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Tuesday, July 29, 2008, 09:00 am PT (12:00 pm ET)

Rogers commits to purchasing $150M in iPhones from Apple

Rogers Wireless said Tuesday it wasn't expecting the opportunity to market the iPhone to its Canadian customers this year, but jumped at Apple's sudden offer with a commitment to purchase at least $150 million worth of the handsets.

Company president Nadir Mohammed made the revelation during a conference call covering Rogers' fiscal second quarter results for the three-month period ended June 30, in which the carrier said it earned C$301 million, or 47 cents per share.

"We didn't anticipate that we would launch that device under any model this year," he said.


Mohammed noted that demand for his firm's usual array of handsets "slammed on the brakes" on June 9th, the same day Rogers announced plans to begin selling the Apple phone the following month.

Subscriber interest in the iPhone eventually led Rogers and Nokia to half the price of Nokia's similarly-equipped 8GB N95 handset to match the 8GB iPhone's $200 price tag in a bid to re-stimulate demand.

Mohammed also acknowledged that the discount Rogers is offering on each iPhone is the largest in the company's history. Still, Apple's approach is said to be "highly, highly attractive" given that the carrier expects the iPhone's higher average revenue per user to more than make up for its initial subsidy investment.

The executive said non disclosure agreements with Apple prevent him from revealing the number of subscribers who switched to the carrier to obtain an iPhone compared to those who simply upgraded. He did, however, reveal that Rogers' agreement with Apple included an up-front commitment to purchase $150 million worth of the new 3G handsets.

Assuming an average non-subsidzed price of $450 per handset, Rogers would have agreed to purchase approximately 333,000 of the new iPhones.

The carrier said it's prepared to expand upon that momentary commitment as necessary.