* Adjusted EBITDA 12.7 bln crowns vs 11.72 bln forecast
* Raises forecast for 2017 earnings margin
* Launches share buyback programme
* Targets 1 billion crowns in cost cuts in 2017
* Shares up 8 pct to highest since Nov. 26, 2015 (Adds detail on cost-cutting)
By Gwladys Fouche and Ole Petter Skonnord
OSLO, July 17 (Reuters) - Norwegian telecoms company Telenor raised its operating profit margin forecast for 2017 on Monday and reported better than expected second-quarter results, sending its shares to their highest since 2015.
Telenor said it had reduced operational costs in its biggest market, Norway, and revenue rose in its main Asian markets, Bangladesh and Thailand, helping all its business units boost their margins.
The company, which is majority owned by the state, said it now expected its operating profit (EBITDA) margin to come in at 38 percent-39 percent this year, up from a previous forecast of 37 percent.
Second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 12.7 billion crowns ($1.6 billion) from 11.38 billion crowns a year ago, well above the average forecast in a Reuters poll of 11.72 billion.
“(In Norway), we have already broken the trend of increased opex (operational expenditure), that’s why we change our EBITDA outlook,” CEO Sigve Brekke told an earnings presentation.
Telenor is now targeting cuts in operational spending of one billion crowns this year, of which 600 million crowns has already been achieved, the company said.
“To achieve our new 2017 target, the trend has to continue in the second half. The majority of the cost cuts will come in the fourth quarter,” Chief Financial Officer Joergen C. Arentz Rostrup told the presentation.
He reiterated the company’s target for 2018-2020 of reducing costs by 1 percent to 3 percent annually.
Telenor’s stock jumped 8 percent to 154.6 crowns its highest since Nov. 26, 2015 and making it the second-best performer on the Europe’s STOXX 600 on Monday.
“There were some uncertainties in the market related to weaker development in Norway and emerging markets in Asia,” said Zilvinas Jusaitis, an analyst at Norne Securities, who has a “Hold” rating on the stock.
“However, today’s results were strong and the company revised its EBITDA margin target for 2017.”
Telenor has some 174 million mobile phone subscribers across Asia, Scandinavia and southeastern Europe. Most are in Asia, in particular Thailand, Malaysia and Bangladesh.
With a free cash flow of 9.9 billion crowns, Telenor also launched a buyback programme for up to 2 percent of its registered shares, representing up to 30 million shares.
Based on Friday’s closing price, the buyback programme will mean 4.3 billion crowns will be returned to shareholders, Telenor said. The Norwegian state’s 53.97 percent stake in Telenor will remain unchanged, said the company.
Rostrup repeated that Telenor was committed to increasing its annual dividend as well. ($1 = 8.1891 Norwegian crowns) (Editing by David Clarke)