UPDATE 2-MTS profit down despite gains in wireless, Internet

(Adds details on Bell Mobility, stock price)

TORONTO, Aug 11 (Reuters) - Canadian regional communications firm Manitoba Telecom Services (MBT.TO) reported a lower quarterly profit on Monday even as it cut costs and had strong growth in its wireless, high-speed Internet and digital television services.

MTS said it earned C$38 million ($35.5 million), or 58 Canadian cents a share, in the three months ended June 30. That was down from a profit of C$57 million, or 88 Canadian cents a share, in the same period a year earlier.

Earnings from continuing operations rose to 81 Canadian cents a share from 79 Canadian cents a share a year earlier.

MTS also reported annualized cost reductions of C$20.1 million at the end of the second quarter, already hitting its 2008 target of between C$20 million and C$30 million.

The company had hoped to be a big bidder in Canada's wireless spectrum auction, but those plans were dashed when a consortium made up of MTS and a pair of private equity backers fell apart in late May -- just days before bidding was set to begin.

MTS, which already has a wireless presence in its home province of Manitoba, said at the time that intense negotiations among the group's members stalled over a handful of key issues.

However, the company still bought enough spectrum to cover 1.2 million people in Manitoba for about C$41 million, it said on Monday.

The company said it was moving some of its wireless needs away from BCE Inc's (BCE.TO) Bell Mobility to new suppliers and to its own platform. It said the costs of moving away from Bell as well as costs related to the spectrum auction were C$10.3 million in the quarter.