NEW YORK (CNN/Money) - Sprint Corp. raised its full-year earnings forecast Monday, citing increased cost-cutting that has helped boost the bottom line as the telephone service provider struggles amid slumping industry demand.

Sprint said it now expects earnings excluding items of $1.41-$1.42 a share. That's higher than the Wall Street forecast of $1.40 a share, according to earnings tracker First Call.

The company also said its global markets group is expected to achieve an operating profit in the third quarter, but that its PCS Group, which provides wireless phone service, is struggling with slower customer growth.

Sprint, based in Overland Park, Kansas, also said it expects to have $200 million in free cash-flow in 2002, marking a sooner-than- expected return to positive, free cash flow thanks to reduced capital spending and an improvement in working capital.

Separately, debt-laden Sprint said Sunday that R.H. Donnelley, a seller of yellow page advertising, had offered $2.23 billion for its Sprint Publishing & Advertising, the company's profitable yellow pages directory business.

The all-cash deal -- expected to close early next year -- gives R.H. Donnelley the nation's sixth-largest directory publisher, with more than 260 white and yellow page books in 18 states.

The unit has annual revenue of about $560 million and 1,033 employees, including about 400 in the Kansas City, Mo., area. R.H. Donnelley will continue operating the directory business from Sprint's suburban Kansas City headquarters.

A growing number of telecommunications companies have sold their phone directory businesses in recent months to ease investors' concerns about liquidity issues and to lower debt.

In August, Denver-based Qwest Communications (Q: Research, Estimates) sold its QwestDex directory unit for $7.05 billion to reduce some of its $26.6 billion in debt. Five months earlier, telecom McLeodUSA Inc (MCLD: Research, Estimates). closed a deal to sell its directory to the British Yell Group, which already owned Yellow Book USA.

The print phone directory business has been the most profitable in the media world of magazines and newspapers during the latest economic slump, with its steady revenues and predictable cost structure.

Shares of Sprint's (FON: Research, Estimates) FON Group, which includes the directory operations, rose 2 cents Friday to $9.02.

Donnelley (RHD: Research, Estimates) shares closed Friday at $23.59, up 21 cents.

-From staff and wire reports