Shaw reports boost in profit, slight rise in revenue for Q2

Shaw Communications Inc. reported an increase of 1.8 per cent in revenue Wednesday for its second quarter of the year, totalling nearly $1.39 billion for the period ending February 28—not long before it was announced Rogers Communications Inc. intends to acquire the company for $26.2 billion. In its results, which Shaw said do not include any costs or other financial impacts of the proposed acquisition, Shaw indicated revenue was up by $24 million from about $1.36 billion in Q2 2020. It said it brought in $217 million in profit, a spike of 29.9 per cent from the second quarter of 2020 in which it made $167 million. Revenue in the consumer division decreased by $10 million or 1.1 per cent “as the growth in Internet revenue was offset by declines in video, satellite and phone subscribers and revenue,” Shaw said in its results. Business revenue was $145 million, an increase of $1 million or 0.7 per cent. “Today, we are on the cusp of a new technological era, with 5G representing limitless opportunities; however, there are significant investments required to fully capitalize on all of its potential,” company CEO Brad Shaw said in a statement on the quarter. “Under a combined Rogers and Shaw entity, we will enable the scale, assets and capabilities to accelerate unprecedented investment, to help close the connectivity gap faster in rural, remote and Indigenous communities, and to deliver new technology and more choice for consumers and businesses, more quickly than either could achieve on its own,” Shaw stated. If the transaction is delayed or not completed, Shaw—which did not hold a conference call for this quarter—reported that its management’s attention could be drawn away from its day-to-day operations. Shaw has also elected not to take part in the upcoming 3,500 MHz spectrum auction and, if the deal isn’t completed, it may face adverse effects by not participating, it said. “If the Transaction is not completed, the inability of the Company to participate in any wireless spectrum auction and to acquire licenses thereunder could have a material adverse effect on the current and future operations, financial condition and prospects of the Company,” it said. Executives for Shaw and Rogers had previously declined to say anything about their plans to handle the spectrum auction, or whether or not they planned to hold onto Shaw’s previously acquired spectrum. Even more uncertainty could stem from the potential for a federal election, Shaw said, which would possibly have an impact on the timing and outcome of regulatory reviews into the Rogers purchase. The company said it may also be required in some circumstances to pay a termination fee of $800 million to Rogers if the deal is not approved, “the result of which could have a material adverse effect on the company’s business, financial position and results of operations and its ability to fund growth prospects and current operations.” Shaw’s wireless division contributed $336 million to its overall revenue, an increase of 11.3 per cent over the same period last year. The company brought on a slew of new customers in the latest quarter, including 82,297 new wireless customers—more than the 51,000 it gained in Q2 last year—causing wireless service revenue to grow by 8.5 per cent to $218 million. The company said average revenue per user (ARPU) in that category decreased 4.2 per cent compared to last year, down to $36.82. The majority of Shaw’s revenue comes from its wireline services. In the second quarter, it brought in $1.05 billion, down by just 0.8 per cent. Shaw saw wireline subscriptions decline by about 66,000 in the latest quarter, compared to its loss of around 50,000 in the same quarter last year. The majority of those, 65,848, were home customers rather than businesses. “The company continued to experience a reduction in overall wireline subscriber activity, an increase in wireline network usage as well as extended peak hours, increased demand for wireless voice services, a decrease in wireless roaming revenue, customer payments substantially in-line with historical trends, and an increase in credits provided for, as well as the reduction or cancellation of Shaw Business customer accounts,” it reported. Meanwhile, capital expenses rang in at $250 million, 9.4 per cent or $26 million lower than the previous year. Wireline spending was $100 million, a 12.4 per cent increase of $11 million, the company reported, while wireless spending went up by $18 million to $71 million due to “costs associated with spectrum deployment and investments related to our network.” Shaw said it’s focusing on “the continued deployment of 700 MHz spectrum, 600 MHz spectrum, LTE and small cells as well as enhancements to the back-office systems, new retail locations and other corporate initiatives.” It reported that the financial impacts from COVID-19 in the second quarter were not material, however, it said “the situation is still uncertain in terms of its magnitude, outcome, duration, resurgence and/or subsequent waves. Consumer behavior impacts remain uncertain and could still change materially, including the potential downward migration of services, acceleration of cord-cutting and reduced ability of customers to pay their bills, all due to the challenging economic situation.” - Reporting by Hannah Daley at hdaley@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca

Shaw reports boost in profit, slight rise in revenue for Q2

News | April 15, 2021

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Shaw reports boost in profit, slight rise in revenue for Q2

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