UPDATE 1-French conglomerate Bouygues beats forecasts with its 2017 profits

* Current operating profit 1.420 bln euros vs est 1.405 bln

* Dividend up to 1.70 euros/share vs 1.60 eur last year

* Bouygues Telecom's margin comes in ahead of targets

* Eyes further improvement in group profits for 2018 (Adds details from statement)

PARIS, Feb 22 (Reuters) - French conglomerate Bouygues said on Thursday that growth at its main construction, media and telecom businesses helped deliver a forecast-beating rise in operating profits for 2017, and it predicted another increase in earnings for 2018.

The telecoms business, France's third-biggest mobile operator which Bouygues failed to merge with market leader Orange in 2016, met or exceeded all its 2017 targets.

That business was experiencing a profitable growth momentum with a free cash flow target of 300 million euros ($368.04 million) in 2019, Bouygues said in a statement.

The family-controlled group, which also builds roads and owns France's biggest private TV company TF1, said current operating profits reached 1.420 billion euros last year, against 1.121 billon in 2016.

Sales rose 4 percent to 32.904 billion euros last year, while Bouygues also increased its dividend to 1.70 euros-per-share from 1.60 euros last year.

Analysts polled by Inquiry Financial for Reuters predicted operating profits of 1.405 billion euros on sales of 32.450 billion euros.

France's telecoms sector, hit by a price war following the entrance of low-cost player Iliad in 2012, has been the subject of takeover speculation in recent years.

But Bouygues Telecom has said it can prosper on its own and has responded with a turnaround plan including job cuts and a focus on the rollout of its 4G network and fixed-line broadband.

Bouygues Telecom's current operating profit rose by 180 million euros to 329 million euros in 2017.

The company achieved a 2017 EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 27.2 percent for Bouygues Telecom, a rise of 4.6 percentage points from 2016, and exceeding its revised guidance of 26-27 percent.

Sales from the telecom network rose 5 percent to 4.272 billion euros, while the telecoms arm added 340,000 fixed-line phone customers and 500,000 mobile plan customers in 2017.

On Wednesday, Orange boss Stephane Richard had ruled out the possibility that Orange could lead a potential new round of talks between French telecom operators, with a view to cutting the number of players from four to three.

The construction business, which makes the bulk of sales and which has been benefiting from large infrastructure projects in France and abroad, also contributed to the higher 2017 profits.

Bouygues shares rose 27 percent in 2017, with the stock down 0.4 percent so far in 2018.

($1 = 0.8151 euros) (Reporting by Dominique Vidalon Editing by Sudip Kar-Gupta)