August 11, 2008 / 6:29 PM / in 10 years

MTS profit slips despite wireless, Internet gains

TORONTO (Reuters) - Regional communications firm Manitoba Telecom Services reported a lower quarterly profit on Monday even as it continued cutting costs and had strong growth in its wireless, high-speed Internet and digital television services.

MTS said it earned C$38 million ($35.5 million), or 58 Canadian cents a share, in the three months ended June 30. That was down from a profit of C$57 million, or 88 Canadian cents a share, in the same period a year earlier.

Earnings from continuing operations rose to 81 Canadian cents a share from 79 Canadian cents a share a year earlier.

MTS also reported annualized cost reductions of C$20.1 million at the end of the second quarter, already hitting its 2008 target of between C$20 million and C$30 million.

The company had hoped to be a big bidder in Canada’s wireless spectrum auction, but those plans were dashed when a consortium made up of MTS and a pair of private equity backers fell apart in late May — just days before bidding was set to begin.

MTS, which already has a wireless presence in its home province of Manitoba, said at the time that intense negotiations among the group’s members stalled over a handful of key issues.

However, the company still bought enough spectrum to cover 1.2 million people in Manitoba for about C$41 million, it said on Monday.

The company said it was moving some of its wireless needs away from BCE Inc’s Bell Mobility to new suppliers and to its own platform, but further details of the move weren’t immediately available.

MTS said revenue grew to C$486.4 million in the quarter, from C$474.1 million a year earlier. Revenue from “growth services” like wireless, Web-based unified messaging, digital TV and high-speed Internet shot up 15.4 percent to C$214.9 million, MTS said.

The company’s shares were down 36 Canadian cents at C$40.90 on the Toronto Stock Exchange.

($1=$1.07 Canadian)

Reporting by Wojtek Dabrowski; Editing by Bernadette Baum

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