** Bernstein cuts it estimates on most of European telco companies in its coverage, citing its downbeat view on the pricing outlook, but calls for embracing capex

** "We do not expect earnings' momentum to improve as the pricing power of (most) incumbent operators remains low", it says

** It notes that many telcos are sitting on a "time bomb" where pricing for existing customer is higher than that for new customers

** It also says that pinning hopes on M&A in the sector to change pricing is risky, as several stakeholders have opposed the change

** Still, and in contrast to the consensual view, Bernstein says that the telco capex should be embraced

** "Our analysis shows that markets with high capital intensity also have lower competition. High capex is the real barrier to entry" - Bernstein

** Broker says Deutsche Telekom DTEGn.DE remains its top pick, and it also advises exposure to Cellnex CLNX.MC and Swisscom SCMN.S

** It adds it would stay clear of Vodafone VOD.L and Telia TELIA.ST given their structural issues

** It cuts Liberty Global LBTYA.O, Orange ORAN.PA and KPN KPN.AS to "market perform" from "outperform" due to pricing pressures in Netherlands and France along with structural changes to cable communications business model

** It upgrades though Telenor TEL.OL to "market perform" from "underperform" after a bottom-up review and tail winds from a change to Norwegian regional fibre regulations

(Reporting by Hugo Lhomedet)

((hugo.lhomedet@thomsonreuters.com))