UPDATE 1-Telecom NZ Q1 profit up, lifts guidance

* Q1 net profit rises on tax gain

* Lifts full year net profit guidance on tax boost

* Earnings to remain between 1 pct fall and 2 pct rise

(Updates with details, background, company comment) WELLINGTON, Nov 6 (Reuters) - New Zealand's dominant phone provider, Telecom Corp (TEL.NZ), posted a 10 percent rise in first-quarter net profit because of a one-off tax gain on Friday, beating analyst's expectations, and lifted its full year guidance.

The former state-owned monopoly, which has been forced by the government to open its network to competitors, said earnings were tracking in line with expectations, and raised its full year profit forecast by as much as 8 percent.

Telecom, which competes with Australia's Telstra (TLS.AX) and British mobile company Vodafone (VOD.L), reported July-September net profit of NZ$163 million ($117 million) against NZ$149 million a year ago, and an average of NZ$87 million of seven analysts surveyed by Reuters.

The profit lift came from a tax credit of NZ$5 million in the quarter against a tax bill of NZ$53 million in the same quarter last year.

"We have been successful in a market that has seen a significant rise in competition and customer choice," Telecom chief executive Paul Reynolds said in a statement.

Shares in Telecom closed on Thursday at NZ$2.48. The stock has gained 11.2 percent so far this year, compared with a 16 percent rise in the NZSX-50 index .NZ50.

Telecom raised its forecast for 2009/10 full year net profit to between NZ$400 million and NZ$440 million from a previous range of NZ$370 million to NZ$410 million.

However, it maintained its forecast for earnings before interest, tax, depreciation and amortisation (EBITDA) to range from a 1 percent fall to a 2 percent gain in the current year, and moving to 4 to 6 percent growth from 2011 onwards.

For the quarter, EBITDA was NZ$447 million, down 4 percent on the previous year.

Telecom is coming to the end of a period of heavy investment in the latest fixed and mobile technology to lessen its reliance on traditional fixed-line phone services.

It said mobile had strong revenue growth, while a cost cutting programme was also helping earnings.

Its Australian arm, AAPT, reported EBITDA of NZ$38 million, up 65 percent due to lower costs and improved terms with its wholesale supplier Telstra.

Telecom will pay an unchanged dividend of 6 cents a share, which it has said will be the minimum quarterly payout in the current financial year. ($1=NZ$1.39) (Reporting by Adrian Bathgate)