This file photo shows a man using an Apple iPhone outside Apple store on Regent Street on the device's U.K. launch day in November, 2007, in London, England.

Rogers bringing iPhone to Canada

CATHERINE McLEAN,  Globe and Mail Update

Rogers Communications Inc. said on Tuesday that it has reached an agreement to bring Apple's iPhone to Canada, a move that promises to bring more growth to its cellphone business after the unit posted a 16 per cent revenue gain in the first quarter.

The wireless gains contributed to a big jump in the company's overall net income in the quarter, which rose to $344-million, or 54 cents a share in the quarter, from $170-million, or 26 cents in the year-earlier period. Profit was also lifted by a stock compensation recovery of $116-million.

Revenue advanced 14 per cent to $2.6-billion.

Rogers is benefiting from its position as the only cellphone carrier in Canada that uses the world wireless standard, GSM. As a result, it collects most of the revenue from people who use their cellphones when abroad and from visitors to Canada. The company is now the first in Canada to get its hands on the iPhone, which runs on GSM and has already been launched in the United States and Europe. Rogers didn't give any further details about when it will launch the iPhone here and at what price.

The iPhone, with its touch screen, was the most hyped cellphone launch last year. People lined up to buy it in the U.S., while some Canadians went shopping south of the border and "unlocked" the cellphone to use it at home. There was much speculation about why the iPhone hadn't yet hit Canada, including a possible reluctance on the part of Rogers to bring down its data rates as other carriers that carry the iPhone have done.

The iPhone gives Rogers an exclusive product to sell at a time when competition in the cellphone market is set to increase. Ottawa plans to auction off new wireless spectrum next month, and has reserved part of those airwaves for new entrants that hope to break into the cellphone business. The Canadian wireless market is currently dominated by Rogers and rivals Bell Mobility and Telus Corp.

"We're thrilled to announce that we have a deal with Apple to bring the iPhone to Canada later this year," Rogers chief executive officer Ted Rogers said on Tuesday in a statement. "We can't tell you any more about it right now, but stay tuned."

Rogers is the only cable company in Canada that owns its own wireless business, a strategy that has made it the "envy of its peers," Genuity Capital Markets analyst Dvai Ghose wrote in a note to clients before the results were released. Other cable companies, including Shaw Communications Inc. and Videotron Ltee are interested in launching their own cellphone services.

"The biggest threat to [Rogers] is that competitors will be successful in imitating Rogers," Mr. Ghose wrote in the note.

The addition of new customers and greater demand for data services fuelled growth at Rogers' wireless business, which climbed to $1.43-billion from $1.23-billion in the quarter. Rogers said revenue from data services for cellphones gained 47 per cent to $206-million as its subscribers visited the Internet more often, downloaded ring tones and sent text messages.

Rogers added 97,000 cellphone customers on monthly contracts in the quarter, and the average bill for these customers rose $4.75 to $72.39 a month. That was more than the 85,000 additions that Genuity Capital Markets analyst Dvai Ghose expected.

The company lost, however, 29,000 prepaid subscribers who aren't on contracts because of competition in the industry, greater than the 7,000 losses that Mr. Ghose anticipated.

Revenue also increased at Rogers' cable business, rising 8 per cent to $925-million in the quarter. The unit added 46,000 phone lines, 41,000 Internet subscribers, and 49,000 digital cable customers. Rogers didn't attract any new basic cable subscribers.

An acquisition helped revenue at the media business gain 15 per cent to $307-million in the quarter.