iPhone Gets More Canadian Carriers

Bell Canada , the subsidiary of incumbent Canadian telecom carrier BCE Inc (BCE - Analyst Report), and Telus Corp (TU - Analyst Report) have reportedly inked agreements with Apple Inc (AAPL) to market iPhone (3G and 3GS) in Canada in November 2009. This will effectively end the country’s largest wireless carrier Rogers Communication’s (RCI - Analyst Report) exclusive distribution rights to the popular handset.

Since July 2008, Rogers Communication has been the sole Canadian carrier to market iPhone in the country as the device is compatible with the company’s GSM and HSPA (high speed packet access) based wireless networks. In contrast, both Telus and Bell Canada currently operates CDMA based networks which does not support the revolutionary smartphone.

Rogers continues to enjoy greater share of the Canadian wireless market driven by strong customer additions on a quarterly basis, given its iPhone advantage. Bell Canada and Telus remain behind in terms subscriber growth. Rogers registered net additions of 214,000 customers in first-half 2009 compared to Telus and Bell Canada ’s 159,000 and 75,000 customers, respectively.

In order to strengthen their competitive positions against Rogers , Bell Canada and Telus has joined forces to deploy 3G HSPA network which is expected to go live in November 2009. The HSPA network will deliver peak downlink speed of up to 21 megabits per second (Mbps) and is expected to address 93% of the Canadian population covering nearly 20,000 cities and towns across rural and urban areas. This network upgrade, when installed, will enable Telus and Bell Canada to launch iPhone in Canada on their respective networks.

iPhone has greater contribution to ARPU (average revenue per user) than regular handsets. Moreover, iPhone subscribers use more data services through web surfing, which will boost revenues and margins. This will offer a substaintial opportunity to Bell Canada and Telus to boost their share of the Canadian wireless market through improved customer retention.

However, the availability of iPhone through multiple carriers is expected to result in aggressive competition among the three national carriers as they aim to offer competitive monthly rate plans to win new customers for the device.