UPDATE 2-Colt beats forecasts, expects better year

(Adds share price, reaction, details)

By Kate Holton

LONDON, July 24 (Reuters) - Britain's Colt Telecom Group SA (COLT.L: Quote, Profile, Research, Stock Buzz) said on Thursday it expected improved results for 2008 after posting a forecast-beating 12.7 percent rise in second-quarter core earnings, sending its shares higher.

"After a strong first half, we expect to report improved results for 2008," Chief Executive Rakesh Bhasin said. "Our outlook is however tempered with some caution given the current economic uncertainty."

The Luxembourg-based pan-European corporate telecoms specialist posted earnings before interest, tax, depreciation and amortisation of 76.5 million euros ($120.4 million) for the three months to June, compared to analysts' expectations of 72.9 million euros.

It posted revenues of 416.3 million euros, also ahead of a consensus of 406 million euros, with the key data revenue up by 9 percent to 225.6 million euros.

Its shares rose 4.3 percent.

Colt, like many other alternative network providers across Europe, has moved to seek growth in high-margin data businesses after suffering from over-capacity and falling prices for voiced-based services.

But some analysts have questioned what this capital expenditure will do to the group's cash flow.