TLGHY Telenet Group Holding NV (CE)

Mobistar SA (MOBB.BT), Belgium's second-largest mobile operator, posted better than expected first-quarter numbers Thursday as mobile Internet use soared.

Net profit for the quarter was EUR68.5 million, up 14% from EUR60.1 million in the same quarter last year, beating analysts' expectation of around EUR61 million. Sales rose 6.1% to EUR394 million.

Mobile Internet customer numbers rose 51% to 88,603 at the end of March from a year earlier.

"More and more customers wish to stay online and use the mobile Internet in addition to their fixed broadband subscription," the company said in its earnings statement.

At the end of March, mobile data made up 31% of the company's mobile services revenue, from 27% a year earlier.

Strong sales of mobile phones also boosted revenue, the company said.

The robust quarter means the company is confident of meeting its forecasts for full-year 2010, it said, despite tough new regulations that will cap the fees operators can charge for routing calls to and from competing networks from July this year, and force telecommunications companies to reduce the charges on calls made overseas.

The new rules will knock about EUR67 million off overall sales this year, it said.

It expects full-year sales to remain at least stable and net profit to reach between EUR210 million and EUR230 million, with earnings before interest, tax, depreciation and amortization between EUR500 million and EUR520 million.

Mobistar, majority-owned by France Telecom SA (FTE), has been struggling to maintain market share in its small Belgian home market which has a population of just 10.5 million and where telecommunications services are dominated by state-owned Belgacom (BELG.BT).

It has been working to broaden its traditional mobile offering to include super-fast fiber optic broadband services. It expects to invest 10% of its total service revenue this year in network upgrades.

"Mobistar reported an excellent set of results with strong structural underlying operational trends," said Bank Degroof analyst Siddy Jobe, adding that guidance now looks "conservative."

Jobe said he is revising his rating to accumulate from hold and raising his target price to EUR53.2 from EUR49.

Still, the second half "will be a lot more difficult for Mobistar as negative impacts from regulation, investments in quadruple-play and possible handset subsidies will kick in," cautioned KBC Securities analyst Nico Melsens.

By the close, the share was up 0.7%, or EUR33, at EUR46.85 in a lower overall market, having earlier risen 2%.

-By Carolyn Henson, Dow Jones Newswires; +32 2 741 1481; carolyn.henson@dowjones.com

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