UPDATE 1-Bouygues sees telecom sales shrink 10 pct in 2012
* Sees telecom sales down 10 pct in 2012
* Group sales seen down 1 pct in 2012
* 2011 net profit flat at 1.07 bln eur (Adds details)
PARIS, Feb 28 (Reuters) - French conglomerate Bouygues on Tuesday pledged to cut costs at its telecoms business to help offset an expected 10 percent sales slide at the unit in 2012 due in part to the arrival of fresh competition in France.
Bouygues said that a planned cut in call termination rates in France, which will have an impact of around 350 million euros ($469.82 million), and the growth of its "low-cost" offers sold without phone subsidies and contracts will hit telecom sales, in addition to the recent launch of a mobile competitor in France.
"In this context, a cost savings plan will have to be implemented," Bouygues said in a statement.
Bouygues said group sales were expected to decline 1 percent in 2012.
France has been locked in a mobile price war since mid-January, when Iliad's Free Mobile launched its ultra low-cost mobile offers, leading France Telecom to lose 201,000 customers to date.
Some analysts predict that France Telecom, Vivendi and Bouygues will all become structurally less profitable as Iliad takes market share in the coming years.
Sales at the construction business, which includes large public works, real estate and road building unit Colas , are instead expected to grow this year due to a strong order book.
"The economic and financial environment is uncertain, but there are many significant projects in negotiation," Bouygues said.
Bouygues Construction is expected to grow 2 percent in 2012, while Colas' sales are forecast to rise 1 percent compared with 2011.
Net profit in 2011 was flat at 1.07 billion euros, while sales rose 5 percent to 32.70 billion euros, beating a Reuters poll of 1.05 billion for net profit and 32.24 billion for sales.
The company is paying a dividend of 1.60 euros a share for 2011.
Bouygues shares, which have lost around 27 percent of their value in the last year, closed at 24.39 euros before the release of the full-year results, giving the company a market capitalisation of 7.44 billion euros. ($1 = 0.7450 euros) (Reporting by Elena Berton; Editing by Helen Massy-Beresford)
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