UPDATE 2-Telekom Austria won't sweeten Telekom Srbija bid

Wed May 11, 2011 6:17am EDT

* Q1 EBITDA 396.7 mln eur vs poll avg of 398 mln eur

* Q1 Sales 1.12 bln eur vs poll avg of 1.11 bln eur

* Confirms 2011 outlook

* Shares down 0.29 pct in line with STOXX 600 Telco index

(Adds Reuters Insider Interview with CEO, shares)

By Nicola Leske

FRANKFURT, May 11 (Reuters) - Telekom Austria (TELA.VI) ruled out a higher offer for Telekom Srbija after reporting a fall in first quarter core earnings due to cuts in roaming tariffs and interconnection fees as well as subsidies for smartphones.

The group, in which the Austrian government holds 28.42 percent, owns major mobile operators in eastern Europe and had opted to buy a majority stake in Telekom Srbija only to be snubbed because it refused to match Serbia's price demands. [ID:nLDE7441PU]

Chief Executive Hannes Ametsreiter told Reuters Insider TV on Wednesday that the process of bidding for Telekom Srbija was closed for the time being. The company has said the offer remained valid for three months.

He ruled out raising the bid in the future.

"We believed the offer was fair," Ametsreiter said. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For Reuters Insider show click: link.reuters.com/nat49r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Ametsreiter said despite the setback in Serbia the company was still screening for assets and that something might come up soon but declined to elaborate.

In the first quarter earnings before interest, tax, depreciation and amortisation (EBITDA) were 396.7 million euros ($554.2 million), down 7.1 percent, while sales were largely stable at 1.12 billion euros.

The telecoms group reiterated it aims to reach a core profit of up to 1.6 billion euros in 2011 and sales of up to 4.6 billion euros.

Telekom Austria also said new social plans for employees resulted in one-off restructuring costs of 184.1 million euros, which hit its bottom line resulting in a net loss of 79.2 million euros.

Analysts had on average forecast a net loss of 22.7 million euros.

"Over the next years, personnel-related costs will be reduced accordingly, easing the burden on the company's profit and loss account," Chief Financial Officer Hans Tschuden said in a statement.

According to Thomson Reuters StarMine, which weights analysts' forecasts according to their track record, Telekom Austria trades at 15.1 times its 12-month forward earnings, slightly above European competitors such as Nordic telecom group Telenor (TEL.OL) and Germany's Deutsche Telekom (DTEGn.DE), which trade at 11.7 times and 14.6 times respectively.

By the end of 2010, Telekom Austria had more than 22 million customers across its operations in 8 countries of central and south-eastern Europe, a market with 41 million inhabitants.

(Editing by Jane Merriman) ($1=.7158 Euro)

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