(Reuters) - BCE, Canada's largest telecom player, reported stronger than expected earnings and an early dividend increase on Wednesday on strong wireless results and rising profits from its fast-expanding media empire.
Montreal-based BCE, the parent of Bell Canada and Canadian Olympic broadcaster CTV, said greater smartphone adoption helped boost profits from its wireless unit, while higher rates paid by broadcast distributors and lower costs lifted profits in its media division.
It raised its forecast for full-year profits and boosted its annual dividend to C$2.27 a share from C$2.17 a share.
"The company surprised by announcing an increase to its annual dividend," National Bank Financial analyst Adam Shine in said a note to clients. "This was earlier than our expectations which called for an increase in December."
BCE stock rose 2.8 percent to C$44.46 by early afternoon.
BCE, which last year acquired CTV, Canada's biggest private broadcaster, for C$1.3 billion ($1.3 billion), has stayed on the domestic acquisition trail with a deal to buy out content provider Astral Media Inc ACMa.TO for C$3 billion.
BCE and rival Rogers Communications (RCIb.TO) are also part of a consortium that is buying Ontario Teachers' Pension Plan's 79.5 percent stake in Maple Leaf Sports and Entertainment, owners of sporting assets that include the NHL's Toronto Maple Leafs and the NBA's Toronto Raptors.
This rapid expansion has raised the ire of some rivals. On Tuesday, three cable companies jointly urged Canadian regulators to block BCE's planned takeover of Astral, arguing that the deal would hurt competition and boost fees.
BCE said it expects the Astral deal, to close in the fourth quarter of 2012, subject to regulatory approvals. The acquisition will win it control of more than 20 television services and some 80 radio stations. It sees the Maple Leaf Sports transaction closing in the current quarter.
BCE said it added 102,067 net postpaid wireless subscribers in the second quarter, up from 94,309 in the same quarter last year. That's below the 112,000 new subscribers added by rival Telus Corp (T.TO), but above the 87,000 at Rogers.
Wireless providers like BCE often subsidize sought-after smartphones for postpaid subscribers, who sign multi-year contracts and pay more each month than prepaid customers.
BCE's subscriber growth was helped by lower monthly churn, the proportion of wireless customers that cancel their service. The metric improved to 1.7 percent from 2.0 percent overall, and to 1.3 percent from 1.5 percent for postpaid customers.
BCE said its average wireless subscriber paid C$55.37 per month in the quarter, up from C$52.99 last year, as higher data use offset lower revenue from voice services.
BCE net income rose to C$773 million, or C$1.00 a share, from C$590 million, or 76 Canadian cents a share.
Excluding one-time items related to severance, acquisition and other costs, earnings rose to C$788 million, or C$1.02 a share, up from C$663 million, or 86 Canadian cents.
Analysts, on average, had forecast earnings of 81 Canadian cents a share, according to Thomson Reuters I/B/E/S.
The company, which expects the Astral deal to boost its earnings and free cash flow in 2013, said it expects adjusted earnings in the year of between C$3.15 a share and C$3.20 a share, slightly above its previously forecast range of C$3.13 to C$3.18. Analysts were expecting earnings of C$3.16 a share. ($1 = 0.9968 Canadian dollars)
Reporting by Euan Rocha and Allison Martell; Editing by Janet Guttsman