Vodafone Share News (VOD)

* Chunk of 100 mln euro savings to go on handset subsidies * Potential KPN synergies could strain Vodafone relationship * Shares fall 0.5 percent VIENNA, Jan 15 (Reuters) - Telekom Austria plansto save 100 million euros ($134 million) in operating costs thisyear, said analysts who attended a company meeting withinvestors on Tuesday. A large part of the savings are likely to be spent on moregenerous handset subsidies for customers as the group seeks toattract and keep subscribers in its highly competitive domesticmarket, the analysts told Reuters. Despite a recently completed 1.3 billion euro takeover ofOrange Austria by Hutchison Whampoa that reduced thenumber of mobile operators in Austria to three from four,Telekom Austria is expecting little let-up in competition. Austria's biggest telecoms company, now 26 percent owned byCarlos Slim's America Movil, warned last week of afurther fall in revenue this year and said that tough conditionswould continue to weigh on margins. In a change of policy, it gave no forecast for earningsbefore interest, tax, depreciation and amortisation (EBITDA). Espirito Santo telecoms analyst Andrew Hogley, who attendedTuesday's capital markets day - which was closed to journalists- said that all of the cost savings are likely to be used forhigher handset subsidies. "At the group level the company remains unwilling to giveany targets on EBITDA, which is concerning. They say that theydo not want to be limited by being held to a target," Hogleysaid. Telekom Austria shares slipped 0.5 percent to 5.60 euros by1327 GMT, outperforming the European telecoms index,which fell 1.2 percent. Austria's telecoms market remains relatively crowded, withthree mobile operators competing for a population of only 8.4million. All-inclusive deals are available for as little at 7euros a month. A major institutional shareholder who attended the meeting,but did not want to be named because he is not authorised tospeak to the press, confirmed the 100 million euro savingstarget and said that half of that figure might remain afterhigher spending. Telekom Austria was not immediately reachable for comment. Analysts said that a search for synergies between TelekomAustria and Dutch KPN, in which Slim also built up amajor stake last year, was complicated by an existingrelationship with Vodafone that could be jeopardised. Telekom Austria has a roaming agreement with Vodafone,allowing the operators to connect to each other's networks atreduced cost, which might be worth more than any synergies withKPN, analysts reported Telekom Austria as saying.