TORONTO (Reuters) - BCE Inc, Canada’s biggest telecommunications company, reported a dip in quarterly profit on Thursday as restructuring costs weighed and the pace at which it added new wireless subscribers slowed drastically due to the weak economy.
BCE said it earned C$372 million ($347.7 million) in the second quarter, down from C$392 million in the same period a year earlier.
Earnings per share were unchanged at 45 Canadian cents because of a decline in shares outstanding. The company completed a share buyback in May.
However, the Montreal-based company said results this quarter included restructuring and other costs of 13 Canadian cents a share.
Revenue fell 2.1 percent to C$4.30 billion.
BCE said it added 64,000 new postpaid -- or longer-term -- wireless users in the quarter, down sharply from 111,000 a year earlier, “primarily driven by the soft economy”.
Average monthly revenue per postpaid wireless user fell C$3.61 to C$62.58 “due to lower usage, lower roaming revenues, and the migration to lower-rate plans as customers reacted to a weaker economy,” the company said.
It said this trend was partly offset by growth in data revenue, which includes services such as wireless e-mail and text messaging.
While the economy remained weak in the second quarter, BCE Chief Executive George Cope told analysts in a conference call that cutting expenses was a priority.
“It’s a quarter that clearly, I think, indicates that we’re all over our cost management,” Cope said. He added, “In this economy, revenue continues to be a challenge.”
The company said its wireless subscriber base reached 6,572,000 at the end of the quarter. Its cost of acquiring new customers dropped 14.6 percent due to lower marketing and commission expenses, it said.
Despite the slowdown in the wireless business and the profit dip, it said it was increasing its annual dividend 5 percent to C$1.62 a share.
It also raised its 2009 forecast. It said revenue at its core Bell Canada unit will rise by 1 percent to 2 percent, compared with previous expectations for a “stable” top line.
And while BCE earlier said it expected adjusted earnings per share to increase by more than 5 percent, it said it now sees growth of 7 percent to 11 percent.
Troy Crandall, an analyst at MacDougall, MacDougall & MacTier, said the outlook adjustments were a minor bright spot in the results, given the weak economic climate and pressures on BCE’s wireless business.
“It’s not a huge difference here on the guidance, but it is ... reassuring,” he said, adding the company’s overall results were roughly in line with his expectations.
BCE shares were up 42 Canadian cents, or 1.7 percent, at C$25.09 on the Toronto Stock Exchange on Thursday morning.
BCE is fighting for dominance of the country’s wireless landscape with rivals Telus Corp and market leader Rogers Communications Inc.
Rogers is the only carrier in the country with a GSM network, which has allowed it to carry Apple Inc’s iPhone.
Telus and BCE are working together on a next-generation network upgrade that would also let them carry GSM-based handsets. The upgrade is expected to be finished next year.
In May, BCE said it would buy the 50 percent of Virgin Mobile Canada that it didn’t already own. That deal followed its acquisition of retail electronics chain The Source, announced in March.
Reporting by Wojtek Dabrowski; editing by John Wallace and Peter Galloway