August 7, 2014 / 4:08 PM / 3 years ago

Canada telecoms Telus, BCE chase down wireless leader

4 Min Read

A Telus retail store is seen in downtown Montreal, June 21, 2007. BCE Inc., Canada's largest telecoms group and a possible target of three international buyout bid groups, said it was in talks to explore the possibility of combining with rival Telus Corp.Shaun Best

TORONTO (Reuters) - Two of Canada's largest telecom companies reported strong quarterly wireless growth on Thursday as they chased down the wireless market leader, but fixed-line performance helped Telus Corp (T.TO) to outshine rival BCE Inc (BCE.TO).

BCE and Telus share a national network as they compete with the country's biggest wireless carrier, Rogers Communications Inc (RCIb.TO), which said last month it added 38,000 postpaid wireless customers in the second quarter.

Telus said it signed up 78,000 net contract wireless subscribers, who typically pay more to use high-end smartphones, in the quarter. BCE, which operates under the Bell brand, signed up 66,186 such customers.

Telus said its average wireless customer, excluding those added in its acquisition of budget operator Public Mobile, paid C$62.51 a month, compared with C$59.49 at Bell and C$59.18 at Rogers.

Canaccord Genuity analyst Dvai Ghose noted the strong wireless performance by Telus, the only major Canadian telco also enjoying fixed-line revenue and earnings expansion. He was also impressed by BCE.

"As with Telus, these results should allay fears of a big slowdown in incumbent wireless growth," Ghose said in a research note.

The Canadian government is eager to introduce a fourth wireless competitor in each of the country's regions, a policy that hangs over the prospects of the three big incumbents.

Telus reported a 33 percent jump in quarterly profit while BCE, Canada's largest telecom company, posted a 6 percent gain, boosted by its acquisition of Astral Media.

Vancouver-based Telus competes against cable company Shaw Communications Inc (SJRb.TO) for television, phone and Internet customers in Western Canada, and against Rogers and Bell for wireless subscribers nationally. Montreal-based BCE is most active in Eastern Canada.

Earlier this week, BCE said it had won regulatory approval for its offer to buy the 56 percent of Atlantic Canada affiliate Bell Aliant it doesn't already own.

Consolidating Bell Aliant is expected to protect BCE's dividend growth profile for a year or two as the industry braces for an increase in competitive turbulence.

BCE said its media arm was hit by soft advertising demand and higher content costs in the quarter, and would have notched a 2 percent drop in revenue if Astral had been included in its year-before results.

Telus posted net income of C$381 million ($350 million), or 62 Canadian cents a share, compared with C$286 million, or 44 cents a share, a year earlier. Operating revenue rose 4.4 percent to C$2.95 billion.

Analysts, on average, had expected 58 Canadian cents a share on revenue of C$2.95 billion, according to Thomson Reuters I/B/E/S.

BCE, meanwhile, said net income rose to C$606 million, or 78 Canadian cents a share, from C$571 million, or 74 Canadian cents a share, a year earlier.

On an adjusted basis, earnings were 82 Canadian cents a share. Operating revenue rose 4.4 percent to C$5.22 billion.

Analysts had, on average, expected earnings of 84 Canadian cents a share on revenue of C$5.19 billion.

Editing by Peter Galloway

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