Public Mobile says keeping pace, hiking rates

TORONTO (Reuters) - Small cellphone company Public Mobile has been keeping pace with other new entrants to Canada’s wireless industry and will raise prices to try to reach profitability, analysts who were briefed by the company on Tuesday said.

The privately held company, which operates a low-cost pre-paid service in and around Toronto and Montreal, added 45,000 subscribers in the fourth quarter for a total of 199,000, analysts at BMO Capital Markets and Bank of America Merrill Lynch said.

Rival new entrant Wind Mobile had 358,000 subscribers as of September, according to parent VimpelCom, while BMO analyst Peter Rhamey estimated that Mobilicity had 187,000 customers late last year. Both operate in more cities than Public Mobile.

All three entered the Canadian mobile industry after buying spectrum in a 2008 auction in which the government set aside airwaves for new entrants to bolster competition.

The three main telecoms providers - Rogers Communications, BCE’s Bell Canada and Telus - have between 7 million and just over 9 million wireless customers each and a much higher average revenue per user (ARPU).

Public Mobile told the analysts its ARPU, a key measurement in the telecom industry, was C$25.27 a month and could be increased by data and roaming charges and rate hikes.

The company said it was raising its C$15 basic voice plan for feature phones to C$19 a month, BMO’s Rhamey said.

Reporting by Alastair Sharp; Editing by Peter Galloway