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BCE profit jumps, says mobile phones help growth

12/11/09

By Wojtek Dabrowski

TORONTO (Reuters) - BCE Inc , Canada's biggest phone company, posted a jump in quarterly profit that topped analyst expectations on Thursday and said subscribers flocked to new mobile phones despite a weak economy.

BCE -- which began selling Apple's popular iPhone this month -- added 122,000 postpaid, or longer-term, wireless subscribers in the quarter. That was up 8 percent from a year earlier and a third-quarter record for the company.

However, while subscriber growth was strong, Montreal-based BCE said that average monthly revenue per postpaid wireless user fell by C$3.98 to C$64.09.

The drop was due to subscriber "migration to lower rate plans, lower usage and lower roaming revenues as customers reacted to a weaker economy," BCE said.

BCE, owner of Bell Canada, has also aggressively cut costs and thousands of jobs to cope with the economic downturn. It said on Thursday that about 1,100 jobs were cut at Bell in the quarter. That brings total cuts since June 2008 to about 5,000, or 11 percent of Bell's workforce.

BCE earned C$584 million ($556.2 million), or 72 Canadian cents a share, in the third quarter. That was up from a profit of C$280 million, or 30 Canadian cents a share, a year earlier.

The company said the results were helped by favorable tax adjustments and lower restructuring charges.

Revenue rose to C$4.46 billion, from C$4.44 billion a year earlier.

Analysts were expecting the company to earn 70 Canadian cents a share on revenue of C$4.5 billion, according to Thomson Reuters I/B/E/S.

NEW NETWORK, NEW COMPETITION

BCE had partnered with rival Telus Corp to build a network upgrade that would let both companies sell next-generation devices like the iPhone. The network launched this month.

Until now, Rogers Communications Inc -- owner of the country's biggest wireless carrier -- was the only service provider to sell the iPhone in Canada.

Aside from battling one another, BCE, Rogers and Telus have been getting ready for new entrants into the Canadian mobile phone market in the wake of last year's government auction of wireless spectrum.

Globalive Communications, one of the startups, was blocked from launching service by regulators late last month after officials determined the company was effectively under the control of its Egypt-based financial backer, Orascom Telecom .

Still, BCE Chief Executive George Cope told analysts on Thursday there are a number of other companies planning to launch service, including Quebecor Inc's Videotron unit.

"We think Globalive was only one of those new entrants," Cope said. "There still is new competition coming and that's what we're preparing for."

($1=$1.05 Canadian)

(Reporting by Wojtek Dabrowski; editing by Dave Zimmerman)

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