UPDATE 1-Czech Telefonica posts record profit, shares rise

(Adds core operating income, share price, background)

PRAGUE, Oct 27 (Reuters) - Dominant Czech phone operator Telefonica O2 CR <SPTTsp.PR> posted on Friday a 34 percent year-on-year jump in nine-month net profit, beating analysts' forecasts of a 25 percent rise and boosting its share price.

The firm, formerly known as Cesky Telecom and 69-percent owned by Spain's Telefonica <TEF.MC>, reported net profit of 6.85 billion crowns ($306.1 million), the best result ever for the nine-month period.

Twelve analysts in a Reuters poll forecast net profit of 6.35 billion crowns on average, as lower one-off costs and growth in mobile and data services helped boost profitability despite the shrinking fixed-line voice business.

The result beat even the survey's highest forecast of 6.72 billion crowns.

Telefonica O2 CR shares were up 1.2 percent at 465 crowns at 1145 GMT, outperforming a half-a-percent fall in the Prague blue-chip PX index <.PX>.

Nine-month revenue grew by 0.6 percent year-on-year to 45.60 billion crowns ahead of the company's outlook -- confirmed on Friday -- of flat revenues for the full year.

The firm said operating income before depreciation and amortisation (OIBDA) rose 4.1 percent to 22.15 billion crowns, above the 21.57 billion crown forecast.

Czech Telefonica upgraded its full-year OIBDA outlook, saying it now expected about 2 percent growth for 2006 instead of flat as previously guided.

"Consolidated income before taxes went up by 27.4 percent ... on the back of the decrease in consolidated depreciation and amortisation and financial expenses and supported by strong OIBDA," the company said in a statement.

The former monopoly has battled steep revenue erosion due to stiff competition on the liberalised domestic market and a shift by clients from fixed lines to mobile phones.

But profits have improved over last year, when earnings were burdened by one-off costs related to the sale of the state's majority stake in the company to Telefonica and massive layoffs to streamline the operator.

Depreciation costs arising from past network upgrades have fallen this year.

((Reporting by Marek Petrus

Editing by Will Waterman

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Keywords: TELECOMS CZECH O2