* Dividend frozen at 0.05 euros/shr for 2014
* Slim, Austrian state could pool stakes by May 28 AGM - report
* Shares up 3 pct
VIENNA, Feb 26 (Reuters) - Telekom Austria said on Wednesday it would freeze its dividend for the third year in a row this year, after reporting a further fall in quarterly sales and profits due to tough competition and regulatory pressures in its main markets.
But shares in the company, buoyed by reports that it could be the target of a takeover bid by Carlos Slim's America Movil , were up 4 percent at nearly 7.5 euros by 1411 GMT, their highest level since shortly after Slim first bought into the company in 2012.
On Tuesday Austria's economy minister said talks about creating a shareholder pact to pool Slim's 27 percent stake with the OIAG state holding company's 28 percent could be concluded within weeks.
Executives declined to comment at a news conference on Wednesday about the likelihood or desirability of Slim and its other major shareholder, the Austrian state holding company OIAG, pooling their shares - which would trigger a mandatory takeover offer.
Chief Executive Hannes Ametsreiter said it was for the major shareholders themselves to comment. "What we can say is that the operational cooperation with America Movil is very pragmatic, realistic, sensible and very good," he said.
Austrian newspaper Die Presse said a timetable was already in place, according to its sources, with an ideal scenario of having the syndicate deal done before Telekom Austria's annual general meeting on May 28.
Analysts have also speculated that the AGM might be asked to approve a rights offer as a means for Slim to take his stake above OIAG's 28 percent holding.
Chief Financial Officer Hans Tschuden declined to comment, reiterating that the company had no current capital needs and would need a capital increase only for a "strategic project" such as an acquisition.
The company earlier said capital expenditure this year, excluding spectrum auctions and acquisitions, was expected to be unchanged at 700 million euros.
Tschuden was speaking after the group reported fourth-quarter underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 18 percent to 262 million euros ($360 million), missing the average estimate of 280 million euros given by analysts in a Reuters poll.
Sales fell 6 percent to 1.056 billion euros, just missing the average forecast by analysts, and Telekom Austria said it expected sales to fall a further 3 percent this year.
However, it said it would maintain its dividend payout at 0.05 euros a share for last year on earnings per share of 0.20 euros and would pay out the same again for 2014.
And Tschuden told Austria's Boerse Express newsletter the company aimed to increase its EBITDA this year for the first time since 2009, although it would be a "great challenge".
"Overall, a weak set of numbers and guidance, but the market is likely to remain focus on the developments around AMX and OIAG forming a shareholder pact," Citi analysts said in a note.
Tschuden said Telekom Austria had raised spending to win and retain premium customers in Austria to 165 million euros in 2013 from 130 million in 2012, mainly on handset subsidies.
But Ametsreiter said he expected average revenue per user to fall further in Austria this year, after a 14 percent drop to 16.10 euros last year.
"Our fears that the fourth quarter would be a salient reminder that Telekom Austria still has a lot of issues to work through appear well founded," said analysts at Jefferies.
Austria is closely watched for signs of so-called market repair after the number of operators contracted to three from four last year. Telekom Austria has raised mobile and fixed-line tariffs in a series of moves this year.
Austrian mobile tariffs were up 19 percent in January on a year ago, Statistik Austria said this week, and regulators are keeping a close eye on such moves by Telekom Austria and its smaller rivals, T-Mobile Austria and Drei.
Nevertheless Austria, with a population of 8.5 million, remains one of Europe's lowest-cost mobile markets.