UPDATE 3-Telus, BCE to team up on network upgrade

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By Susan Taylor and Wojtek Dabrowski

OTTAWA/TORONTO, Oct 10 (Reuters) - Telus Corp (T.TO), Canada's No. 2 phone company, said on Friday it will build a next-generation wireless network with Canada's biggest telecom company, BCE Inc (BCE.TO), as they fight for market share with rival Rogers Communications Inc (RCIb.TO).

The upgrade to high-speed packet access (HSPA) technology, which will be completed in early 2010, will allow Telus and BCE's Bell Canada unit to offer services on a wider range of cellphones and smartphones.

It is considered a transitional step before the advent of so-called "fourth-generation" technology, which allows for much faster data-transmission speeds on mobile phones. The technology lets users freely use data-intensive applications like watching movies and playing media-rich games.

"This will enable a smoother transition to a fourth-generation wireless network, using long-term evolution technology," Telus CEO Darren Entwistle said in a conference call with analysts.

The pact with BCE -- traditionally a big Telus rival -- will lower the costs of the network deployment for both companies as well as "significantly improving the economics of the investment," Entwistle said.

Aside from Rogers, Telus and Bell also face potential competition from new sector entrants following a wireless spectrum auction that wrapped up this summer. Privately held Globalive Communications acquired spectrum across the country and plans to roll out service next year.

Some analysts have raised the possibility that the crisis gripping world credit markets could make network rollouts more difficult because of tight financing conditions.