October 19, 2017 / 8:52 AM / a year ago

UPDATE 1-Tele2 could raise dividend after profit beats forecasts

* Tele2 beats Q3 earnings forecast, ups 2017 forecasts

* Rival Telia Q3 core profit as expected

* Telia still expects Eurasia exit this year (Adds detail, background, Telia results)

By Anna Ringstrom

STOCKHOLM, Oct 19 (Reuters) - Swedish telecoms operator Tele2 indicated it could raise dividends sooner than planned as well as make a one-off payment to shareholders after reporting forecast-beating third-quarter profit on Thursday.

Tele2’s profit before interest, tax, depreciation and amortisation grew to 1.8 billion crowns ($227 million) from a year-ago 1.5 billion, against a mean forecast of 1.7 billion seen in a Reuters poll of analysts.

Chief Executive Allison Kirkby said free cash flow was stronger than planned so far this year and thus increasingly likely to fully cover the dividend for 2017.

“As we earlier assumed dividend cover only in 2019, our board of directors will now review our dividend policy for 2018 and beyond in connection with our full-year results,” she said.

The company said in its 2016 earnings report it expected to pay a dividend of 4 crowns per share for 2017. It had not committed to a specific dividend policy beyond then.

“With the balance sheet strength we are now seeing, and dependent on the closing of the sale of Tele2 Austria, we will also review means beyond the ordinary dividend to return these proceeds to shareholders,” Kirkby added.

Tele2 agreed in July to sell its Austrian business to mobile telecoms firm Hutchison Drei Austria for 95 million euros.

Tele2 also raised its full-year guidance, saying it now saw EBITDA at between 6.4 billion to 6.6 billion crowns, up from the 6.2 billion to 6.5 billion range seen previously.

Shares in Tele2 rose 5.9 percent by 0835 GMT, bringing its year-to-date gain to 37 percent.

Separately, rival Telia posted earnings in line with expectations and said it still hoped to sell its Central Asian operations this year after reaching a settlement last month with U.S. and Dutch authorities over bribery allegations in Uzbekistan.

Telia has agreed to pay $966 million to settle U.S. and European criminal and civil charges it paid bribes in connection with its entry into Uzbekistan 10 years ago.

Telia is co-owner of Fintur Holdings which holds the bulk of its Central Asian business — in Azerbaijan, Kazakhstan, Georgia, Moldova — while its remaining business in Uzbekistan is a separate unit.

“For Fintur Holdings we see continuous progress and high activity and it is still our ambition to divest these assets before year-end, even if I will not set that as a firm deadline,” Telia CEO Johan Dennelind said on Thursday.

Dennelind told Reuters he also hoped to sell Telia’s business in Uzbekistan by the end of the year.

Telia also stood by guidance for unchanged core earnings this year. Its shares slipped 1.2 percent. ($1 = 8.1425 Swedish crowns) (Reporting by Anna Ringstrom and Olof Swahnberg; Editing by Keith Weir)

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