MTS, Russia's largest mobile phone operator, posted a 4.1 percent fall in its third-quarter net profit as sales fell and debt-servicing costs rose, but its figures were ahead of most analysts' forecasts.

The company's net profit fell to $494.4 million as its debt rose and the weaker rouble increased the interest on its dollar-denominated loans and bonds.

MTS said it expected debt to rise further in 2010-2012 as it may have to borrow if bondholders demand up to $821 million in early repayments.

As of Sept. 30, MTS's total debt stood at $7.2 billion, with net debt at $3 billion.

MTS also said it planned to increase capital expenditures as a percentage of sales to 22 to 25 percent next year in order to finance the third-generation (3G) network roll-out and continue investing in its retail business.

In the longer term the level of capital expenditures will be reduced to 15 to 20 percent of revenue, Chief Executive Mikhail Shamolin told reporters.

Sales at MTS, part of services conglomerate Sistema, fell 19.4 percent to $2.27 billion, but were above the average forecast of $2.21 billion given in a Reuters poll of analysts.

Operating income before depreciation and amortisation (OIBDA) declined 26.9 percent to $1.06 billion, while analysts had expected it to be $1.03 billion.

(Reporting by Anastasia Teterevleva and Maria Kiselyova; Editing by Greg Mahlich)