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Telus Corp. slashed its quarterly dividend by more than half yesterday, saying the widely expected move would free up cash to push its wireless and Internet strategies and drive growth at Canada's second-biggest telecommunications company.

The company also posted better-than-expected third-quarter results, which sent its shares up 12 per cent on the Toronto Stock Exchange.

President and chief executive officer Darren Entwistle said the dividend cut was in shareholders' best interests.

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"We believe that long-term shareholder value can be created by investing a greater proportion of internal cash flow into the many opportunities in telecommunications," Mr. Entwistle said in a conference call.

He said those opportunities include launching "state-of-the-art" Internet data centres and potentially buying companies that fit with Telus's overall expansion strategy.

Telus said yesterday it would cut its quarterly dividend to 15 cents a share from 35 cents. Before the cut, Telus stock's yield was 7.1 per cent for non-voting shareholders and 6.7 per cent for voting shareholders, according to presentations made by the company yesterday.

By comparison, at yesterday's stock prices, BCE Inc. shares had a yield of 3.3 per cent; Manitoba Telecom Services Inc. yielded 2.1 per cent; and shares of AT&T Corp. had a yield of 0.9 per cent.

Telus, which has been pushing out of its conventional turf in Alberta and British Columbia to go after market share in Ontario and Quebec, yesterday reported a big jump in profit, owing largely to the impact of some divestments on the bottom line.

For the three months ended Sept. 30, the company earned $585.8-million or $1.96 a share compared with earnings of $161-million or 68 cents during the same period the year before.

Telus recorded a $551.8-million gain on the sale of two businesses for the quarter, and said divestment proceeds would climb to $1.2-billion for the year.

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However, core earnings -- earnings before discontinued operations, amortization, restructuring and refinancing -- dropped by 42.1 per cent to $87-million from $151-million. Core earnings per share dropped by 54.7 per cent from 64 cents to 29 cents. Analysts surveyed by Thomson Financial/First Call were expecting core or operating earnings of 19 cents.

But the company raised its core earnings per share estimate for the fourth quarter to 85 cents from 75 cents.

"Although we met Street expectations, we can and must do better," Mr. Entwistle said.

For this year, Telus said it expects revenue of $7.1-billion to $7.3-billion, unchanged from the previous outlook issued in July.

For the nine-month period, Telus reported a profit of $496.8-million or $1.68 a share on sales of $5.3-billion, compared with a profit of $488.4-million or $2.05 on sales of $4.4-billion during the same period the year before.

Telus said a network sharing agreement signed earlier this month by Telus Mobility and Bell Mobility would avoid duplicating services in rural areas, and lead to capital expenditure savings of $800-million.

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Mr. Entwistle said operating highlights for the quarter included an agreement announced earlier this month between Telus and Microsoft Canada Co. to provide voice over Internet services. The new system will be included with the Windows XP operating system, which was launched today.

The company said its wireless business increased, with the number of subscribers climbing 21 per cent to 2.42 million. Telus lowered its forecast of new wireless subscribers from an upper range of 500,000 for the year to between 400,000 and 440,000, owing to an "uncertain economic climate" in Canada.

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