March 8, 2011 / 11:47 AM / 7 years ago

UPDATE 2-Quebecor profit hit by wireless startup costs

* Adjusted EPS C$0.87 vs year ago C$1.31

* Revenue at C$1.09 bln vs C$1.03 bln

* Hurt by wireless costs, weak cable, Internet growth

* Shares dip 2.3 pct in Toronto (Adds details, analyst quote)

TORONTO, March 8 (Reuters) - Quebecor Inc (QBRa.TO) posted a 41 percent fall in quarterly profit on Tuesday, hit in part by higher expenses as it sets up its wireless network.

For the fourth quarter, the Montreal-based newspaper publisher and communications company posted net income of C$43.5 million, or 68 Canadian cents a share, down from C$73.8 million, or C$1.15 a share, a year ago.

Revenue rose 5.4 percent to C$1.09 billion.

Excluding items, it earned 87 Canadian cents per basic share compared with C$1.31 a year ago.

The earnings were hurt by expenses connected to the September launch of Quebecor’s wireless network, which added 40,700 net subscribers in the quarter. [ID:nN09185742]

Each new subscriber cost the company C$471 and, according to Desjardin analyst Maher Yaghi, brought in C$48.70 a month.

Yaghi said that while the wireless numbers showed promise, other subscriber metrics missed his expectations, including just 9,600 basic cable additions, 18,300 new Internet customers and 16,200 cable telephone subscribers.

“Quebecor is on track to becoming a significant wireless player in the province of Quebec, while on its traditional cable platform, its net additions continue to exhibit signs of maturity,” Yaghi wrote in a note.

Cost of sales rose about 14 percent to C$731.7 million.

Quebecor also operates cable TV and Internet services and produces French- and English-language magazines and newspapers, including the Sun newspaper chain. It is also planning a national TV news channel called Sun News.

Quebecor shares fell 2.6 percent to C$34.30 on Tuesday morning on the Toronto Stock Exchange.

The company, which had been expected to report its quarterly numbers on Wednesday, will host a conference call for analysts Tuesday afternoon.

$1=$0.97 Canadian Reporting by Alastair Sharp in Toronto and Arnika Thakur in Bangalore; editing by Rob Wilson

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