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UPDATE 1-SFR pledges to invest more to lure back mobile clients

(Refocuses story on mobile business, adds share price, company comment, analyst reaction)

PARIS, March 15 (Reuters) - France’s SFR said it would accelerate investment in high-speed mobile internet services to try to catch up with rivals after losing about 1 million mobile customers last year.

Franco-Israeli tycoon Patrick Drahi’s Altice holding company, which has been running France’s second-largest telecoms operator since January 2015, has been losing mobile and broadband subscribers to competitors as it overhauls tariffs and focuses on savings to boost profits.

As of this month, SFR had deployed 4,951 high-speed 4G mobile internet antennas, lagging behind market leader Orange with 8,612 antennas and also trailing Bouygues Telecom and Iliad’s Free Mobile, according to the French frequency agency.

SFR “confirms its plan to reach 4G network parity with the market leader by the end of 2017,” it said in a statement.

Analysts see SFR benefiting from the potential 10 billion euro sale of Bouygues Telecom to top rival Orange as Bouygues Telecom would have to shed assets to ease competition concerns.

Shares in Numericable-SFR were up more than 3 percent by 0915 GMT. The stock has rallied 15 percent in the last week.

SFR cut investments last year by 2 percent to 1.86 billion euros ($2.07 billion). It gave no forecast for 2016. Analysts at Jefferies expect annual capital expenditure to reach 2.2 billion euros in 2016 and 2017.

The telecoms operator made 755 million euros in cost savings last year, helping it to achieve a core operating margin over the period of 35 percent based on a profit of 3.86 billion. Mobile subscribers fell from 22.94 million at end-2014 to 21.95 million at end-2015.

Altice, which has cable and telecoms operations in Europe, the United States and Israel, said in a separate statement that core operating profit grew 18 percent to 6.67 billion euros ($7.42 billion) last year.

Altice said it expected an improving trend in the group’s revenue on a consolidated basis and mid-single digit percentage growth in core operating profit this year. It also forecast 2016 operating free cash flow would be flat to slightly down because of higher investments.

Altice shares were down 3.8 percent at 0900 GMT. Analysts at ING and Kepler Cheuvreux cited disappointment with the cash flow guidance. ($1 = 0.90070 euros) (Editing by James Regan and Keith Weir)

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