Shaw cites broadband pricing, packaging as areas to improve

Shaw Communications Inc. blamed a third quarter of soft consumer internet performance more on its own execution than on hyper-competitive activity during a conference call with analysts Thursday. Shaw’s third quarter results reflected a loss on the consumer internet side of 3,764 subscribers against a gain of 20,892 in the same period last year. That result was put candidly by Shaw executives as something the company needs to “take our medicine” and work on, even as it comes on the heels of a corporate restructuring. “We need to be more effective in the way we price and package our services, and improve our ability to target customers with more effective offers through better segmentation and spending of promotional dollars with a data-driven approach,” company CEO Brad Shaw said at the top of the call. Shaw noted factors contributing to the broadband performance included seasonal student disconnects, competitor promotions and the company’s pricing. Total consumer internet subscribers sat at about 1.88 million by the end of the quarter, which ended May 31. But president Jay Mehr said he wouldn’t overemphasize the competitive dynamic as a driver in those weaker results. “I don’t know if I would characterize it as super aggressive competitive action that changed that,” Mehr said. “We need to get better at playing the same targeted segmented game.” “I would say our competitor is best-in-class at targeting and segmentation and you saw that in the quarter,” Mehr added, referring to Telus Corp. “We were in maybe a slightly more premium pricing position on internet in the quarter than would’ve been optimal, and that was just where we were in our step-by-step plan,” Mehr said, adding there will be an adjustment to that next quarter. The rest of the wireline segment also didn’t fare too well. Cable video lost 16,332 subscribers in the quarter compared to a gain of 12,921 in the same period last year, for a total of 1.62 million subscribers. Shaw said that was partly due to subscribers moving down to smaller video packages. Landlines also declined by 13,264 compared to the 1,827 the company lost over the same period last year, for a total base of 880,007. Satellite video, however, was the only consumer segment that saw growth, increasing subscribers in the quarter by 9,066. That base stood at 757,802. Consumer wireline revenues were down 0.8 per cent to $923 million compared to last year. That was buoyed by a six per cent increase in the business segment to $141 million. The focus on cable internet represents a shift away from the normal discourse on the success of wireless — which continued for Shaw’s Freedom. The wireless division — coming off a reallocation of spectrum intended to improve the network — added 54,189 postpaid subscribers in the quarter versus the roughly 20,000 it did in the same period last year. President of Freedom Paul McAleese said the company expects to roll out its 700 MHz spectrum this summer, with an intended completion of 12 to 18 months. McAleese said nearly 25 per cent of Freedom’s base is now on the company’s Big Gig data plans, which begin at $50, higher than a traditional Freedom plan. That is pushing up the average revenue per user (ARPU), which increased $2.97 over the year to $39.84 in the quarter. “We’re winning our fair share of gross adds we’re keeping customers at record rates for the company,” McAleese said, addressing a question about the company’s churn. Meanwhile, total wireless revenues were up 53.9 per cent over the year to $237 million, including $82 million in the quarter for device revenues over the $32 million last year — a result of a large chunk of the company’s base taking up higher-end phones, such as those from Apple Inc. and Samsung Electronics Co. Ltd. The fact that only a quarter of the base are on those higher-priced plans suggests more upside for APRU is yet to come, Canaccord Genuity analyst Aravinda Galappatthige said in a Thursday note. Freedom, however, suffered a loss of 7,530 prepaid subscribers in the quarter against the loss of 111 in the equivalent quarter last year, as the base lost about 10,000 subscribers over that period for a total of 373,006. Combined with postpaid, Freedom added to the base for a total of nearly 1.32 million wireless subscribers. Galappatthige added that success in wireless can be “compromised” by lackluster cable internet results and the eroding value of Corus Entertainment Inc., which Shaw has a stake in. A Globe and Mail report earlier this month reported, citing anonymous sources, that the company was looking to sell that stake, but the company didn’t address the speculation Thursday. Shaw, however, noted that its $91 million net loss in the quarter — compared to a $133-million gain in the equivalent period a year ago — was “substantially” due to a $284 million hit it took from its investment in Corus. On Wednesday, Corus announced a dividend cut and saw its stock plummet, as it struggles with a continued decline in television revenues. All said, Shaw generated revenues of $1.3 billion in the quarter, up 6.9 per cent year-over-year. Shaw also announced a second national distributor in Walmart, which will sell the Freedom brand in 140 locations. In April, the company announced a similar national distribution agreement with Loblaws. Combined with its existing corporate and dealer stores, Shaw said it expects to have the Freedom brand in about 600 retail locations in early 2019. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Shaw cites broadband pricing, packaging as areas to improve

News | June 28, 2018

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Shaw cites broadband pricing, packaging as areas to improve

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