UPDATE 2-Mobistar warns on profit as costs and competition mount

Wed Feb 6, 2013 5:24am EST

* Sees core profit falling 15-23 pct in 2013

* Dividend set at 1.80 euros for 2012

* 2012 core profit 494 mln euros, vs 481 mln forecast

* Shares down 3.1 percent, after hitting 10-year low (Adds analyst comments, share price reaction)

By Robert-Jan Bartunek

BRUSSELS, Feb 6 (Reuters) - Belgian mobile phone operator Mobistar said 2013 earnings would miss analyst forecasts and cut its dividend, joining the list of European telecoms firms hit by the cost of faster networks and cut-throat competition.

The firm, in which France Telecom has a 52.9 percent stake, said on Wednesday core profit was likely to fall 15-23 percent this year, worse than analysts' expectations and following a 7 percent decline in 2012.

It also said it would spend an extra 150 million euros ($203 million) over three years on its fourth-generation (4G) network, aiming to cover 80 percent of the Belgian population by 2015.

Telecoms firms across Europe are struggling with the cost of building networks that offer faster speeds for consumers increasingly accessing the internet on mobile devices. They also face regulatory caps on tariffs and fierce competition.

Dutch telecoms group KPN on Tuesday announced plans for a 4-billion-euro rights issue, in part because it paid more than expected for a 4G mobile licence.

Mobistar shares fell as much as 5.1 percent on Wednesday, reaching their lowest level in over 10 years.

"It is our opinion that competitive pressure, such as Telenet mobile offers, will keep weighing on profits in 2013," KBC analyst Thomas Deschepper wrote in a note to clients, referring to one of Mobistar's competitors in Belgium.

Cable operator Telenet, which uses Mobistar's network for its mobile phone offering, said in December its number of mobile subscribers had doubled since introducing new tariffs in the summer of 2012.

Competition on the Belgian telecoms market also increased in 2012 because of a new law limiting customer contracts to six months, increasing the number of people switching operators.

The head of market leader Belgacom, Didier Bellens, accused the Belgian government of seeking to kill business. In other European Union countries, contracts can run for a year.

Mobistar set its dividend for 2012 at 1.80 euros per share, down from the 3.70 euros paid for 2011 which included an extraordinary dividend.

Core profit (earnings before interest, tax, depreciation and amortisation) for 2012 fell 6.8 percent to 494 million euros, compared with a forecast for 481 million.

Mobistar predicted core profit would drop to 380-420 million euros this year, below the 434 million forecast.

It also saw revenues falling 4-6 percent.

At 1000 GMT, Mobistar shares were down 3.1 percent at 18.405 euros, while Belgacom was down 1.6 percent at 21.115 euros.

($1 = 0.7392 euro) (Editing by David Cowell and Mark Potter)

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