* Q2 adjusted EPS C$0.77 vs C$0.58
* Increases 2010 revenue, adjusted EPS outlook
* Raises annual dividend by 5 pct
* To launch discount Solo wireless brand in August
* Stock up 1.8 pct at C$32.19 on TSX (Adds detail from conference call, analyst comments, stock prices)
By Susan Taylor
OTTAWA, Aug 5 (Reuters) - BCE Inc (BCE.TO) (BCE.N), Canada’s biggest communications company, posted a big jump in quarterly profit on Thursday, due largely to lower costs, and said it was well prepared for increased wireless competition as it boosted its 2010 forecast.
BCE, which sells phone, Internet and satellite-TV services, is facing some tough new wireless rivals offering low-cost plans, and is bracing for more cable operators to enter the sector.
Chief Executive George Cope said the company will launch its own low-cost wireless service, Solo Unlimited, this month. It will be focused on urban markets.
That will also counter last week’s launch of the Chatr discount wireless service from rival Rogers Communications (RCIb.TO).
“I was totally surprised by that development, but we’ll remain competitive,” Cope told analysts on a conference call about the Chatr launch. “We will respond to that.”
BCE is also advancing its Internet television service, known as IPTV, to counter a plan by Quebecor’s (QBRa.TO) Videotron cable unit to offer wireless phone service in Quebec this summer. The IPTV service is currently in trials in Montreal and Toronto.
“Unlike previous periods, when the competition introduced a new product into the marketplace and gained market share against BCE, this time around BCE has more tools in their arsenal to compete,” Desjardins Securities analyst Maher Yaghi said.
“They have a higher financial flexibility, so they can afford to be more aggressive on pricing and customer retention ... and they have a four-product arsenal that they can play with and adjust accordingly to competitive threats.”
Buoyed by a big gain in heavy-spending wireless subscribers and 9.6 percent jump in related revenue, the company now sees 2010 revenue growth of 2 percent to 3 percent at its core Bell telecoms unit. That is up from a previous 1 percent to 2 percent estimate.
The EBITDA estimate was unchanged because Bell expects to continue paying more to acquire and keep wireless customers on more costly smartphone subsidies.
The company added 480,639 subscribers in the quarter, a 19 percent jump over last year, including 102,754 lucrative postpaid customers, which was well above analyst expectations.
The average revenue per wireless user rose by C$1.66 to C$52.12, while increasing by C$1.18 to C$63.66 for postpaid customers.
BCE, which announced a widely expected 5 percent increase to its annual dividend on Thursday, also lifted its estimate for full year adjusted earnings per share to a range of C$2.75 to C$2.80 from C$2.65 to C$2.75.
BCE, which dominates Canada’s wireless market along with Rogers and Telus Corp (T.TO), said full-year free cash flow is now seen at the high end of an earlier estimate of $2 billion to C$2.2 billion.
BCE shares rose 1.8 percent, or 58 Canadian cents, to C$32.18 on the Toronto Stock Exchange and gained nearly 2.3 percent to $31.73 on New York on Thursday, after the results were issued.
For its second quarter, BCE said net earnings rose to C$590 million ($584 million), or 78 Canadian cents a share, from C$346 million, or 45 Canadian cents a share.
Before restructuring charges and other gains or losses on investments, BCE said adjusted earnings rose to 77 Canadian cents a share from 58 Canadian cents last year.
Revenue was up 4.5 percent at C$4.4 billion.
BCE is benefiting from lower costs after making sharp job cuts over the past two years. In total, it has cut about 5,800 jobs to save more than C$500 million annually, Canaccord Capital analyst Dvai Ghose said in a recent note.
The company said it has completed about 66 percent of its 2010 share buyback plan, purchasing 11.2 million shares for C$329 million.
$1=$1.01 Canadian Reporting by Susan Taylor; editing by Rob Wilson