BUSINESS

BlackBerry benefits from loan between Export Development Canada, Vodafone

12/16/2014 07:28 EST | Updated 02/15/2015 05:59 EST
TORONTO - BlackBerry (TSX:BB) is getting a major boost from Export Development Canada, as part of US$850 million in financial assistance being given to European telecom giant Vodafone.

The Crown corporation has struck a five-year loan agreement with the telecom company, which includes a commitment of $750 million to BlackBerry's handsets, software and support services.

"It's right across the board, so they'll be buying everything from BlackBerry," EDC spokesman Phil Taylor said in an interview on Tuesday.

The announcement comes as BlackBerry prepares to launch the Classic, an updated version of its popular older keyboard smartphones, on Wednesday. The Waterloo, Ont-based company is also slated to report its third-quarter financial results on Friday.

EDC provides financing to international companies to help promote Canadian goods and services, or other international relationships.

The loan to Vodafone includes $100 million dedicated to "corporate purposes" supported by the EDC, which include making business connections with Canadian supply chain companies that match where Vodafone wants to grow its business, Taylor said.

It is the second time the EDC has loaned money to Vodafone. In 2012, the London-based telecom provider received a $750-million loan that was recently repaid by the company, Taylor said.

Last year, Spanish telecom company Telefonica was loaned 200 million euros, or about C$265 million, by the EDC to buy BlackBerry phones and services.

Vodafone is a longtime partner with BlackBerry, carrying its phones during its early rise to fame in the early 2000s. It operates in 26 counties and has 438 million mobile customers.

The loan to Vodafone provides BlackBerry with a boost of confidence as chief executive John Chen works to turn around the smartphone company, which has fallen out of favour in the consumer market.

BlackBerry has faced an onslaught of competition for its longtime business customers from the likes of Apple, Samsung and other larger companies.

Last month, BlackBerry announced it would partner with Samsung to make its mobile security technology available for the Android operating system next year. The security offering will be made available through Rogers in Canada and Vodafone in the UK.

For the third-quarter, analysts are estimating BlackBerry generated about US$925 million of revenue, which would be down about 22 per cent from the comparable period last year.

According to data compiled by Thomson Reuters, analysts estimate BlackBerry will have reduced its third-quarter net loss to about five cents per share on an adjusted basis — an improvement compared with a year-earlier loss of 67 cents per share.

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Note to readers: This is a corrected story. A previous version spelled Vodafone incorrectly.