May 7, 2009 / 12:23 PM / 9 years ago

UPDATE 1-BCE profit rises, but warns of consumer caution

* Q1 EPS 48 Canadian cents vs 32 Cdn cents a year ago

* BCE buying rest of Virgin Mobile Canada for C$142 mln

* Says consumers using mobile phones less amid recession (Adds details, background, byline)

By Wojtek Dabrowski

TORONTO, May 7 (Reuters) - Canadian telecom giant BCE Inc (BCE.TO)(BCE.N) posted a higher quarterly profit on Thursday as it booked fewer charges than a year ago, but warned that consumers are cutting back and using mobile phones less than in the past because of the recession.

BCE, the country’s biggest telecom company, also announced it would buy the 50 percent of Virgin Mobile Canada that it does not already own for C$142 million ($121.4 million) to boost its wireless offering.

It also signed a deal with rival Telus Corp (T.TO) under which Telus will distribute satellite TV service in Alberta and British Columbia under its own brand.

BCE said it earned C$406 million, or 48 Canadian cents a share, in the first quarter. That was up from a profit of C$289 million, or 32 Canadian cents a share, a year earlier.

The company’s adjusted earnings were unchanged at 57 Canadian cents a share.

The quarter saw BCE book C$109 million in restructuring and other charges, compared with C$283 million a year earlier.

Revenue edged lower to C$4.34 billion from C$4.36 billion a year earlier.

Montreal-based BCE said it added 35,000 new postpaid — or longer-term — wireless subscribers in the quarter, up from 28,000 new additions a year earlier.

However, average monthly revenue per postpaid wireless user fell C$1.93 to C$62.34. BCE blamed aggressive discount-brand pricing and “lower usage as customers reacted to a weakening economy.”

BCE is locked in a three-way fight with Telus and Rogers Communications (RCIb.TO) for dominance of Canada’s wireless market.

Rogers has had a leg up as it is the only carrier in the country with a GSM network, which has let it carry Apple’s (AAPL.O) popular iPhone.

To help remedy this, Telus and BCE — which currently use CDMA wireless technology — are working together on a network upgrade that would also let them carry GSM-based handsets. That upgrade is expected to be finished next year.

In March, BCE also announced it would buy retail electronics chain The Source from U.S.-based Circuit City Stores to vastly expand its retail presence.

The deal gave BCE more than 750 stores and came a month after BCE Chief Executive George Cope expressed the need to increase the number of locations where consumers can buy the company’s wireless products.

On Thursday, BCE said the purchase of the rest of Virgin Mobile Canada is expected to drive more traffic to the Source stores. ($1=$1.17 Canadian) (Reporting by Wojtek Dabrowski; editing by Maureen Bavdek)

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