BCE Profit Exceeds Estimates; Company Boosts Dividend

Feb. 11 (Bloomberg) -- BCE Inc., Canada’s largest phone company, forecast earnings for this year that topped analysts’ estimates and increased its dividend after adding more mobile- phone subscribers last quarter.

Profit, excluding some costs and gains, will climb more than 5 percent this year, Toronto-based BCE said today. That amounts to more than C$2.36 ($1.90) a share, beating the C$2.12 average of estimates compiled by Bloomberg. The company also predicted “stable” revenue.

BCE raised its annual dividend payout by 5 percent. George Cope, who became chief executive officer in July, reinstated dividends and bought back shares to win over investors after the stock fell 37 percent last year. The shares slumped after the failure of a C$52 billion takeover attempt from investors led by the Ontario Teachers’ Pension Plan, Canada’s third-largest pension fund.

“It’s good to see that George Cope is in place and seems to be moving the company forward, and seems to be taking action,” Wayne Kozun, head of equities at Teachers’, said in an interview today. The Toronto-based pension fund retains an undisclosed stake in BCE. “We’re helping them focus on areas that will improve shareholder value.”

BCE is competing with Rogers Communications Inc. and Telus Corp. for customers amid a shrinking Canadian economy. Cope is cutting jobs and using the savings to invest more in the Bell premium wireless service for smart phones and the Solo budget brand. BCE will add or revamp 65 kiosks to sell Solo mobile phones this year, Cope said.

Discount Market

“The discount market for wireless has opened up and we’ve got to be playing in it,” Cope told reporters today. “In this economy, people are going to be more price-sensitive.”

BCE climbed 36 cents, or 1.4 percent, to C$25.49 at 4:16 p.m. on the Toronto Stock Exchange.

BCE lost 72,000 residential land-line customers last quarter, less than the 110,000 predicted by National Bank analyst Greg MacDonald. BCE added 117,000 net new wireless subscribers, missing MacDonald’s 158,000 estimate.

Excluding reorganization costs and other items, fourth- quarter profit amounted to 55 cents a share, compared with the 51-cent average of estimates compiled by Bloomberg.

The company reported a net loss of C$48 million, or 6 cents a share, compared with a profit of C$2.35 billion, or C$2.93, a year earlier. BCE booked a gain from the sale of its satellite unit in the 2007 quarter. In the 2008 period, the carrier incurred 47 cents a share in costs on investments and 14 cents for restructuring.

Takeover Offer

Sales were little changed at C$4.49 billion. Cope is scheduled to outline his strategy at BCE’s shareholder meeting in Montreal Feb. 17. This is BCE’s first quarter since Ontario Teachers’ and its partners abandoned their takeover offer in December.

Teachers’, Providence Equity Partners Inc., Madison Dearborn Partners LLC and the buyout unit of Merrill Lynch & Co. dropped their bid Dec. 11 after an auditor said the transaction would render the carrier insolvent. BCE is seeking C$1.2 billion in damages from the bidders, arguing they withdrew from the takeover prematurely.

-- With reporting by Doug Alexander in Toronto. Editors: Julie Alnwick, Jonathan Thaw