PREVIEW-Australia's Telstra H1 seen up on market share gains

* What: Telstra Corp Ltd H1 profits due on Feb. 21

* Gaining market share in mobile phone and broadband

* Little benefit yet from cost-cutting programme

MELBOURNE, Feb 18 (Reuters) - Telstra Corp Ltd (TLS.AX: Quote, Profile, Research, Stock Buzz), Australia's largest phone company, is expected to post a small rise in first-half profits as strong mobile phone and broadband sales are dented by higher costs related to a company overhaul.

Analysts said Telstra would continue to outperform its global peers on arresting the decline in higher margin fixed-line revenues, helped by being the dominant player in a fast-growing local economy.

"In Australia no one really thinks twice about upgrading handsets, corporate spending is pretty strong and the competitive environment is probably not as tough as some markets in Europe," said JP Morgan analyst Laurent Horrut.

The former government monopoly is set to report net profit before one-offs rising 3.4 percent to A$1.76 billion ($1.6 billion) from A$1.704 billion, according to a Reuters survey of seven analysts.

Recent results from main rival Optus, owned by Singapore Telecommunications (STEL.SI: Quote, Profile, Research, Stock Buzz), suggest Telstra was gaining market share in the more lucrative broadband and mobile phone markets.

Telstra's figures show its high-speed third-generation (3G) mobile penetration, which brings in revenue of A$20 per month per user more than 2G mobiles, has increased rapidly to 38 percent from 27 percent over four months.