UPDATRE 2-Belgacom Q1 sales drop 3 pct, worse than expected

(Adds analyst comment, share price)

By Julien Ponthus

BRUSSELS, May 16 (Reuters) - Belgium's dominant telecom operator Belgacom (BCOM.BR: Quote, Profile, Research, Stock Buzz) reported a worse than expected 3 percent drop in first-quarter sales on Friday, but kept its financial targets for the whole of 2008.

Belgacom's first-quarter sales fell to 1.469 billion euros ($2.28 billion) from 1.515 billion euros a year earlier and against a Reuters Estimates poll of 8 analysts gave an average expectation of 1.496 billion euros.

Shares in Belgacom slipped in early trading and were down 1.8 percent at 30.45 euros at 0740 GMT against the 0.2 percent drop of the DJ Stoxx European telecoms index .

Belgacom said price cuts imposed by European and local regulators were the main cause of the revenue decline.

Competition may also harden for Belgacom's mobile operator Proximus after France Telecom (FTE.PA: Quote, Profile, Research, Stock Buzz) announced on Friday that its Belgian operator Mobistar (MSTAR.BR: Quote, Profile, Research, Stock Buzz) would be selling Apple's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone in Belgium later this year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 518 million euros, down 3.3 percent from 536 million euros last year while the analysts polled by Reuters expected on average 519 million euros.

Net income fell to 236 million euros from 319 million euros as a result of the EBITDA decrease and because of a capital gain in the first quarter of 2007.