BCE profit falls, but wireless business up sharply

Wed Aug 6, 2008 2:38pm EDT
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By Wojtek Dabrowski

TORONTO (Reuters) - BCE Inc, the Canadian communications company that is set to be taken private in a C$34.8-billion ($33.1 billion) buyout, reported a lower quarterly profit on Wednesday even though it signed up lucrative long-term mobile phone subscribers at the fastest pace in about 2-1/2 years.

The lower profit was due to the absence of last year's big gain from an asset sale and fell short of analysts' estimates.

BCE -- Canada's biggest telecom company -- said it signed up 111,000 postpaid wireless users in the second quarter, up from 43,000 in the year-before period.

Postpaid subscribers pay bills on a monthly basis and often enter into years-long contracts. They are seen as more lucrative than prepaid users, who pay in advance for a set amount of mobile phone service.

The postpaid subscriber additions were "very, very impressive," said Troy Crandall, an analyst at MacDougall, MacDougall & MacTier. They were also better than those of market leader Rogers Communications Inc, which added 92,000 in the second quarter.

"Bell had some attractive plans," Crandall said, adding the buzz created by Apple's iPhone ahead of its launch on Rogers' network last month may also have attracted to BCE customers seeking less expensive devices and plans.

However, the growth in BCE's wireless unit was offset by weakness in its Internet business, and the company said it will take action to improve performance after losing 1,000 customers in the quarter.

"What you also are seeing is possibly the effects of some slowdown in the economy," Crandall said, adding the market for high-speed Internet is also maturing and characterized by fierce competition from providers such as BCE, Rogers and Quebecor Inc's Videotron unit.   Continued...

<p>The offices of BCE Inc. are seen in Montreal, June 20, 2008. Canada's largest telecom company, BCE Inc. , won the backing of the Supreme Court of Canada on Friday to proceed with the world's biggest leveraged buyout. REUTERS/Shaun Best</p>