August 7, 2010 / 3:56 AM / 7 years ago

CORRECTED-UPDATE 3-Telus gets boost from wireless gains

(Corrects 16th paragraph to show earnings excluding tax adjustments were 71 cents a share in year earlier period)

* Q2 EPS C$0.92 vs C$0.77 year ago

* Revenue 1 pct higher at C$2.4 billion

* Trims 2010 revenue forecast

* Stock down 0.8 pct at C$41.20 on TSX (Adds CFO, analyst comments, updates stock price)

By Susan Taylor

OTTAWA, Aug 6 (Reuters) - Telus Corp (T.TO) posted a 21 percent jump in quarterly profit on Friday, boosted by big gains in its wireless division and sharply lower restructuring costs and capital spending.

Canada’s second-largest phone company said it added more wireless subscribers than rivals Rogers Communications (RCIb.TO) and BCE (BCE.TO), but faced tough times in its wireline unit, where revenue fell 4 percent on competitive and economic pressures.

To reflect those difficulties, Telus trimmed its 2010 consolidated revenue forecast by 1-1.5 percent and cut its wireline revenue estimate by 2-3 percent. The Vancouver-based company affirmed the rest of its full-year estimates.

“Telus reported strong second-quarter results, exhibiting strength in wireless ... slightly offset by softer wireline margins,” BMO Capital Markets analyst Peter Rhamey said in a note. “All-in, it was a solid quarter with headline earnings per share particularly positive.”

The company said quarterly wireless unit revenue grew by 6.2 percent to C$1.2 billion ($1.17 billion) as it added 124,000 wireless subscribers in the quarter.

The average monthly revenue per user fell 1.9 percent to C$57.47, but that was a smaller decrease than analysts had expected.

Unlike its rivals, which are offering new discount wireless plans to combat new entrants in the market, Telus said it has no need to respond, because its results are improving.

“Rogers clearly is being more reactive and maybe Bell is being reactive to Rogers, but we’re going to take more of a wait-and-see attitude,” Chief Financial Officer Robert McFarlane said in an interview.

Telus is now seeing a payoff from its investment last year in a high-speed network that now supports devices like the iPhone, he said.

“The good news for us is that while maybe the job isn’t complete, we’re well down the road, and starting to see the benefit of those investments,” McFarlane said.

“Competition has been tough, but we’re better positioned now than we’ve ever been in the past.”

MORE SMARTPHONE SUBSCRIBERS

Telus said it added 109,000 higher-value postpaid wireless subscribers and that smartphone users now represent 25 percent of postpaid subscribers, up from 16 percent a year ago.

Wireline division revenue fell by 4.1 percent to C$1.2 billion, reflecting declines in traditional local and long-distance revenue, Telus said.

Data revenue grew 5.1 percent and Telus TV added 29,000 subscribers for a total customer base of 228,000

The company said consolidated net profit rose to C$296 million, or 92 Canadian cents a share, in the second quarter, from C$244 million, or 77 Canadian cents a share, a year earlier.

Excluding tax-related adjustments, Telus said earnings rose to 89 Canadian cents a share from 71 Canadian cents.

Revenue rose 1 percent to C$2.4 billion.

On average, analysts had expected earnings of 77 Canadian cents and revenue of C$2.4 billion, according to Thomson Reuters I/B/E/S.

“Overall, we continue to look for a better entry point, given the considerable share price appreciation experienced year-to-date and with the valuation gap discount with BCE having dissipated,” Desjardins Securities analyst Maher Yagi said in a note.

Telus shares, which have climbed about 19 percent so far this year, ended down 33 Canadian cents at C$41.20 on the Toronto Stock Exchange on Friday.

$1=$1.03 Canadian Reporting by Susan Taylor; editing by Rob Wilson

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