May 5, 2011 / 1:18 PM / in 7 years

CORRECTED - UPDATE 3-Telus profit rises on subscriber gains

(Corrects paragraph 4 to clarify dividend increase will be 10 percent annually, not twice a year; inserts dropped words in third bullet point)

* EPS C$1.00 versus forecast C$0.93

* Revenue up 6.5 percent

* Adds 52,000 postpaid wireless subscribers

* Raises quarterly dividend by 4.8 percent (Adds analysts’ comments)

TORONTO, May 5 (Reuters) - Canadian telecommunications company Telus Corp T.TO posted a higher quarterly profit that beat market estimates on Thursday as soaring smartphone demand fueled strong subscriber growth.

The Vancouver-based company added 52,000 new postpaid wireless subscribers in the first quarter, topping the expectations of most analysts and helping revenue increase by nearly 7 percent.

Smartphone subscribers formed 38 percent of Telus’s postpaid customer base in the quarter, up from 22 percent a year earlier.

Telus boosted its quarterly dividend by 4.8 percent to 55 Canadian cents a share, its third increase in the past year. It is looking to raise its dividend twice a year, by about 10 percent on an annual basis, until 2013.

“They’re doing really well. I challenge you to find another incumbent telco that’s recording 7 percent revenue growth,” Canaccord Genuity analyst Dvai Ghose said.

“Despite generating superb subscriber growth in wireless and wireline, they managed to generate very good margins,” he added.

Wireless EBITDA margins were stable in the quarter.

The company has won share from market leader Rogers Communications RCIb.TO after teaming up with BCE Inc’s BCE.TO Bell Canada to build and share an upgraded national wireless network, which was completed in 2009.

“The wireless subscriber market in Canada has not hit a ceiling yet,” Desjardins Securities analyst Maher Yaghi said.

“The wireless market is going to be split equally between the three companies.” he added, referring to Telus, Bell and Rogers.

Telus, which also competes closely with cable and broadcasting company Shaw Communications SJRb.TO in Western Canada, added 44,000 TV customers and 16,000 high-speed Internet subscribers in the quarter.

Its earnings rose to C$328 million ($338 million), or C$1.00 a share diluted, from C$273 million, or 85 Canadian cents a share, a year earlier. Analysts on average had forecast earnings of 93 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 6.5 percent to C$2.5 billion. Analysts had expected C$2.46 billion.

The company’s shares, up by a third in the past 52 weeks, were down 24 cents, or less than 1 percent, at C$49.14 on Thursday morning on the Toronto Stock Exchange.

$1=$0.96 Canadian Reporting by S. John Tilak, editing by Peter Galloway

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