Canada Lends $265M to Telefónica for Bulk BlackBerry Purchase

by Istvan Fekete on April 9, 2013

The Canadian government is helping both a Spanish telecommunications company and BlackBerry with $265 million credit to purchase BlackBerry handsets and related services.

Export Development Canada (EDC) has extended the loan to Telefónica, which is understood by the Crown corporation to be a helping hand to foster a stronger relationship between the two companies.

“EDC’s financing is really about making the transactions between BlackBerry and Telefonica easier, helping to enhance and broaden the relationship between these two major global players,” said EDC regional vice-president Lewis Megaw, who is responsible for Africa, Europe and the Middle East.

EDC, which provides taxpayer-backed loans to companies across the globe to enable access for those companies to purchase Canadian goods and services, announced the $265 million short-term working capital facility for the Spanish Telefónica in a statement issued last week.

The loan was granted to facilitate BlackBerry market share growth within Telefónica, according to the EDC statement.

Backed by such a loan — which has the backing of the Canadian government — Telefónica ensures that it has sufficient funds to make the purchase, although they can also minimize the risk to the buyer by limiting the amount of money provided up front.

EDC said the facility “just makes the purchase [of phones and services] and related lending easier, quicker and more efficient for all parties”, adding: “There appears to be a need for financing for [Telefónica] at this time.”

Telefónica was a Spanish state-run monopoly and has grown to be the world’s fifth-largest mobile network operator, building a presence in 24 countries. Its revenue was estimated at $82 billion in 2011.

However, the current economical situation in Spain hasn’t helped Telefónica’s position much, and especially its revenue stream. Its latest quarterly earnings report showed a profit shrinkage of 82% with European operations dropping, but those in Latin America going up.

The EDC loan comes as BlackBerry launches pre-sales of its next handset, the BlackBerry Q10 in the United Kingdom. Carphone Warehouse has begun assessing customer interest in the latest handset, which is said to be going on sale in May.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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