Canada's BCE profit beats on wireless, shares gain

By Alastair Sharp

TORONTO (Reuters) - BCE Inc, Canada's largest telecommunications company, reported a higher-than-expected quarterly profit on Thursday as it added more wireless subscribers who also paid more for service, while its internet and television growth slowed.

Shares rose 0.7 percent to C$62.25 in early trading.

"Wireless was strong, wireline was somewhat weak," said Maher Yaghi, an analyst at Desjardins, pointing to pressure from business accounts that cut into fixed-line revenue. "The ship is definitely moving in the right direction."

Bell, as the company is known to customers, competes for wireless market share with national rivals Rogers Communications Inc and Telus Corp and smaller regional players.

The company added a net 69,848 postpaid wireless customers in the second quarter, up from 61,033 a year earlier.

Rogers said two weeks ago that it added 65,000 such customers in the same period. Telus reports results on Friday.

Bell's fixed-line business weighed as it signed up fewer new television customers than expected, partly due to competitive pressure and economic headwinds.

The Montreal-based company, which is rolling out a major upgrade to its fixed-line network, said it decided not to match aggressive fixed-line promotions in Toronto, Canada's largest city.

Bell in May agreed to buy Manitoba Telecom Services Inc for about C$3.1 billion to expand its services in the western Canadian province.

The deal has won approval from both sets of shareholders and a provincial court, but still needs a nod from the country's competition watchdog, its telecom regulator, and the federal government.

Bell expects to close the deal in late 2016 or early 2017.

BCE's blended average revenue per user increased 2.9 percent to C$64.32, helped by a larger proportion of two-year contracts, a higher postpaid smartphone subscriber mix, and increased wireless data usage.

The company said it was on track to meet its 2016 forecast.

BCE's net income attributable to shareholders rose 2.5 percent to C$778 million ($597 million) in the second quarter, from C$759 million a year earlier.

On an adjusted basis, the company earned 94 Canadian cents per share. Analysts on average had expected a profit of 91 Canadian cents per share, according to Thomson Reuters I/B/E/S.

Operating revenue rose marginally to C$5.34 billion.

($1 = 1.3034 Canadian dollars)

(Additional reporting by Manish Parashar in Bengaluru; Editing by Bernadette Baum)