BlackBerry’s Telefonica deal is another large order, not a government handout

This week, Export Development Canada announced it would loan European carrier Telefonica $256 million to buy BlackBerry smartphones and services.

With BlackBerry’s perilous position in the global smartphone race having been more than well documented over the past several years, a casual observer could be excused for thinking that the deal is some form of government handout. But it isn’t, not by a longshot.

Export Development Canada, in fact, puts money in the pockets of Canadians. From their 2011 annual report:

“EDC is financially self-sustaining and does not receive parliamentary appropriations. The income that we generate is applied directly against Canada’s fiscal accounts and it strengthens our capital base. In the first quarter of 2011 we paid a dividend of $350 million to the Government of Canada. We ended the year with a strong capital position of $10.8 billion, which makes us more resilient, with greater capacity to help Canadian exporters and investors navigate the uncertainty and volatility in the current trade environment.”

EDC has 244 active financing arrangements with major buyers around the world, including with India’s Tata Motors, Brazilian energy giant Petrobras, Mexico’s state-owned petroleum company PEMEX and China’s transportation specialist, Noble Group.

The entity acts as a matchmaker of sorts, introducing foreign buyers and state-owned entities to Canadian suppliers. In 2011, it brought in $3.3 billion in new contracts to 871 Canadian exporters. EDC has become a vital link between Canada and emerging markets.It says that in five years, emerging markets could account for 20% of all Canadian exports.

Emerging markets have been a beacon in the storm for BlackBerry, as its U.S. market share fell sharply since the introduction of the iPhone. BlackBerry is still a top brand in markets like Indonesia, the U.K., UAE and throughout Africa. CrackBerry’s Chris Umiastowski estimates that the EDC deal probably means an order of between 500,000 and 700,000 devices from Telefonica, whom he notes have a big presence in Latin America.

In March, BlackBerry has just announced that an unnamed partner, later revealed to be Verizon distributor Brightstar, had purchased a million BlackBerry 10 smart phones. The order, said BlackBerry, was the largest-ever single purchase order in its history.

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