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    BCE Quarterly Profit Triples; Revenue Meets Estimates  
    Bloomberg  
   

Chris Fournier

 
    February 06, 2008  
   

Feb. 6 (Bloomberg) -- BCE Inc., Canada's largest telephone company, said fourth-quarter profit more than tripled from a year earlier on a gain from the sale of its satellite unit. Sales met estimates as wireless revenue climbed.

Net income rose to C$2.39 billion ($2.38 billion), or C$2.92 a share, from C$717 million, or 84 cents, a year earlier, the Montreal-based company said today in a statement. Revenue amounted to C$4.55 billion, in line with the average of analysts' estimates compiled by Bloomberg.

BCE, which accepted a C$52 billion takeover offer in June from the Ontario Teachers' Pension Plan, is betting wireless growth will counter declines in its fixed-line business. Revenue from the mobile unit rose 8.4 percent, while BCE lost 117,000 residential fixed-line subscribers, compared with a drop of 149,000 in the same period last year.

``The bloom is still on the rose,'' Iain Grant of Montreal- based industry researcher SeaBoard Group said in an interview. He called the results ``positive'' and estimated the probability of the deal closing on time at about 85 percent.

Excluding an unusual tax impact, operating earnings per share were 46 cents, according to National Bank Financial's Greg MacDonald. That beat his estimate of 45 cents, the Toronto-based analyst said in an e-mail.

BCE rose 35 cents to C$34.90 at 4:10 p.m. on the Toronto Stock Exchange, about 18 percent less than the pension plan's offer of C$42.75 a share. BCE said in December that it expects the deal to close early in the second quarter.

Collapsing Takeovers

Today's results come after the collapse of takeovers of U.S. mortgage company PHH Corp. and student lender SLM Corp. Investors are also awaiting a decision from the Quebec Superior Court in a lawsuit brought by BCE bondholders, who claim the transaction violates the conditions of their securities. BCE denies the claims.

Teachers' intends to borrow about C$34 billion to finance the deal, according to filings. It has commitments from banks including Toronto-Dominion Bank, Canada's second-biggest lender by assets, and Citigroup Inc., the biggest in the U.S.

``We continue to recommend purchase of BCE shares,'' Toronto-based Genuity Capital Markets analyst Dvai Ghose wrote in a note after the results. ``However we do so with some trepidation and so continue to recommend hedging strategies.''

Wireless Revenue

Although BCE's addition of 195,000 net wireless subscribers missed Ghose's estimate of 210,000, he said more of those signed contracts than he had anticipated. Average revenue per wireless customer rose 3.8 percent to C$55, beating his C$54 estimate.

In the ``unlikely'' event that the buyout fell through, the shares would probably drop to C$25 to C$28 initially, Ghose wrote. They would probably rebound to about C$30 if BCE reinvested the C$1 billion breakup fee and the proceeds from the satellite unit sale in repurchasing shares, he added.

Loral Space & Communications Inc. and a company formed by a Canadian pension fund agreed in December 2006 to buy BCE's Telesat Canada satellite services unit for C$3.25 billion. The sale added $2.93 a share to fourth-quarter earnings, BCE said.

 


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