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* Q3 EPS C$0.74 vs C$0.83 a year earlier
* Lower tax expenses boosted year-earlier profit
* Operating revenue up 1.5 pct at C$4.98 bln
* Net postpaid subscriber additions up 17.1 pct
* Shares drop 1.4 pct in Toronto (Adds investor comment, confirmed guidance, updates market reaction)
Nov 1 (Reuters) - BCE Inc, Canada's biggest telecom provider, said on Thursday its quarterly profit fell from a year earlier, when lower tax expenses boosted results, and its shares dropped despite strong wireless and media results.
In media, BCE said coverage of the London Olympics, led by its CTV television network, helped boost revenue. It acquired CTV, Canada's biggest private broadcaster, last year.
In wireless, BCE unit Bell Canada added almost twice as many lucrative postpaid wireless subscribers in the third quarter as competitor Rogers Communications Inc.
Postpaid subscriber numbers are watched closely because those customers, who often sign multi-year contracts, typically pay more each month than prepaid subscribers.
Like Rogers, Bell Canada signed up more new smartphone customers. It raised the proportion of postpaid users with smartphones to 60 percent from 43 percent a year earlier.
"The results were in line with expectations, but wireless results were superb," said Desjardins Securities analyst Maher Yaghi.
In announcing its results, BCE offered no news on its proposed acquisition of radio, cable-channel and outdoor-advertising company Astral Media Inc. The C$3 billion deal has been blocked by Canada's broadcast regulator on competition grounds, but BCE hopes to persuade the federal government to overrule the regulator, and to that end recently delayed the deal's closing.
Some of the subscriber gains were in Western Canada, where Bell has opened more retail outlets. Yaghi said a focus on expanding in that region seemed to be paying off.
"The economy is stronger (in Western Canada)," he said. "There's more business customers, there's more international calling south of the border, because of the type of industries they work in."
Overall, Bell added 148,502 net postpaid subscribers, 17.1 percent more than in the same quarter last year. Rogers said last week it added 76,000 net postpaid subscribers. BCE's other major wireless competitor, Telus Corp, is set to report earnings on Nov. 9.
"That market continues to grow for all the players," said Ryan Bushell, portfolio manager at Leon Frazer & Associates. "The smartphone adoption rates are pretty incredible."
Bushell favors BCE because of its dividend. At 5.2 percent, its dividend yield is higher than Rogers' 3.6 percent or Telus's 3.8 percent, based on Wednesday's stock closes. BCE is one of Leon Frazer's top holdings.
Bell's wireless customers paid an average of C$57.30 each month, up from C$55.01 a year earlier.
Overall, BCE's earnings before interest, taxes, depreciation and amortization rose 4.0 percent.
Net income attributed to shareholders for the third quarter to Sept. 30 fell to C$569 million ($569 million), or 74 Canadian cents a share, from C$642 million, or 83 Canadian cents a share, a year earlier.
Excluding severance and acquisition costs and other items, adjusted earnings fell to C$588 million, or 76 Canadian cents a share, compared with C$724 million, or 93 Canadian cents, a year earlier. Analysts, on average, had expected earnings of 77 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Operating revenue rose 1.5 percent to C$4.98 billion, slightly above the average analyst estimate of C$4.94 billion.
In vetoing the proposed Astral acquisition, the Canadian Radio-Television and Communications Commission (CRTC) said Astral's media properties would give too much market power to BCE.
BCE has asked the federal government to intervene and direct the CRTC to "adhere to its existing policies" and reconsider. The CRTC ruling can also be appealed to the Federal Court of Appeal.
The company affirmed its August forecast for full-year 2012 results. BCE expects adjusted earnings of between C$3.15 and C$3.20 a share, and annual revenue growth at the low end of a 3 to 5 percent range.
The stock was down 1.4 percent at C$43.04 on Thursday afternoon on the Toronto Stock Exchange.
$1=$1.00 Canadian Reporting by Allison Martell; Editing by Gerald E. McCormick, James Dalgleish, Leslie Gevirtz; and Peter Galloway