Shaw feels the competitive heat on wireline

Shaw Communications Inc. reported wireline results for the fourth quarter that analysts characterized as disappointing and the company said were the result of fierce competition from rival Telus Corp. “I think it’s clear in a competitive marketplace when you win a cycle and when you don’t win a cycle, and they absolutely won a cycle, so no excuses from our end,” Shaw president Jay Mehr said in a call with analysts, adding the company should, in hindsight, have spent more on marketing in August. Its wireline division -- the sum total of cable and satellite video, internet and phone -- lost 71,030 residential customers, compared to the 21,794 it gained in the fourth quarter of 2017. Most of those losses came from cable subscribers, 33,990 of whom left the company in the quarter, while Shaw also lost 26,160 residential landline subscribers. It reported a total of 5.68 million residential and business wireline customers, down 59,231 in the quarter. That compared to a total 25,352 gain in the fourth quarter of 2017. Canaccord Genuity analyst Aravinda Galappatthige said in a research note the cable results “disappointed meaningfully.” They follow a third quarter in which the company saw soft consumer internet performance. Galappatthige noted the "persistently soft" cable subscriber trends and downgraded the stock from Buy to Hold, meaning the company is now only expected to generate returns of between 0 and 10, versus over 10, per cent during the upcoming year, by Canaccord's metric. Still, overall wireline revenue, including consumer and business, ticked up 1.3 per cent to $1.09 billion. Wireless was a different story, with revenue up 45 per cent over the year, from $172 million in the fourth quarter of 2017 to $250 million in Q4 2018. Shaw said growth in wireless was driven by a nine per cent increase in average revenue per unit (ARPU) to $41, as well as “a significantly greater proportion of postpaid subscribers purchasing handsets in fiscal 2018, resulting in a $40 million increase in service revenue and a $38 million increase in equipment revenue compared to the fourth quarter of fiscal 2017.” The company added 85,014 customers in quarter, nearly all of them postpaid, for a total of 1.4 million at quarter end. That’s up from 1.15 million a year ago, and around double the number the company added in the fourth quarter of 2017. “The increase in the customer base reflects continued customer demand for premium smartphones combined with device pricing and packaging options, data centric plans, and the ongoing execution of the wireless growth strategy to improve the network and customer experience,” Shaw said in its quarterly results. The company doesn’t currently disclose churn, but executives said it will include those numbers in the next quarterly results. Paul McAleese, president of wireless, said on the call that while he couldn’t provide guidance, he’s optimistic about how that figure will turn out out. “I’m pleased to say that we continue to see record levels of retention performance across our wireless businesses, largely fueled by the fantastic work we’re seeing from our network team,” he said. “I can’t say enough about the improvements I’ve seen in my 18 months here. This is a completely different product experience than it was even a year ago.” That echoed comments previously made by Mehr, who told analysts in January that the introduction of Apple Inc.’s iPhones to its roster last December transformed the business. McAleese also noted the company began deploying its 700 MHz spectrum in recent weeks. “The consumer response to that was immediate and strong. So we are continuing to invest in that customer experience and it is blowing through to our churn results,” he said. Shaw reported overall revenue of $1.34 billion in the three months ended Aug. 31, up 7.4 per cent from the same quarter the previous year, which Shaw said was primarily driven by growth in wireless. Net income, however, was down $58.4 per cent to $200 million, which Shaw said was due to a bump in last year’s quarter after the sale of ViaWest. If that sale was excluded, net income would have been $51 million higher in the current quarter compared to a year earlier, it said in its quarterly results. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca

Shaw feels the competitive heat on wireline

News | October 25, 2018

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Shaw feels the competitive heat on wireline

News | October 25, 2018

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