April 30, 2015 / 11:56 AM / in 3 years

UPDATE 2-BCE's first-quarter profit helped by wireless, media drags

(Adds analyst and executive comment, share price reaction, details)

By Alastair Sharp

TORONTO, April 30 (Reuters) - A strong performance from BCE Inc’s wireless unit helped Canada’s largest telecom company post a modest gain in adjusted profit on Thursday, while its media division paid out for a new streaming service and higher sports content costs.

In its landline business, which accounts for well over half of Montreal-based BCE’s revenue, growth in internet and TV services barely offset the steady decline playing out in legacy phone services.

Bell, as the company is known to customers, added 35,373 postpaid wireless customers, who typically spend more than those who pre-pay for service, it said.

By comparison, Rogers Communications Inc lost 26,000 such customers, it said on April 20. The third of Canada’s dominant wireless operators, Telus Corp , is due to report next Thursday.

All Canadian wireless providers face a so-called “double cohort” of expiring customer contracts after three-year terms were essentially banned, but Bell appears to be successfully managing the transition.

“We expect wireless momentum to continue through 2015 and continue to believe the ‘double cohort’ impact is manageable,” RBC Capital Markets analyst Drew McReynolds wrote in a note.

An average wireless customer at Bell spent C$60.83 a month for service, down slightly from the prior quarter.

The boost from mobile services was offset by lagging performance in Bell’s media unit, where subscriber revenues slipped from a year ago as its sports channel TSN wound down some regional hockey broadcasts and paid out for some games after losing NHL rights to rival Rogers.

“Media’s performance, as we have seen for the past few quarters, will continue to reflect the higher cost of sports broadcast rights and programming investment in CraveTV,” retiring Chief Financial Officer Siim Vanaselja said on his last conference call with analysts.

CraveTV is Bell’s response to online alternatives such as Netflix, and the company has paid to boast exclusive Canadian rights to HBO and Showtime libraries.

Excluding one-time items tied to litigation, severance and other costs, the company earned a profit of C$705 million, or 84 Canadian cents a share, compared with a year-earlier profit of C$626 million, or 81 cents a share.

Analysts had on average expected BCE to earn 79 cents a share, according to Thomson Reuters I/B/E/S.

Net income slipped to C$532 million, or 63 cents a share, from C$615 million, or 79 cents, a year ago. Operating revenue rose 2.8 percent to C$5.24 billion.

BCE’s shares slipped 0.3 percent to C$54.01.

Additional reporting by Euan Rocha; Editing by Bernadette Baum, W Simon and Meredith Mazzilli

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