* Roaming, new price caps to take bite out of profits
* Benefits for telcos are uncertain, long-term
* Risk that EU won't finish law ahead of May elections
* Analysts sanguine, see more benign regulatory mood
By Leila Abboud and Claire Davenport
PARIS/BRUSSELS, Sept 12 (Reuters) - Telecom executives weregenerally downbeat about proposals for a revamp of EuropeanUnion regulation because price caps and limits on roamingcharges would hit their profits soon, while ideas they likedwere less sure to be adopted.
The European Commission unveiled reforms on Wednesday tofoster a cross-border market for telecom services and spurinvestment in networks to help Europe catch up with the U.S. andAsia in the broadband and mobile race.
The industry welcomed some proposals such as giving the EUveto power over auctions of mobile spectrum and lettingoperators charge web companies for carrying data-heavy servicesat high speeds.
But since these ideas are controversial with the memberstates and EU Parliament, which must ratify the law, telecomexecutives fear they might not get through.
One, who declined to be named, said: "Short term, there iscertain pain for operators. Long-term there are gains, but theyare uncertain because of the legislative process ahead."
As it stands, the proposals being steered by EU telecomschief Neelie Kroes will hit operators' bottom line because ofconsumer-friendly measures.
They would put caps on cross-border fixed phone calls inEurope at the price of a long-distance domestic call and limit,to 19 euro cents a minute, the price for users makingcross-border mobile calls.
JP Morgan analysts estimate the change would cost 500million to 1 billion euros ($665 million-$1.33 billion) in lostsales and operating profit for European operators.
The hit would be biggest for Vodafone, with 142million European subscribers and a large base of corporatecustomers, followed by KPN, Deutsche Telekom and Orange, according to Bernstein Research.
The changes to roaming charges proved to be less harsh thansome had feared from earlier drafts. Operators are encouraged toform alliances to escape price caps, eventually meaningconsumers will not pay extra when travelling.
Analysts said it was hard to quantify the financial impactas it was unclear whether operators would join alliances.
The GSMA, a trade group of global telcos, estimated that theimpact of driving roaming prices down to domestic rates andending fees for incoming calls to users while they weretravelling would cut revenues by up to 2.3 billion euros.
Executives interviewed by Reuters did not believe theproposals would achieve the EU's stated aim of encouragingtelecom operators to plough money into better networks.
"Right now, it seems that the most important chapters inthis proposal are not going to lead to more investment orlong-term growth," said Viktor Wallstrom, a spokesman for Nordicoperator Tele2.
The debate on the reforms faces a tight legislative calendarahead of EU elections next May. Most EU laws take up to twoyears to adopt so Parliament may not have enough time.
On Thursday, Kroes urged the need for speed.
"Failure to implement this package would mean a delay of twoand a half years...I can assure you with certainty that Europewould lose the global race," said Kroes.
Her spokesman added that telcos concerned about changes tothe package should work with Kroes to ensure passage byParliament and states.
The European telecom index was up 0.5 percent at1626 GMT, and is up 18.6 percent year to date, compared with a11.7 percent gain in the FTSE 100 and outperformingsectors like utilities, pharma and oil and gas.
PRESSURES
Europe's telecom sector has seen falling revenues in recentyears partly due to competition from low-cost upstarts and newInternet players. Sales are seen to decline between 0.5 to 2percent a year to 2020, according to a report by BostonConsulting Group for telecom lobby ETNO, opening up aninvestment gap of more than 100 billion euros.
The pressures have triggered consolidation that couldreshape big markets such as Germany, where Telefonica wants to buy a rival, subject to anti-trust regulation.
Telecom groups have lobbied for the current regulatoryreboot to allow more deal-making to help companies invest morein networks. But such measures were not included since they arehandled by EU competition authorities, not Kroes' office.
"The objectives we supported at the outset were fostering asingle European market, spurring network investment, and pavingthe way for more consolidation," said a second executive at amajor operator, who also declined to be named.
"Instead we got a plan that will hit margins, a raft ofconsumer-friendly measures, and nothing on mergers or levellingthe playing field with Internet groups like Google and Skype."
Bruno Lippens, a portfolio manager at Pictet AssetManagement, said it was difficult to assess the plan's effects.
"I am a bit worried that you get the stick first, meaningthat the regulation will shave off earnings expectation for 2014and 2015. And then the carrot - on consolidation for example -is a few years away and uncertain."
Some investors were more sanguine and the majority viewamong analysts was that it could have been worse for operators.
"We think that the process of market repair is now underwaythat will lift the entire telecoms sector, promote the networkinvestment that Europe's economy desperately needs, and powerlower unit prices for customers," HSBC analysts wrote.
Vodafone (VOD)