VANCOUVER, B.C. - Telus Corp. revenue and profit will come in lower-than-expected this year due to impacts from a weak economy and the telecom giant's increased spending on the early launch of a new advanced wireless network, the company (TSX:T) says.

Vancouver-based Telus issued lowered 2009 guidance to investors Friday while announcing a dip in both third-quarter net income and revenues, alongside a surge in capital spending year-over-year.

Telus also increased restructuring expenses as it continues to make cuts across the company.

Telus president and chief executive Darren Entwistle said the benefits of cutting costs while investing more in its network "are exceedingly clear."

"I believe Telus is clearly leading the change in Canada's wireless market by delivering exceptional client experiences though the series of major initiatives we have completed just this week," Entwistle said on a conference call Friday.

"We very much look forward to capitalizing on these developments in the marketplace."

This week, Telus launched its long-awaited HSPA (High Speed Packet Access) network, which allows faster Internet downloads of music, video and software applications.

Bell Canada (TSX:BCE), which worked in co-operation with Telus to launch the network, also announced its roll out this week.

The new network also allows Bell and Telus to start offering the Apple iPhone, a popular device that only Rogers Communications (TSX:RCI.B) could offer in Canada, until now.

Also this week, Telus started selling smartphones in its newly acquired Black's stores across Canada. Telus paid $28-million in September to buy the 113 stores across Canada from privately held Black's Photo Corp.

Entwistle said the investments are needed to improve the company's position in the highly competitive telecom industry.

He also said the company's cuts over the past several months have helped offset a decrease in revenues, particularly in its wireline business, which includes residential lines and long-distance services.

"In the past, I have been occasionally publicly critical of our organization's performance when warranted," Entwistle said.

"Within this context, I can say conclusively that I have never been as confident nor positive as to the future prospects of our company."

On Friday, Telus reported a profit of $280 million or 88 cents per share in the quarter ended Sept. 30.

That beat analysts' expectations of 82 cents per share according to figures compiled by Thomson Reuters.

For the same quarter last year, Telus earned a profit of $286 million or 89 cents.

Revenues fell 1.6 per cent to $2.42 billion in the latest quarter, which includes one month of revenues, or about $6 million, from the Black's locations.

Revenues for the same time last year were $2.45 billion.

Analysts were looking for revenues of $2.44 billion in the current quarter.

Average revenue per user, or ARPU, was $59.45 in the quarter, down from $64.14 a year ago, but up from $58.61 in the second quarter.

ARPU figures have been falling across the industry as technology changes and greater competition push down costs for services such as downloads and long distance calls.

"Telus subscribes to the view that we are in a declining ARPU environment and if we don't drive cost efficiencies we are going to experience a perpetual margin compression," Entwistle said.

But Entwistle also said ARPU levels aren't dropping as quickly as they have been in the past.

Capital spending in the quarter rose 18 per cent to $558 million, compared to $473 million last year.

Operating expenses were cut by 2.3 per cent in the quarter to $823 million compared to $804 million last year.

The company said Friday it has cut about 1,600 staff position since the end of 2008, with a current employee roster of about 26,300. That doesn't include the 700 staff under the Black's company umbrella.

The company also revised its 2009 financial guidance, following revisions in August and May.

Telus said it now expects 2009 revenue to be from $9.6 billion to $9.7 billion, which is lower than a range of between $9.7 billion to $9.9 billion issued in May.

The profit range has been lowered to $3.10 to $3.30 of earnings per share, down from a range of $3.35 to $3.55 a share in its August guidance revision.

The company will also record an additional $10 million in restructuring costs, bringing the expected 2009 total to $160 million, and increase the capital spending target slightly to $2.1 billion.

Next year's capital budget is expected to be $1.7 billion.

Total customer connections in the quarter totalled 11.9 million, a figure which was higher than a year ago due to growth in its wireless, Telus TV and high speed Internet sectors.

Free cash flow increased by $748 million from year-ago levels due to prior year payment for advance wireless services spectrum licenses.

The company maintained its current dividend pay out, which Entwistle said was "warranted" given the current economic environment.

RBC Dominion Securities analyst Jonathan Allen said in a note that he expected a "modest" five per cent increase, noting that Telus has raised the dividend at this time of year for the last four or five years.

"But alas, Telus has passed on its dividend increase this year," Allen said.

Telus did say it plans to change to its dividend reinvestment program to issue shares from treasury at a three per cent discount from the average market price.

"This could be a way to preserve cash," Allen noted.

On Friday, Telus shares closed down 37 cents at $33.61 on the Toronto Stock Exchange.

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