Feb. 14 (Bloomberg) -- Telus Corp., Canada's second-biggest telephone company, may lose the Catholic Church as a customer after becoming one of the first wireless providers in North America to offer adult content to users.

Telus ``crossed the line'' by making pornographic images and films available to users, according to the Web site of the B.C. Catholic, which cited an interview with Vancouver Archbishop Ray Roussin. That may lead him to cancel service, the archdiocese newspaper said.

Telus has added more of its own Web content after customers almost doubled spending in the latest quarter to download videos and pictures to mobile phones. Of the top 25 Web sites visited by Telus customers via their handsets in December, more than half were adult sites, Telus spokesman Jim Johannsson said.

``Adult content has been available in an unrestricted way on mobile phones for several years now,'' Johannsson said in an interview yesterday. ``The responsible thing to do is provide users an avenue to reach the content in a safe, secure and legal way.'' The company started the service last month and has added age-verification software to block minors' access.

Archbishop Roussin will meet with schools and parishes this week to decide whether to cancel services, according to Paul Schratz, a spokesman for the Archbishop. Schratz wasn't immediately able to provide details about the archdiocese's contracts.

Catholics `Unhappy'

``A number of people have contacted us,'' Schratz said in an interview yesterday. ``Speaking to Catholics in pews, quite a few are unhappy with Telus's decision and are willing to consider changing suppliers.''

A move by the Archbishop to cancel services may inspire others among Vancouver-based Telus's 10.5 million subscribers to boycott the phone company. More than a third of Canada's population of about 33 million identifies itself as Roman Catholic, according to the latest Census data.

Revenue from downloading adult content to handsets may generate $900 million worldwide by 2008, according to Toronto- based SeaBoard Group, an industry researcher.

``The market is set to explode,'' SeaBoard analyst Kevin Restivo said in an interview, adding that better browsers for handsets such as Apple Inc.'s iPhone will boost downloads. ``Telus assumes the benefits will outweigh the negatives.''

Telus's revenue per customer for wireless data, which includes downloads, grew 79 percent in the third quarter from a year earlier. That compares with 3.1 percent growth in revenue per customer in total wireless services, the company said Nov. 3.

Issue Will `Fade'

Johannsson declined to estimate how much the company makes from downloads of erotic content, or what the response has been so far. Telus charges C$3 to C$4 for a single still image or a 1-minute to 2-minute video clip. Cable and satellite companies already make C$100 million from pornographic material annually, he said.

The church's protest ``will have more of a headline impact than a monetary one,'' Troy Crandall, an analyst at Montreal- based MacDougall, MacDougall and MacTier, said in an interview. His firm has a ``buy'' rating on the shares. ``Whenever porn moves into a new medium, it becomes an issue for a short while, then fades into the background.''

Telus rivals Rogers Communications Inc. and BCE Inc. will ``likely offer this as well, once the smoke has cleared,'' Crandall said. ``They're letting Telus test the waters.''

Rogers, BCE to Compete?

``We don't talk about products before they're launched,'' BCE spokesman Mark Langton said in an interview. Rogers has ``no imminent plans'' to launch an adult service, said Jan Innes, the company's vice president of communications.

Telus has signed contracts with Canadian providers of adult material, Johannsson said. He declined to name them, citing ``competitive reasons.'' Wireless companies typically allow phone customers with browsers to download adult content from the Internet. Telus is the first in Canada to provide that type of content.

Shares of Telus rose 4 cents to C$57.63 at 4:10 p.m. in Toronto Stock Exchange trading. They have gained 31 percent in the past year.

The Vancouver Archdiocese oversees about 400,000 Catholics and about 130 parishes and schools, according to Schratz.

To contact the reporter on this story: Chris Fournier in New York at Cfournier3@bloomberg.net

Last Updated: February 14, 2007 16:12 EST