February 4, 2016 / 1:51 PM / 3 years ago

Canada's BCE posts lower profit, raises dividend

TORONTO (Reuters) - BCE Inc, the Canadian telecommunications and media company, reported a drop in fourth-quarter profit as it paid more to win wireless business and for workers’ severance, but raised its dividend and pointed to moderate growth in 2016.

George Cope President and Chief Executive Officer of BCE addresses shareholders at the company's Annual General Meeting, in Toronto April 30 2015. REUTERS/Fred Thornhill

Bell, as the company is known to customers, said on Thursday that wireless revenue grew 5.9 percent as it added 91,000 postpaid wireless customers, who typically spend more than those who prepay.

Wireless market leader Rogers Communications Inc said last week it added 31,000 such customers. Telus Corp, the country’s third national wireless player, is due to report earnings on Feb. 11.

In the fourth quarter, Bell’s wireless customers, on average, spent C$63.67 a month, although it paid more to court and retain them amid aggressive holiday promotions, versus C$59.16 for Rogers.

The Montreal-based company also added 74,000 Fibe TV customers and 39,000 high-speed Internet connections.

RBC Capital Markets analyst Drew McReynolds said the results and 2016 forecasts, including 1 percent to 3 percent revenue growth and adjusted earnings of C$3.45-C$3.55 a share, were largely in line with rising market expectations.

Fixed-line revenue declined 1.5 percent, but margins improved on cost-cutting. Its media unit reported a 3.4 percent gain in revenue, but margins were squeezed by rising content costs.

The company expanding its control of HBO content in Canada in November.

Bell said the “significant cost restructuring” in its media unit will bring labor savings that should offset further content cost increases and the impact of new broadcast rules that will bring more consumer choice.

Net income attributable to shareholders fell to C$496 million ($362.1 million), or 58 Canadian cents a share, from C$542 million, or 64 cents, a year earlier.

Revenue rose 1.4 percent to C$5.60 billion, just below analysts’ expectations, while adjusted earnings were 72 Canadian cents a share, unchanged from a year earlier. Analysts, on average, expected 73 cents, according to Thomson Reuters I/B/E/S.

Bell raised its dividend by 5 percent, in contrast to Rogers, which surprised investors by holding its payout steady.

BCE shares were up 1.5 percent to C$57.59 while the broader index rose 1.3 percent.

BCE Chairman Thomas O’Neill will retire in April. BCE plans to nominate Gord Nixon, the former chief executive officer of Royal Bank of Canada, to replace him, the company said.

Reporting by Alastair Sharp; Editing by Bernadette Baum and Jeffrey Benkoe

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