Nov. 4 (Bloomberg) -- BCE Inc., the Canadian phone company that began selling Apple Inc.’s iPhone today, said the Canadian dollar’s gains are cutting its cost for the handsets.

“The reason it helps us is because our subsidy on handsets goes down -- because we buy most of our handsets in U.S. dollars,” Chief Executive Officer George Cope said in an interview yesterday.

To get the iPhone on its network, BCE buys the phones and resells them to its customers at a lower price. Cope, who became CEO in July 2008, is investing savings from more than 3,500 job cuts into the wireless business. His iPhone strategy is getting a boost from the Canadian dollar’s 14 percent gain this year against the U.S. currency.

“You’ve got the mother of all devices with the mother of all subsidies,” said Dvai Ghose, an analyst at Genuity Capital Markets in Toronto who recommends holding BCE shares. “He’s moving in the right direction, but the problem is it’s going to be very dilutive up front.”

BCE’s Bell Mobility unit will rely on iPhone monthly service fees to recoup the subsidy of about $400, or the difference between the cost and resale value, estimated by Ghose.

“Early on it’s costly. But the benefit -- the present value benefit to shareholders -- is undeniable,” said Cope, noting that carriers paid high subsidies on the first digital devices in the 1990s.

Rogers’s Head Start

Rogers Communications Inc., based in Toronto, is the biggest wireless-service provider in Canada. It already sells the iPhone, and it reported that third-quarter data revenue climbed 46 percent at its wireless unit as iPhone customers spent more on service charges.

Bell’s prices for the iPhone will start at C$99.95 ($94.09) for the iPhone 3G on a three-year contract and C$199.95 for the faster 3GS version. Telus Corp. -- Canada’s third-biggest wireless carrier, which is introducing the iPhone among five new phones tomorrow -- will charge C$99.99 for the basic model and C$199.99 for the 16-gigabyte iPhone 3GS. Rogers charges C$199 for the same 3GS. Without a contract the phone can cost C$700.

Telus has a “very substantial” list of existing customers waiting to buy the iPhone, Joe Natale, head of the company’s consumer business, said in an interview today. The device will “drive strong additions in data revenue” in the long term, he said.

Faster Web Surfing

Telus, based in Vancouver, is introducing the phones as it joins BCE in rolling out its own HSPA, or high-speed packet access, network that it says will offer faster Web surfing and data downloads. Bell, which introduced its HSPA network today, is sharing some technology with Telus to save money on operating their networks.

Apple’s worldwide share of the mobile-phone market jumped to 13.3 percent in the second quarter from 2.8 percent a year earlier, outpacing Waterloo, Ontario-based BlackBerry maker Research In Motion Ltd., according to researcher Gartner Inc. in Stamford, Connecticut.

BCE fell 37 cents to C$25.79 at 4:10 p.m. on the Toronto Stock Exchange. The stock has gained 2.6 percent this year, compared with declines of 12 percent for Rogers and 11 percent for Telus.

David Rosenberg, an economist at Gluskin Sheff & Associates Inc. in Toronto, forecast in September that the loonie, as the Canadian dollar is known, will reach parity with the U.S. dollar by the end of the year. It’s trading today at about C$1.063.

Cope said the company is focused on returning cash to shareholders through dividend increases. BCE, which reports third-quarter earnings on Nov. 12, raised its dividend twice this year.

“Our message is consistent with the investment community: Our objective is to be in a position to grow our dividend over time,” Cope said from his Toronto office.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

Last Updated: November 4, 2009 16:36 EST