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(NATHAN DENETTE/Nathan Denette/The Canadian Press)
(NATHAN DENETTE/Nathan Denette/The Canadian Press)

BCE profit climbs 70 per cent Add to ...

There is an arduous grind ahead of incumbent Canadian telecom companies, but BCE president and chief executive officer, George Cope, remains confident that his, the biggest of them all, will thrive.

"We will remain competitive," Mr. Cope said on a conference call with analysts Thursday, shortly after the company posted second-quarter results that were in line or ahead of analysts' expectations.

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"Obviously, we'll react."

Despite competitive pressures on multiple fronts and serious uncertainty in Quebec, the rejuvenated company appears to be in a strong position to face the tumult. Quarterly profit was up 70 per cent from the same period last year, the common share dividend increased 5 per cent to $1.83, and crucial wireless data growth from smart phone usage soared by 45 per cent.

Mr. Cope also said Bell is repositioning its Solo Mobile brand to be a discount, urban-based unlimited talk-and-text plan - in line with Rogers Communications Inc.'s new discount brand, Chatr Wireless Inc.

But before September ends, Quebecor Inc.'s Vidéotron Ltée will in all likelihood have launched cellphone service with aggressive prices in Quebec, where Bell is based and has the most wireless market share. And other new entrants will have picked up speed.

The company also continues to lose residential and business landlines, dropping 129,147 in the quarter. Bell's strong position, however, could insulate it from the looming, near-term knocks, according to Greg MacDonald, a telecom analyst with National Bank Financial Inc.

"I think it's going to be a longer, drawn-out battle than most people like to think," Mr. MacDonald said. "There's going to be pressure. But the market understands what that's going to be."

The Street remains concerned, however, about the possibility of a price war in the Quebec market - a war that, if it occurs, could be restricted to prices within bundles of multiple services, such as TV, home phone, wireless and Internet.

Bell has already begun agitating in Quebec, offering personal video recorders - PVRs - for free for up to three years to promote its IPTV product. Vidéotron sells the device for about $500. And Vidéotron is expected to undercut competitors on wireless, partially because it discounted pricing upwards of 60 per cent in a bundle when it launched home phone service.

In an interview Thursday, Bell Mobility president Wade Oosterman said Bell's national breadth and buying power puts them at a natural advantage should the fight for market share turn ugly.

"If it becomes a bundle war, why do people think Bell won't win?" Mr. Oosterman asked. "I would bet on Bell."

But the deeper the discounting goes, the more likely Bell is to "cannibalize" itself and drive existing landline subscribers to go wireless only, said Dvai Ghose, an analyst with Canaccord Genuity. This is exacerbated by Bell and Rogers both bringing out cheap, unlimited plans on existing national networks, Mr. Ghose said, and will almost certainly lead to downward pressure on the average revenue per user - a crucial metric and one that climbed slightly for Bell in the last quarter.







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