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UPDATE 1-Telecom operator Telia's core earnings beat expectations

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(Adds details on results, CEO comments)

By Supantha Mukherjee

STOCKHOLM, Oct 21 (Reuters) - Nordic telecom operator Telia posted stronger quarterly core earnings than expected by analysts as Nordic markets recovered from the effects of the pandemic.

On an adjusted basis, Telia's net sales increased 3.8% and service revenue rose 2.3%.

"The highlight in the quarter was third consecutive quarter of top line growth but this time you're seeing service revenue growth in seven out of our eight business units," Chief Executive Officer Allison Kirkby said in an interview.

"We are also seeing a return to growth in Sweden, which hasn't grown since 2015," she said.

The company, which offers mobile connections, broadband and television services, has been seeing growth in Norway and the Baltics, but Denmark and Finland created a drag on its results.

Since taking over the top job last year, Kirkby has been streamlining operations and cutting costs, raising investors' hopes that she can spur growth and shareholder returns.

Telia, which sold a 49% stake in its towers unit earlier this year, said the European Commission has approved the divestment and is expected to be finalized in the fourth quarter after final regulatory approval.

The company's third-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) fell 4.9% to 7.81 billion Swedish crowns ($908.81 million) from a year earlier, beating the mean forecast of 7.75 billion crowns, according to Refinitiv estimates.

Kirkby attributed the decline to increased costs related to sports rights as it bought rights for tournaments such as the Champions League.

Adjusted EBITDA, in constant currency and excluding Telia Carrier, is expected to be flat or grow in the low single digits this year ($1 = 8.5937 Swedish crowns) (Reporting by Supantha Mukherjee in Stockholm; Editing by Johan Ahlander & Simon Cameron-Moore)

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