TORONTO (Reuters) - Canadian telecoms provider Telus Corp (T.TO) promised three more years of dividend growth on Thursday as it reported a 13 percent rise in quarterly profit, results that outshone cross-Canada rival BCE Inc (BCE.TO).
Both companies scored in the fast-growing wireless space as consumers grasp for the latest smartphones to stream video and other data. But Telus also managed to increase its fixed-line business on the back of its Optik TV product and it raised its 2013 dividend by 11.5 percent.
BCE profit rose 6.6 percent, and the company said it remains on track to hit its full-year earnings targets.
Telus shares were up 1.8 percent at C$37.35 on Thursday morning, while BCE shares were down 0.4 percent at C$47.72.
Vancouver-based Telus competes against cable company Shaw Communications Inc (SJRb.TO) for television and Internet customers in Western Canada and against Rogers Communications Inc (RCIb.TO) and BCE’s Bell for wireless subscribers across the country.
“Things are going exceptionally well at Telus,” said Canaccord Genuity analyst Dvai Ghose. “Bell is obviously at a much earlier stage both in terms of subscribers as well as profitability” for its fixed-line unit.
Telus and Bell both signed up some 59,000 net new postpaid wireless subscribers, who typically pay more to use high-end smartphones on multiyear contracts. Market leader Rogers added 32,000 in the quarter.
Telus said its wireless customers paid an average of C$60.04 a month for service, as booming data usage more than offset falling voice calls. Bell’s average bill was C$55.92.
Telus, unlike its biggest rivals, has not acquired companies producing the content distributed over its network. But it has moved forcefully to increase fixed-line revenue through Optik TV, an Internet-based product that is challenging Shaw’s dominant cable television position in Western Canada.
Telus said it added 34,000 TV customers in the quarter, compared with the 47,000 Bell added with its equivalent Internet TV product, Fibe, which is at a much earlier stage of deployment. Telus added 16,000 Internet subscribers, versus less than 2,000 for Bell.
BCE has in recent years moved aggressively to secure ownership of news, sports, films and other content distributed via its television and Internet services.
BCE said revenue at its Bell Media unit was flat as a weak advertising market offset higher fees from rival distributors.
The company is currently seeking regulatory approval for its revised C$3 billion bid for its biggest content provider, Astral Media Inc ACMa.TO.
The regulator rejected BCE’s first offer for Astral in October, citing the inordinate influence it would give BCE.
BCE has since agreed to divest some Astral pay and specialty television channels, although critics say the smaller deal does not preclude Bell from setting exorbitant rates for the premium content it owns.
BCE bought CTV, the country’s largest private broadcaster, in 2011. Last year, it teamed up with Rogers to buy the owner of the National Hockey League’s Toronto Maple Leafs and a stable of other sports assets.
Telus reported net income of C$362 million, or 56 Canadian cents a share, in the three months to the end of March, compared with C$319 million, or 49 cents a share, a year ago.
Operating revenue rose 5 percent to C$2.76 billion.
Analysts had on average expected Telus to earn 54 Canadian cents a share on revenue of C$2.78 billion, according to Thomson Reuters I/B/E/S.
BCE first-quarter net earnings rose to C$566 million, or 73 Canadian cents a share, from C$531 million, or 69 Canadian cents, a year earlier on little changed operating revenue of C$4.92 billion. On an adjusted basis, the company earned 77 cents a share. Analysts had on average expected BCE to earn 71 Canadian cents a share on revenue of C$4.96 billion.
“Telus fired on both cylinders and clearly has the stronger balance sheet and cash flow profile,” Canaccord’s Ghose said.
Telus said it would aim to buy back up to C$500 million of its own stock this year and for the next three years.
Telus said it plans to continue with semi-annual dividend increases in the 10 percent per-annum range through to 2016.
editing by Jeffrey Hodgson, Janet Guttsman and Matthew Lewis