* EPS C$0.98 vs C$0.94 year-ago
* Revenue up 6 percent, beats expectations
* Telus raises revenue outlook for the year
* UBS upgrades stock, says attractive in volatile market
* Shares little changed
(Adds CFO comments; updates shares)
By S. John Tilak
TORONTO, Aug 5 Telus Corp's (T.TO) quarterly
net profit rose 7 percent on gains at its wireless and Internet
television segments, outshining its larger rivals and prompting
the company to raise its revenue forecast for the year.
The Canadian telecoms company, whose shares dropped on
Friday along with the broader market, said the rapid adoption
of smartphones such as Apple Inc's (AAPL.O) iPhone boosted data
revenue and fueled subscriber growth.
Telus added 94,000 wireless customers in the quarter, a
decline from the number signed up a year earlier but ahead of
the average estimate of analysts. Wireless revenue rose 10
percent and wireless data revenue increased 49 percent.
But the cost of activations rose 8 percent to C$370 each as
the industry subsidized the cost of providing smartphones for
new subscribers. For BCE Inc's (BCE.TO) Bell Canada, new
activations cost even more at C$400 each, a 19 percent
On average, each of the Vancouver-based company's wireless
customers spent C$58.88 a month in the quarter, up 2.5 percent
but lower than analysts had estimated, Macquarie Capital
Markets analyst Greg MacDonald said.
Even so, on that basis, Canada's third-largest wireless
provider had a stronger quarterly performance than its main
competitors, Rogers Communications Inc (RCIb.TO) and Bell, he
Canada's telecoms market has largely been a three-horse
race until recently, as Mobilicity, Globalive's Wind Mobile and
other entrants stepped up the pressure on them by launching
"The impact from wireless competition is lower at Telus.
That's the biggest takeaway from the report," MacDonald said.
Its greater exposure to the less-competitive Western
Canadian market may give it an advantage over the other two,
which are more focused on the Eastern half of the country.
"Our results show a distinct outperformance in favor of
Telus," Chief Financial Officer Robert McFarlane told Reuters
in an interview. He said Telus topped Rogers and Bell in terms
of revenue, profit growth and customer loyalty.
While Research In Motion Inc's RIM.TO BlackBerries formed
the largest chunk of its smartphone sales, Google Inc's
(GOOG.O) Android-software based devices were the fastest
selling, McFarlane said. Its Android line-up includes Samsung
Electronics Co's (005930.KS) Galaxy S and HTC Corp's (2498.TW)
REVENUE TOPS ESTIMATES
Second-quarter earnings rose to C$324 million ($331
million), or 98 Canadian cents a share, from C$302 million, or
94 Canadian cents, a year earlier. Analysts had on average had
expected earnings of 96 Canadian cents a share, according to
Thomson Reuters I/B/E/S.
Revenue grew 6 percent to C$2.55 billion, more than the
average estimate of C$2.52 billion.
Telus it increased its television subscriber base by
46,000, or 59 percent, as it expanded its recently launched
Internet-based TV service, Optik.
Telus is locked in a battle for Internet and television
consumers of Western Canadians with Calgary-based cable Shaw
Communications (SJRb.TO), which has delayed launching a
The company raised its 2011 revenue outlook by C$200 to
C$300 million. It also sees more capital expenses.
UBS analyst Phillip Huang raised his rating on the stock to
"buy" from "hold," following the results.
The shares are "an attractive investment for a volatile
macro economic environment" because of its "stable business,
strong balance sheet and focus on returning capital," he wrote
in a research report.
The stock, up 13 percent since the start of the year, was
up 2 Canadian cents at C$51.30 on a weak Toronto Stock
(Reporting by S. John Tilak; editing by Janet Guttsman)