A woman uses a mobile device while walking past a Telus store in Ottawa February 19, 2014. REUTERS/Chris Wattie

(Reuters) - Telus Corp T.TOTU.N, one of Canada's three big telecom providers, said it would sell a 35 percent stake in outsourcing service provider Telus International, and plans to use the proceeds to expand its wireless and wireline networks.

Competition among Canadian telecom companies has been heating up, sparked by deals including Shaw Communications Inc's SJRb.TOSJR.N acquisition of Wind Mobile, the country's fourth-largest wireless provider, and Rogers Communications Inc's RCIb.TO C$465-million purchase of smaller rival Mobilicity.

Telus on Monday entered an agreement with rival BCE Inc BCE.TO to buy one-third of Manitoba Telecom Services' (MTS) MBT.TO post-paid wireless subscribers, after BCE completes its deal to buy MTS.

Vancouver-based Telus said on Thursday it would sell the stake in Telus International to Baring Private Equity Asia for proceeds of about C$600 million ($467.14 million), in a deal valuing the unit at C$1.2 billion.

The company also posted a lower profit due to higher costs, sagging demand in Alberta, Canada’s oil producing hub, and fierce competition for wireless customers.

Telus’s net income fell to C$378 million, or 64 Canadian cents per share, in the first quarter ended March 31, from C$415 million, or 68 Canadian cents per share, a year earlier.

However, operating revenue rose to C$3.11 billion from C$3.03 billion, helped by growth in wireless and wireline operations.

Blended churn rate, or the number of customer cancellations, in the quarter was the company’s lowest first quarter churn rate in 16 years, Telus said.