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Telus Corp. T-T , Canada's second-largest telecommunications company, reported a 45-per-cent drop in fourth-quarter profit Friday, driven down partly by the economy and partly by huge investments in network infrastructure.

The Vancouver-based telecom provider reported profit of $156-million, down from $285-million last year, with earnings per share of 49 cents, both down slightly more than 45 per cent since the end of fiscal year 2008.

Operating revenue was also down slightly to just over $2.4-billion, hit by a decline in voice services, which continue to drag on revenue from wireless services and growth in data packages.

“There is no question that the last year was a challenging one economically, but also one where we progressed game-changing capital projects and made significant investments in operational efficiency to improve our cost structure,” Telus president and chief executive officer Darren Entwistle said in a release.

One of the most significant costs of the last year would have been the expensive build out of its new, national network with BCE Inc., which launched in November.

Wireless revenue increased by 3.1 per cent over all and the company added 122,000 net new subscribers, 18 per cent lower than last year and below analysts' revised expectations of around 135,000.

Maher Yaghi, an analyst with Desjardins Securities, wrote in a note that the results “were not as impressive as last week's BCE results, but were mainly in line with expectations.”

“We continue to believe Telus is attractively valued and will soon begin capitalizing on investments made in wireless (HSPA network, smart phones) and wire line,” Mr. Yaghi said.

The company was hit by a number of trends now plaguing the industry's bottom line. People continue to drop their land line phone connections in favour of wireless connections, which is continuing to erode one of the most stable sources of revenues for companies like Telus and BCE. The company said there were “a large number of disconnections” in its land line business, which continues to be hit by weak spending by businesses in Canada.

Telus also reported a drop in average revenue-per-user, or ARPU, of 7.7 per cent, a reflection of wireless subscribers talking less on the phone, either because of recessionary caution or because they are substituting cheaper texts and e-mails for conversations.

Telus's wireless data revenue increased by $40-million to $243-million for the quarter, as people opt for more expensive smart phones, like Apple Inc.'s iPhone 3GS.

The results were slightly below analysts' expectations, but the company said its performance was in line with its past guidance.

Telus said the next year should see it reap profit from the investments, and widespread cost cutting, that took place in fiscal 2009. However, 2010 will in all likelihood continue to be challenging for large telcos as new wireless entrants launch and eat into the incumbents' margins. BCE, which reported relatively robust fourth-quarter revenue growth last week, offered a “conservative” guidance for the year ahead.