UPDATE 2-Tele2 Q4 in line, Russia growing fast

* Q4 core profit flat yr/yr, in line with expectations

* Adds 1.15 mln customers in Russia in Q4

* Says to reach 18-19 mln clients in Russia by end 2011

* Shares up 1 pct

(Adds analyst, CEO comment, share reaction)

By Helena Soderpalm and Simon Johnson

STOCKHOLM, Feb 9 (Reuters) - Telecom operator Tele2 (TEL2b.ST) posted broadly flat core profit for the fourth quarter, as expected, and said on Tuesday it was adding new customers at a fast pace in the key Russia market.

Chief Executive Harri Koponen said that although the company would continue to invest heavily this year, it would also work on costs. It saw revenues growing as economic recovery takes hold in the Nordic region, Russia and the Baltics.

"It's February and I am still smiling here," Koponen told Reuters in a telephone interview after the results. "The signs are there that we are moving toward better times."

Earnings before interest tax, depreciation and amortisation (EDITDA) were 2.19 billion Swedish crowns ($294 million), almost matching a forecast in a Reuters poll and little changed from 2.16 billion a year earlier. [ID:nLDE6130F3]

"The worst economic climate hit us (last year) all over the place and we were still able to grow," Koponen said. "I think that's a good result."

Shares in Tele2 were up 1 pct at 106 crowns at 0825 GMT, slightly ahead of the overall market .OMXS30.

Tele2 has shifted its focus from established western European markets to emerging markets in recent years. It has sold operations in Switzerland and France, among others, and focused expansion mainly on Russia.

The company added 1.15 million new customers in Russia for a total of 14.45 million at year-end and said it was on track to reach its target of 18-19 million by the end of 2011. EBITDA in Russia rose 7.8 percent to 695 million crowns, driven by growth in regions where the company has been operating for some time and despite rollouts in 10 new license areas.

"The report looked pretty much in line overall," said Stefan Billing, analyst at HQ Bank. "But if you look at the mix, the EBITDA in Russia was clearly a positive surprise."

The company said it would look to expand its operations through new licences in Russia as well as complementary acquisitions.

Tele2 It is also looking at broadening its footprint and late last year bought a majority stake in mobile operator NEO in Kazakhstan.

In Sweden, the companies biggest market by revenue, EBITDA dropped 9.6 percent to 689 million crowns as the group lured higher-end customers with attractive deals.

The company said its focus on customers paying monthly bills instead of prepaid services was paying off, though this is adding to costs in the short term. Margins in Sweden should begin to rise again toward the end of this year, Koponen said.

($1=7.444 Swedish crowns) (Editing by Mike Nesbit and David Cowell)