Freedom says ads intended to ‘stir the market,’ induce churn

An ad launched over the weekend depicting a fictitious version of the big three incumbent wireless providers gloating about high prices charged to consumers is another effort by Shaw Communications Inc.’s Freedom to rile up the industry, its president said on Tuesday. The bigger wireless providers BCE Inc., Rogers Communications Inc., and Telus Corp. have been focusing ever-more on keeping their rate of customer defections, or churn, low, which has prompted the major fourth player to once again hit the switch on what’s becoming an action-inducing marketing strategy. “We’re doing a number of things to stir the market right in the back half of the year,” Freedom president Paul McAleese said on a second-quarter conference call, alluding to the new ad campaign. Its purpose is to remind Canadians that “there are strong alternatives and better value in the marketplace. “That’s a big part of what we have to do,” he added. “We just need to make sure that our message is out there and that the availability of affordable, large data buckets is there for everyone within our service footprint.” https://twitter.com/FreedomMobile/status/1114541891318497281 In all of this, Freedom’s own churn improved. Compared to the same period last year, the company reported a postpaid churn rate of 1.36 per cent, nearly 30 basis points better than the 1.66 it posted last year. It chalked that up to the improvements to the customer experience, which includes ongoing network improvements. The company is in the midst of deploying its 700 MHz spectrum, which McAleese said will likely spill over into 2020. McAleese said that as the company’s network improves, it is seeing existing customers take up additional lines. Adding to that, the company said its distribution strategy is also improving, as more corporate and retail stores hang its brand name. Case in point, on Tuesday, Freedom announced that the company has finalized an agreement with its third national retail distributor, Mobilinq, which will carry Freedom’s prepaid offers in all of its 50 locations that will roll out later this month. The prepaid segment has been a strong focus Shaw’s competitors, including Bell, as they argue having a strong prepaid division leaves the door open for future upward migrations to the bigger pay days that come from longer-term postpaid customers. “This segment of the market has become increasingly competitive over the last several months,” Shaw president Brad Shaw said on the call. “While our priority remains to target and attract higher value postpaid customers, we can also participate more effectively in the growth of the prepaid market with attractive offers including LTE data.” For the three months that ended on February 28, the company gained 64,670 new postpaid wireless subscribers, close to 30,000 shy of the 93,508 it got in the same period last year. Its total wireless base -- factoring in the 16,887 prepaid subscribers it lost in the quarter -- sat at 1.52 million subscribers. When asked on the call about the possibility of Shaw establishing a premium wireless brand, McAleese said the company is currently “really pleased” with Freedom’s growth, covering the gamut from entry-level prepay to $60-plus subscribers. “We’ve been holding on the launch of a premium brand until such time that we’re satisfied that the network will support that in the way that we want that story to be told,” said McAleese, answering the question that has been asked many times previously. “So nothing to report other than to say that we think patience is the right approach here as we mature the network we’ll have that option to bring to market later on.” On the consumer wireline side, the company lost just shy of 29,000 video subscribers in the quarter, compared to the 17,715 it lost in the same quarter last year. Satellite video also lost more this quarter than last year, at 9,627 versus 4,301. The total consumer video base at the end of the quarter was roughly 2.2 million. Home phone lost close to 21,000 subscribers, compared to 14,842 last year, for a total base of 816,974. However, the company saw better fortunes in its internet segment, which was infused with 11,105 new customers in the quarter, compared to just 5,476 last year. The total base sits at close to 1.9 million. On the business side, the company gained 830 satellite video customers -- compared to a gain of 1,330 last year -- and increased its phone count by 5,836 in the quarter (against 4,655 last year) but lost 1,465 cable video and 1,440 internet subscribers. Put together, the business side added a net of 3,761 subscribers, shy of the 5,747 it added last year. Total company revenues declined by one per cent to $1.32 billion, while net income for the quarter was $155-million versus a loss of $175 million in the same period last year due to a restructuring. In late February, the Liberal government announced its plans to urge, in a new policy direction, the CRTC to promote affordability and consumer interests rather than focusing on market forces in its decision-making. Then just days later, the CRTC reversed its long-held position that mobile virtual network operators (MVNOs) aren’t entitled to wholesale access to wireless providers’ networks. In the wake of the moves, experts said they expected industry pushback, and it came during Tuesday’s call. “Like others in the industry, we were very surprised, if not shocked, to see the CRTC come out with their preliminary review in support of mandated MVNO,” Shaw said. “Clearly, we are absolutely opposed to this view and we’ll be participating in the comment period as to why the mandated regime is not only bad for Canadians, but also bad for the future of a sustainable wireless competition in Canada and the future of 5G in Canada.” He said the company is doing its part bringing affordable services to Canadians. “It’s going to be really hard to comment right now on how these changes are going decision making, but I can tell you we’re going to be very active and a full participant in that process.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Freedom says ads intended to ‘stir the market,’ induce churn

News | April 9, 2019

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Freedom says ads intended to ‘stir the market,’ induce churn

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