November 4, 2011 / 12:33 PM / 7 years ago

UPDATE 3-Telus profit jumps on smartphone growth

* Q3 EPS C$1 vs C$0.78; revenue up 7 pct to C$2.62 bln

* Adds 133,000 post-paid wireless customers

* Adds 50,000 television subscribers

* Shares flat at midday after early bump (Adds conference call, analyst comment, updates shares)

By Alastair Sharp

Nov 4 (Reuters) - Telus Corp (T.TO), Canada’s third-largest wireless provider, reported a 30 percent jump in quarterly net profit on Friday as it signed up more smartphone customers and its new Internet-based television service gained traction.

Vancouver-based Telus reported net profit of C$326 million ($321.9 million), or C$1 a share, in its third quarter ended Sept. 30, up from C$251 million, or 78 Canadian cents a share, a year earlier.

“Telus continues to post very strong wireless results, and video is helping revenue on the wireline side, but is not yet enough to overcome the decline in legacy voice products,” Desjardins analyst Maher Yaghi wrote in a note.

Adjusting for three one-time items, net income rose 12 percent in the quarter, Telus said.

Revenue rose nearly 7 percent to C$2.62 billion, while wireless data revenue jumped 53 percent.

Analysts had, on average, expected Telus to post adjusted earnings of 97 Canadian cents a share on revenue of C$2.60 billion, according to Thomson Reuters I/B/E/S.

Telus added 133,000 lucrative post-paid wireless subscribers, who typically use a smartphone and spend around three times as much as a pre-paid customer. The company lost 19,000 more value-conscious pre-paid users, who have been lured by aggressive pricing from several newer entrants.

It also lost 19,000 of what it described as low-value post-paid subscribers after the federal government switched a contract to rival Rogers Communications (RCIb.TO).

By comparison, market leader Rogers said last week it added 74,000 post-paid subscribers and 87,000 pre-paid users in the quarter, while BCE Inc’s (BCE.TO) Bell units added 126,854 customers on contract and lost 41,105 pre-paid users. [ID:nL3E7LQ1XX] [ID:nN1E7A20BJ]

Telus said the cost of acquiring a post-paid subscriber jumped 17 percent to C$397, as the company paid higher subsidies to support smartphone sales.

The company, which has been the most modest of the three major national wireless providers regarding plans to upgrade its network to long term evolution (LTE) technology, repeated that the upgrade was on track for an early 2012 launch on a conference call with analysts.

Telus added 50,000 television subscribers in the quarter on the back of the Internet-based TV service Optik it launched last year.

The company got a boost in its battle against Calgary-based cable company Shaw Communications (SJRb.TO) for Internet and television clients in Western Canada when Shaw walked away from a plan to launch a wireless telephone network in September. [ID:nL4E7K12CN]

The decision means Shaw lacks the fourth, wireless leg of a bundled offering to go along with home phone, Internet and television.

But Telus still has a long way to go. It can now boast more than 450,000 television subscribers, well below the 2 million users of Shaw’s basic cable service.

Telus said it would raise its dividend, for the second time this year, to 58 Canadian cents a quarter, in line with its goal of increasing its payout by 10 percent a year.

Shares of Telus, which have gained almost 20 percent so far this year, were flat at C$54.00 at midday on the Toronto Stock Exchange, after rising as high as C$54.76.

$1=$1.02 Canadian Additional reporting by Bhaswati Mukhopadhyay in Bangalore; editing by Rob Wilson

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