Shaw wireline losses are part of a strategy: McAleese

While Shaw Communications Inc. posted a substantial loss in wireline subscribers for the three months ending Nov. 30 of last year, executives encouraged those scrutinizing the numbers to cut the company some slack, and recognize the long-term strategy Shaw is pursuing to compete with Telus Corp. in western Canada. In the quarter Shaw reported losing 100,907 total wireline subscribers, a large jump from the 57,451 the company lost in the same quarter last year. The losses came across the consumer division, with 34,437 lost cable subscribers, 33,587 lost satellite subscribers, 15,068 lost internet subscribers, and 23,760 lost phone subscribers. With the exception of home phone, all the consumer divisions bled more subscribers than they did a year ago. On the wireless side, the company added 87,296 postpaid wireless subscribers, up from the 66,865 they added a year ago, as well as 13,733 prepaid wireless subscribers, for a total of 101,029 wireless adds. Shaw now posts a total of 1.92 million wireless subscribers, up from the 1.82 million they posted this time last year. Shaw's president Paul McAleese pointed toward continued promotional activity in the west, but reassured analysts that was part of a larger strategy. "The 15,000 subs that we lost last quarter didn't abandon the internet, they likely went across the street to Telus. And some of this share leakage comes from our customer retention metrics that are, as we understand them, weaker than Telus. And this is an area I'll acknowledge our competitor excels," president Paul McAleese said on a Wednesday first quarter earnings conference call. "Not all customers are created equally, right? So we have made great strides in the last year to pursue higher value customer relationships, and perhaps forego some of this lower value, lower margin stuff that is out there in the marketplace," McAleese said. "Think about the quality of what we're gaining relative to the quality of what we're losing," he said. "Understand that we're happy to make the trade for higher quality and higher return." Canaccord Genuity analyst Aravinda Galappatthige wrote in a Wednesday afternoon note that Shaw had made a "a strong case" for focussing on the profitability of those wireline subscribers, though he did add, "we think the degree of weakness in Q4 and Q1 consumer requires some monitoring." Overall revenues for the company dipped 0.9 per cent, down to $1.37 billion from $1.38 billion for the three month ending Nov. 30, 2020. Wireline revenue slipped one per cent, down to $1.06 billion from $1.07 billion, while wireless was relatively steady, dropping to $317 million from $318 million. The company's profit increased slightly to $163 million from $162 this time last year. "With a weakened economy in western Canada and then the practical impacts of COVID -- things like students returning home, not having additional lines -- most industry predictions right now suggest little to no organic internet internet subscriber growth in the west this year," McAleese said. Wireless average revenue per user (ARPU) decreased 1.3 per cent, down to $38.25 from $38.76 this time last year, but McAleese again urged analysts to look at the larger picture of Shaw's bundled options. "When you're adding new revenue of $115 for Internet, and then typically when people buy Shaw Mobile they buy them in pairs, two at a time. So adding another $50 in wireless service revenue. All of a sudden you've got $165-plus household, add some video and things like that and you get up around a couple hundred dollars of ARPU. That's all new money to us," McAleese said. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Shaw wireline losses are part of a strategy: McAleese

News | January 13, 2021

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