Freedom set to support older iPhones with spectrum rejig, deployment

Shaw Communications Inc. announced Thursday that it would move to redeploy existing spectrum in addition to deploying new spectrum to allow it to support older Apple Inc. iPhones — addressing a shortcoming analysts have pointed to as a limiting factor for the company. “I think you can appreciate that’s a major shift for us as we build out our LTE network,” Shaw president Jay Mehr said on a conference call with analysts following its fourth quarter earnings report Thursday, referring to its newly expanded base of support for handsets. As part of a multi-step roadmap for its Freedom business, Shaw noted that it needed to establish a handset device “ecosystem” to propel its wireless division forward. In a first quarter conference call with analysts at the beginning of the year, the company said it would at least quadruple its handset offering by the middle of the year. “We’ve come a long way and as we launch all those , I think we’ll have handset ecosystem parity,” Mehr said. To do that, it announced in one of several press releases Thursday that it would “refarm” some of its AWS-1 spectrum and deploy its recently-purchased 2500MHz spectrum from Quebecor Inc. to support the “vast majority” of LTE devices on the market today, including older iPhone and Samsung Electronics Co. Ltd.’s Galaxy models. Analysts have said that despite improvements to its network that Shaw would reap from the spectrum buys, the benefits would take time to see. It first appeared that Shaw would only support the newest iPhones because when they were announced, only the new models supported Shaw’s Band 66. Some analysts speculated at the time that the support for the new iPhones would be dampened by its lack of network compatibility with older ones, with its device range for a while being a “limiting factor” for the company. Barclays Capital analyst Phillip Huang said in a note Thursday he was “encouraged” to hear Shaw’s plan to expand support for older phones. “This should help accelerate Shaw’s market share gain in Canada’s expanding BYOD market. While Shaw’s network will still clearly be nascent vs. the Big 3 and a network sharing arrangement with is unlikely near term, we believe Shaw does not need network-parity with Big 3 to see meaningful wireless growth acceleration,” he said. Huang also noted last month that deploying almost all of its 2500MHz and 700MHz would mark a point where the company should become more aggressive on wireless. That aggression was teased last week when the company announced its “Life is a Big Gig” promotional plans, which begin offering customers 10GB of wireless data for $50. The move prompted a shrug from Rogers Communications Inc. head Joe Natale that same week, partly because he said Shaw’s network quality isn’t up to par yet. On the call Thursday, Mehr admitted the company needs stronger national distribution and to make sure customers can purchase services from Freedom at household name retailers, which will be a focus going forward. He also said that his company can't simply compete with the Big Three on pricing and packages, considering their advantage in voice networks. The network upgrades are already underway and will be completed in Western Canada by early December and early next year for the rest of Freedom’s coverage area, the company said in a Thursday press release. When it was called Wind Mobile, the company expected to just begin LTE rollout to some of its customer base by the end of last year. Also Thursday, the company announced that T-Mobile US Inc. chief operating officer Mike Sievert will join its board of directors at their annual general meeting in January. “Mike brings a wealth of wireless experience to our board, with a strong background in operations and marketing,” CEO Brad Shaw said on the call. “While Shaw will continue to chart our unique path in offering a differentiated mobile experience for our customers, Mike’s breadth and depth of hands-on experience will be an asset to us,” Shaw added. Sievert has experience with the likes of Microsoft Corp., AT&T Inc. and Etrade Financial Corp. The move prompted some analysts on the call to wonder whether there would be a change to management focus, which Mehr denied, alluding to the different dynamics and market between Canada and the United States. “He’s going to be a great asset to the board and to the family and we’re privileged to have him, but we wouldn’t see anything changing in the strategy,” CEO Shaw said. But the question isn’t without merit, as T-Mobile has been known to make radical moves in the industry south of the border. Calling itself a “renegade wireless company” in one August 2016 press release, it announced that it would make available a single plan, called T-Mobile One, with unlimited talk, text and data. The “industry-shaking move,” as it was called in the release, inevitably led to questions about throttling that nipped it in the rear that year. In a Thursday note Huang said the Sievert hire “might be concerning to some investors,” but that Barclays doesn’t think Shaw will “approach wireless as aggressively” as T-Mobile. He added in a later note that executives on the call “implied Shaw will not approach the wireless opportunity with a land grab mentality.” In the midst of the announcements, the company reported its fourth quarter earnings. For the three months ended Aug. 31, it added 29,089 new postpaid subscribers, an increase of 2,058 compared to the same period last year. By the end of the quarter, it had a total of 764,091 postpaid subscribers. It added fewer prepaid subscribers compared to last year — 11,925 compared to 12,788 in fiscal 2016 — but still ended with a total of 383,082, more than the 376,260 it had at the end of last year. Overall wireless subscribers sat at just over 1.1 million. Wireless revenues climbed 16.2 per cent to $172 million in the quarter compared to $148 million in the same period last year. Meanwhile, average revenue per user (ARPU) increased to $37.66 compared to the $37.40 it achieved in the same period in 2016. Subscriber growth was attributed to the “expanded handset lineup, simplified packaging and pricing on the new LTE-Advanced network, and targeted seasonal promotional activity,” it said in the report. On the consumer side, the company added 22,045 internet subscribers in the quarter, 11,704 more than the 10,341 it added in the same period last year. Total subscribers sat at a little over 1.86 million. For telephone, the quarter saw fewer losses (4,535) compared to the equivalent period last year, when it lost 18,942. Total landline subscribers declined to 925,531 compared to 956,763 last year. While satellite TV lost fewer subscribers (3,283) as well this quarter compared to the 6,332 lost in the same period last year, the total base still dipped to 773,542 by quarter end compared to 790,574 last year. But that was not the case for cable. The segment saw 7,567 new subscribers in the quarter compared to a loss of 22,171 last year. Total subscribers edged up slightly by 218 to 1.61 million. That was due to the strength of BlueSky TV, launched in January and running on Comcast Corp.’s X1 platform, which is also slated to be the future IPTV platform for Rogers’ and Quebecor’s Videotron. “ created tremendous value in terms of the integration of and other services being aggregated,” Mehr said on the call. Total consumer revenues for those segments in the quarter dipped 0.1 per cent to $937 million. Overall revenue increased 2.6 per cent to $1.2 billion compared to the same period last year. Meanwhile, net income increased in the quarter to $481 million compared to $154 million, largely on the back of the sale of its ViaWest data centre business. At one point in his roadmap to wireless success, Mehr noted that the company will likely seek 600 MHz spectrum. Innovation, Science and Economic Development (ISED) Canada earlier this year said it is considering setting-aside some spectrum for “new entrants,” which angered incumbents as analysts speculated that Quebecor and Shaw could be the big winners of the set-aside policy. “If we look at our business through the lens of the Big Three with all of their , there’s no question that we have to play the game differently, and you’re going to see us play the game differently,” Mehr said. “I would make the argument that Canadians don’t need a ‘me, too,’” Mehr added. “I would make the argument that Canadians need a differentiated wireless service.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Freedom set to support older iPhones with spectrum rejig, deployment

News | October 26, 2017

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Freedom set to support older iPhones with spectrum rejig, deployment

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