BUSINESS
08/07/2014 08:59 EDT | Updated 10/07/2014 05:59 EDT

Telus, BCE Profits Jump On Higher Earnings Per Customer

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Signage is displayed outside of a BCE Inc. Bell Canada store in Toronto, Ontario, Canada, on Wednesday, Aug. 8, 2012. BCE Inc., Canada?s second-largest wireless carrier, topped second-quarter profit estimates and increased its annual forecast after adding more smartphone subscribers on lucrative long-term contracts. Photographer: Brent Lewin/Bloomberg via Getty Images

BCE Inc., Canada's largest telecom company, posted higher profits in the second quarter as more wireless customers upgraded to smartphones with bigger data plans.

Telus Corp. says second-quarter profits jumped 33 per cent on growth in both its wireless and wireline businesses.

The outlier is Rogers Communications, which reported last week and posted a lower second-quarter profit but beat analyst expectations as it focused on improving its operations.

"Canadian consumers' adoption of smartphones and usage of these devices, and the improvement in our speed of the LTE by 50 per cent over the next four or five weeks — that is only going to drive more and more demand for usage of the product,'' BCE chief executive George Cope said during a conference call with analysts.

"The (revenue per user) that we're seeing on the market is not from price increases; it's generally from pricing discipline, but also from increased usage of the product.''

Operating revenue on Bell's wireless side was up 5.7 per cent to $1.5 billion, driven by a higher postpaid subscriber mix, greater data usage and higher average rate plan pricing as customers moved to two year from three year contracts.

Bell's wireless customers paid an average of $59.49 a month for service, up 4.6 per cent from last year.

Telus reported profits of $381 million, or 62 cents per share, compared to $286 million or 44 cents per share a year ago. On an adjusted basis, results were equal to 63 cents per share from 54 cents. Operating revenue grew 4.4 per cent to $2.95 billion from $2.83 billion.

Telus says it added 78,000 wireless customers on contracts, 23,000 subscribers for its television services and 15,000 high-speed Internet customers.

Overall subscriber growth was slightly better than expected, said RBC Capital Markets analyst Drew McReynolds in a note.

He noted that the company's wireless division showed a stronger momentum than he anticipated as more customers transitioned to higher-priced two-year contracts for their smartphones, rather than the three-year plans that were the industry standard before rule changes by regulators.

On the Toronto stock market Thursday, shares in BCE were trading down 13.5 cents to $48.74, while Telus was up 14 cents to $38.10.

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