points above the group's overall efficiency, after it restructured its Norwegian unit earlier this year. Its fixed line services in Scandinavia continued to sputter, however.

Examining the impact of Vodafone's revenue warning on other telecoms carriers, Dresdner Kleinwort analysts calculated that in the worst case, EBITDA estimates had to be cut by 0.3 to 1.7 percent for this year.

"The stark sell-off therefore does not look justified by fundamentals. However, we acknowledge that lack of visibility may mean that there is no short-term rebound," the broker said.

"At least short term a move towards stocks that are exposed to economies that have been less impacted by boom and bust will be sensible," Dresdner Kleinwort said, singling out Telekom Austria (TELA.VI) and Deutsche Telekom. (Additional reporting by Kate Holton in London; Writing by Niclas Mika; editing by Elaine Hardcastle)