UPDATE 3-Telus trims forecasts, expands cuts as profit falls

* 2008 profit, revenue targets lowered

* Q3 EPS 89 Canadian cents

* Cost-cutting program expanded

* Shares drop as much as 3 percent

(Adds details, updates stock price)

By Wojtek Dabrowski

TORONTO, Nov 7 (Reuters) - Telus Corp (T.TO), Canada's No. 2 phone company, on Friday posted a lower quarterly profit, trimmed its revenue and profit forecasts for the year and said it would make even deeper cost cuts than it had planned.

The news, which drove the shares down more than 3 percent, was softened by an increase in revenues during the latest quarter thanks to growth in its wireless business. Telus also boosted its dividend.

The company's decision to expand its cost-cutting plan reflected spending on the launch of Koodo, its discount wireless brand, as well as the planned rollout of a television service and recent spending on wireless spectrum, it said.

Telus also cited the expense of a network technology upgrade in partnership with BCE Inc (BCE.TO), parent of Bell Canada.

Profit fell to C$285.1 million ($239.6 million), or 89 Canadian cents a share, in the third quarter, down from C$409.9 million, or C$1.23, a year earlier. The company attributed much of the drop to tax-related adjustments.

The company, which has now signed up 6 million wireless subscribers, said revenue rose to C$2.45 billion from C$2.31 billion.

Chief Executive Darren Entwistle said Telus will "materially and substantially" cut costs over the remainder of 2008 and beyond to offset its investments in Koodo and in other areas.

As a result, Telus has increased its restructuring charges for this year by C$20 million to a total of C$50 million, it said.

National Bank Financial analyst Greg MacDonald said the results were largely in line with his expectation and added the restructuring isn't a huge surprise.

"Restructuring in the telecom industry is an ongoing event that will last for years," he said.

Telus said the higher restructuring costs, an uncertain economy and extra expenses to attract and keep customers were among the reasons it was trimming its revenue and profit targets for the rest of the year.

During a government auction of wireless spectrum last summer, Telus spent a total of C$882 million on the airwaves over which wireless services are delivered.

The company is ramping up its discount Koodo brand just as new entrants that also won spectrum in the auction plan to challenge the industry leaders -- Telus, BCE and Rogers Communications Inc (RCIb.TO).

Telus now expects full-year revenue of C$9.675 billion to C$9.725 billion, down from a previous target of C$9.675 billion to C$9.825 billion.

It forecast basic earnings per share of C$3.45 to C$3.60, down from a previous range of C$3.50 to C$3.70.

The company added 158,500 new postpaid wireless subscribers in the quarter, an increase of 61 percent. Postpaid users pay monthly bills and often sign up for multi-year contracts. They are viewed as more lucrative than prepaid subscribers, who pay in advance for a set amount of service.

Chief Financial Officer Bob McFarlane told analysts the wireless industry remains robust despite economic uncertainty.

"That's a very healthy trend," he said. "We believe there remains ample room for future growth in Canada and that Telus is well positioned to compete for a share of this growth."

Average wireless monthly revenue per subscriber fell to C$64.14, down 1 percent from a year earlier. However, it rose C$1.41 from the second quarter of 2008.

Telus also said its monthly subscriber churn, or turnover, crept up slightly to 1.52 percent, up from 1.43 percent a year earlier.

It said it would raise its quarterly dividend to 47.5 Canadian cents a share from 45 Canadian cents.

Telus shares dropped C$1.24, or 3.16 percent, at C$39.50 on the Toronto Stock Exchange. ($1=$1.18 Canadian) (Reporting by Wojtek Dabrowski; editing by Frank McGurty)