Current versions of Apple iPhones are not compatible with Freedom Mobile’s s new LTE network, but a trio of new smartphones being introduced by Apple on Tuesday are expected to change that.Spencer Platt/Getty Images
For Freedom Mobile, Apple Inc.'s annual iPhone unveiling will be about more than whether you can unlock the device using facial recognition or recharge it wirelessly.
The Shaw Communications Inc.-owned wireless carrier is putting the finishing touches on a new LTE (long-term evolution or 4G) network. However, the company is using radio waves in a frequency not compatible with many devices, including current versions of the iconic iPhone.
Apple is expected to introduce a trio of new smartphones Tuesday, including, according to reports, two updates to last year's iPhone 7 and a brand new device that could be called the iPhone 8 or be dubbed something entirely different. Most important for Freedom is that at least some of Apple's newest devices are expected to work on the small Canadian carrier's LTE network.
This might not lead to an immediate spike in sales – the newest iPhones will be pricey, which is not in line with Freedom's marketing toward consumers looking for a cheaper wireless alternative. But it would be a particularly symbolic piece of a puzzle that is slowly coming together for the carrier, making it better able to take on the Big Three national carriers, Rogers Communications Inc., BCE Inc. and Telus Corp.
Freedom, which operates mainly in urban areas in British Columbia, Alberta and Ontario, has 1.1 million customers, compared with the combined 28 million of the Big Three. But after a year and a half of owning Freedom (formerly Wind Mobile), Shaw is getting more aggressive, spending $430-million this summer to acquire new airwaves and selling its data centre business, ViaWest, to free up more cash for its wireless business.
"There are a number of factors that will ultimately determine Freedom Mobile's ability to compete in the Canadian wireless market. Right at the top, in our view, is management execution. Next are network quality and devices," Scotia Capital Inc. analyst Jeff Fan wrote in a report to clients last week.
"Network quality is a gradual process that will occur through 2018. Devices, on the other hand, will likely get an important boost from Apple next week," he added.
Mr. Fan said two things to watch out for in the Apple announcement are whether Freedom will have an agreement in place to sell iPhones (to date Apple has not directly authorized it to sell the devices) and how many earlier-generation iPhones will soon work on band 66, the name for the type of spectrum Freedom used to build its LTE network.
The iPhone 8 (or otherwise-named newest device) is expected to include a chip set that supports band 66, but Mr. Fan notes that press speculation suggests it will cost between $1,000 (U.S.) and $1,200 and would be even more expensive in Canadian dollars.
"For Freedom, we believe it would be more important that Apple updates previous iPhone versions with band 66," he said. "This would be a more positive event for Freedom because older versions of the iPhone are relatively inexpensive and would be a better fit for the customer base."
It's not all about the iPhone, either. Freedom has not been able to attract many customers looking for "bring your own device" deals because its LTE network is not compatible with many newer smartphones, limiting potential subscribers to its more congested 3G network. But eventually, as it deploys spectrum in new frequency bands that it acquired this summer from Quebecor Inc., Mr. Fan says Freedom's LTE network will work with more devices, including popular Samsung, LG and Google smartphones.
"We estimate that the addition of multiple iPhones with band 66 and the ability to cater to BYOD subscribers could expand Freedom's addressable market by over 12 million," he said, noting that there are about 30.7 million wireless customers in total in Canada, making that expanded market quite significant.
Macquarie Capital Markets analyst Greg MacDonald agrees that Freedom could be getting closer to overcoming its struggles with a limited device lineup.
"While the lack of compatible devices for Freedom's band 66 remains a hurdle to broader adoption, recently launched compatible devices, such as the [Samsung] Galaxy Note 8 and possibly the iPhone 8, could potentially be a catalyst for subscriber growth in [the second half of its fiscal year, which ends Aug. 31, 2018]," he wrote in a report to clients last week.