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Canadian Satellite Radio Holdings Inc., which brought the XM subscriber radio service to this country in late 2005, declared its first-quarter financial results a success Thursday even though they included a big loss as it continues to invest in building its business for the future.

The Toronto-based company, one of two satellite radio providers in Canada and the only one that's publicly traded, spent heavily during the three-month period ended Nov. 30, 2006 on marketing and other expenses ahead of the Christmas-New Year's holiday selling period.

It had a net loss of $23.9 million or 50 cents per share. Adjusted operating loss, a measure of profitability used by the company, was $12.8 million.

In the year-earlier period, which isn't comparable because it included only nine days of operations and therefore minimal revenue, the company had a net loss of $14.6 million.

On the positive side, its revenue in the first quarter reached $3.9 million and it had 147,000 subscribers as of Nov. 30, even before the holiday sales period.

"We are off to a promising second year of operations," CSR chairman and CEO John Bitove said in a statement ahead of the company's first annual meeting of shareholders, held at the Hockey Hall of Fame in downtown Toronto.

"We will continue to aggressively pursue and win market share through our pioneering initiatives and we are well on our way to achieving our goal of one million subscribers by 2010. We are also on track to achieve our goal of realizing an operating profit of $100 million by 2012."

Stephen Tapp, CSR's president and chief operating officer, told the shareholders meeting that "satellite radio has a much faster adoption rate than anything we've seen. It's on an incredible tear."

If it achieves one million subscribers by 2010 as planned, it will have more subscribers by its fifth anniversary than historically was achieved by cable, wireless phones or broadband Internet services.

"Our second goal is to achieve more than $100 million in operating profit by the year 2012. Big numbers and we're well on our way to getting there," Mr. Tapp said.

"We're proud of our first year of operation. We've built a solid base in our retail and our automotive channels and we're setting the standard for this sector in partnerships and revenue opportunities."

XM Canada has partnerships with several auto makers to have their radios - which receive signals from satellites rather than conventional broadcast signals - installed in their vehicles, including General Motors, the major Japanese car makers, and South Korea's Hyundai.

It also has a deal to distribute its signals to Telus wireless customers.

The other Canadian satellite radio services is Sirius Canada Inc., a partnership that includes the government-owned Canadian Broadcasting Corp. and Standard Radio Inc., a privately owned company.

Both Canadian services are aligned with U.S. partners, XM and Sirius respectively, that provide much of the content supplemented by Canadian programming in French and English.

In November, Sirius Canada announced Wednesday it had acquired more than 200,000 paying subscribers in its first year. It doesn't disclose its financial results to the public.

Last week, XM said it ended 2006 with 7.63 million subscribers. That was up almost 1.7 million from a year ago, but short of its most recent prediction of 7.7 million to 7.9 million. It also said it turned a profit on an operating basis in the fourth quarter.

In November, Sirius Satellite Radio Inc. - the U.S. company - reported a loss of US$162.9 million, or 12 cents per share down from US$180.5 million, or 14 cents per share, a year earlier.

Canadian Satellite Radio's operational expenses for the three-month period ended Nov. 30 included general and administrative expenses of C$4.8 million and $6.3 million for marketing.

The company said average revenue per unit, or subscriber, was $11.30 during the quarter. But had subscriber acquisition costs of $46 per unit, down from $59 in the previous quarter ended Aug. 31.

Cost per gross addition of $311 was up from $242 in the previous quarter, due to increased media spending.

CSR shares traded at $7.75, up 75 cents or 10 per cent, at the Toronto Stock Exchange.

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