UPDATE 1-Inteliquent cuts FY revenue view as telecom demand slips

* Cuts FY rev view to $280 mln-$290 mln from $290 mln-$300 mln

* Q2 EPS $0.12 vs est $0.20

* Q2 rev $68.3 mln vs est $72.4 mln

* Says plans to issue one-time special dividend; authorizes share buyback

* Shares fall as much as 20 percent

Aug 7 (Reuters) - Network connectivity services provider Inteliquent Inc posted quarterly results that were well below analysts' expectations, and cut its full-year revenue forecast on a fall in demand from its telecom service provider customers.

A faltering U.S. recovery and weakness in Europe have hit network-related service and gear providers as their biggest customers, mostly carrier service companies, cut spending.

The Chicago-based company cut its full-year revenue outlook to between $280 million and $290 million from between $290 million and $300 million it forecast earlier in March.

Analysts were expecting full-year revenue of $294.4 million, according to Thomson Reuters I/B/E/S.

Inteliquent, which provides voice, ethernet and hosted application services, counts AT&T Inc and Sprint Nextel Corp among its biggest customers.

The company, with a market value of $442.4 million, also announced a plan to issue a one-time special dividend of between $4.80 and $5.65 during the fall, and said its board authorized a $50 million share buyback.

The company's net income fell nearly 50 percent to $3.7 million, or 12 cents per share, in the second quarter, from $7.1 million, or 20 cents per share, a year earlier. Analysts expected earnings of 20 cents per share.

Revenue rose 5 percent to $68.3 million, but fell below Wall Street's expectations of $72.4 million.

Shares of the company , which operates under the name Neutral Tandem Inc, lost close to one-fifth of their value in early trade on Tuesday, falling to a two-month low of $11.25.

The stock later pared some of its earlier losses to trade down 10 percent at $12.57 at 1154 ET on the Nasdaq.