MONTREAL'BCE Inc. continued to lose ground to its rivals in the key wireless business at the start of 2007 as the company reported a "steady" overall performance in what will likely be its final quarter as a public company.

Canada's largest telecommunications company, which is on the verge of being taken private by a group headed by the Ontario Teachers Pension Plan, said Wednesday that excluding one-time costs and investment losses, its profit improved to $457 million from $420 million.

Adjusted EPS grew to 57 cents from 52 cents, topping the Thomson Financial analyst consensus expectation of 54 cents.

However, net income decreased to $258 million or 32 cents per share, down from $499 million, or 62 cents a year earlier.

Profits were cut by a $236-million charge following a CRTC decision on uneconomic expansion of broadband service to 86 small communities. The January-March results also no longer reflect contributions from Telesat, which was sold last October.

Total revenues increased by 0.1 per cent to $4.39 billion as growth at Bell Canada and Bell Aliant was offset by the loss of Telesat's contribution to revenue.

"During the quarter, we made good progress on the completion of the privatization transaction and delivered solid financial results, consistent with our plan for the year," stated CEO Michael Sabia.

He said BCE continues to expect the takeover by the Teachers-led investor group to be completed by in the current quarter, which ends June 30.

"Bell had its best operating revenue growth in over two years along with steady EBITDA growth," Sabia added. "BCE's earning per share before special items grew by 9.6 per cent."

The Bell Wireless segment had net activations of 34,000 during the quarter, up from 13,000 in the first three months of 2007. Bell Wireless operating revenues increased by 8.7 per cent to $1.04 billion.

But UBS analyst Jeffrey Fan said the segment continues to underperform.

Rival Rogers Communications (TSX: RCI) continued to gain share in the quarter, he wrote in a report Wednesday. The Toronto-based company added 97,000 post-paid customers, compared to 28,000 by BCE. BCE's EBITDA grew by only 1.7 per cent, compared to 5.4 per cent last year.

Vancouver-based Telus (TSX: T) reports its quarterly results Thursday.

Nonetheless, Fan expects BCE's privatization will proceed as planned, despite a Quebec Court of Appeal challenge by disgruntled bondholders and public concerns about leveraged buyout's financing.

"Based on the results, in our view, the business remains stable and nothing material has changed that would jeopardize the buyout from the equity sponsors' perspective," he wrote.

The Bell wireline segment had stable revenue of $2.63 billion, and continued to reduce the number of residential customers lost to cable companies and other competitors.

"In our wireline business, this is the first quarter in over two years that operating revenues have held steady," stated George Cope, president of Bell Canada and the designated successor to Sabia once the takeover is completed.

"Wireline EBITDA also showed strength with growth of 3.3 per cent based on a strong performance from our enterprise and video units along with lower labour and pension costs. In addition, significant growth in winbacks led to fewer residential line losses."

Bell invested $456 million of capital during the quarter, $85 million less than a year ago.

BCE shares gained 21 cents to $36.77 in morning trading on the Toronto Stock Exchange. Shares continue to lag the $42.74 takeout price offered by the prospective buyers.

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