May 7, 2009 / 3:09 PM / 9 years ago

WRAPUP 3-BCE, Telus wireless results hit by recession fallout

* BCE, Telus blame economy for denting wireless results

* Telus says wireless subscriber additions down 46 pct

* BCE says consumers using cellphones less amid recession (Adds Telus CEO comments)

By Wojtek Dabrowski

TORONTO, May 7 (Reuters) - Two of Canada’s biggest telecom companies warned on Thursday that recession is battering their key wireless businesses as consumers keep a tight rein on spending and use their mobile phones less.

In reporting first-quarter results, both BCE Inc (BCE.TO) — Canada’s biggest telecom company — and Telus Corp (T.TO) said that, on average, they are bringing in less revenue per wireless user each month. Both blamed the weak economy.

“I just think people in general are cutting back,” said Troy Crandall, an analyst at MacDougall, MacDougall & MacTier. “If they might have wanted that BlackBerry Storm, maybe they’re holding off for right now.”

Feature-rich smartphones like Research In Motion’s RIM.TO RIMM.O BlackBerry and Apple’s (AAPL.O) iPhone have been a crucial driver of profits for Canadian carriers like BCE, Telus and rival Rogers Communications Inc (RCIb.TO).

The trend stumbled in the first quarter as customers tightened their purse strings amid widespread layoffs, weak stock markets and general economic uncertainty.

Vancouver, British Columbia-based Telus, the country’s No. 2 telephone company, said new wireless subscriber additions dropped 46 percent to 48,000. Average monthly revenue for both prepaid and postpaid — or longer-term — users fell 5.6 percent to C$58.39 per wireless user, just as it had warned in April.

“It’s clear to me that the Telus organization on the wireless front is reflecting the rather severe impact of the very weak economy,” Chief Executive Darren Entwistle told reporters on Thursday. “We’re not in a predictable environment right now.”

The company also cut its 2009 earnings and revenue outlook, but its shares still rose 1.9 percent to C$31.21 on the Toronto Stock Exchange, as investors had already punished the stock at the time of the April warning.

BCE fared a little better on subscriber additions, adding 35,000 new postpaid users to its wireless network, up from 28,000 a year earlier.

However, average revenue per postpaid user fell 3 percent to C$62.34 a month, it said, also blaming the weak economy as well as aggressive pricing by discount brands.

The wireless results from Telus and BCE were in sharp contrast to the performance of rival and wireless market leader Rogers Communications Inc (RCIb.TO).

Last month Rogers reported adding 104,000 postpaid subscribers in the quarter. It also said average revenue per postpaid user held relatively steady at C$72.15 a month.


“We’re not immune,” BCE Chief Executive George Cope said of the economy during a conference call with analysts. The company’s shares fell 79 Canadian cents to C$25.28 on Thursday.

BCE’s quarterly revenue edged lower to C$4.34 billion ($3.7 billion) from C$4.36 billion a year earlier. At Telus, revenue crawled higher to C$2.37 billion from C$2.35 billion.

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 year earlier.

The quarter also saw BCE book C$109 million in restructuring and other charges, which was less than the C$283 million a year earlier.

BCE also said it would buy the 50 percent of Virgin Mobile Canada that it doesn’t already own for C$142 million to further boost its mobile phone offering.

Telus said it earned C$322 million, or C$1.01 per share, in the three months ended March 31. That was up from a profit of C$292 million, or 90 Canadian cents, a year earlier.

The latest results included a C$62 million favorable tax adjustment, compared with C$17 million a year earlier, the company said.

Telus said it aimed to cut expenses further, and it boosted its estimate of 2009 restructuring costs to about C$125 million from between C$50 million to C$75 million previously.

$1=$1.17 Canadian Reporting by Wojtek Dabrowski; editing by Frank McGurty

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