CALGARY – Despite an increase in revenue, Shaw Communications saw second quarter profits drop by 2.4%.
For the three month period ended February 29, 2016, Shaw posted net income of $164 million, down from $168 million in the prior year. The company said Thursday that the period included transaction costs associated with the Wind Mobile acquisition, higher amortization and a greater equity loss related to some of its investments, which were partially offset by higher operating income from continuing operations and higher income from discontinued operations, net of tax.
Revenue for the quarter of $1.15 billion was up 3% from $1.12 billion year-over-over, reflecting growth in its Consumer, Business Network Services and Business Infrastructure Services divisions. The improvement is primarily attributed to customer growth in both its Business Network Services and Business Infrastructure Services divisions.
Operating income before restructuring costs and amortization for the quarter of of $502 million improved 0.8% over the comparable period.
Consolidated free cash flow plunged 29.6% from $169 million last year to $119 million this quarter, largely due to higher planned capital expenditures which were partially offset by higher operating income before restructuring costs and amortization and lower cash taxes.
Shaw said that its Consumer division lost a total of 41,922 revenue generating units (RGUs) during the quarter, reflecting the loss of 14,473 phone lines with the continuing unbundling of phone services market wide, 6,002 satellite video RGUs, and 25,782 cable video RGUs.
Consumer division subscribers for the quarter were 1,720,712 cable video subscribers (down 25,782), 1,786,061 Internet customers (up 4,335) and 990,566 digital phone lines (down 14,473). Satellite customers totalled 793,059, a decrease of 6,002 year-over-year.
Business Network Services, which includes cable, satellite, Internet and phone, lost 51,495 subscribers to end the second quarter with a total of 5,853,912.
CEO Brad Shaw said that the core of the company’s business continues to show “solid results despite the economic challenges that some of our customers are facing in parts of western Canada”.
With the recent acquisition of Wind and disposition of Shaw Media, Shaw revised its fiscal 2016 guidance, predicting that its Consumer, Business Network Services and Business Infrastructure Services combined will have operating income before restructuring costs and amortization between flat to low single digit growth over fiscal 2015. The company added that consolidated capital investment for Consumer, Business Network Services and Business Infrastructure Services is expected to be $995 million.
"With Wind we have acquired immediate scale with a subscriber base of approximately 980,000, extensive spectrum, retail distribution, a wireless network that has a clear path to LTE and the opportunity to integrate that wireless network with our hybrid fibre-coax network and Shaw Go WiFi in a converged best-in-class network-of-networks," continued CEO Shaw.
"As we move through the last half of the year and into fiscal 2017, we are excited about the opportunities ahead for all segments of the business. Shaw's new asset profile has renewed our focus on growth while operational efficiencies will anchor our ability to be successful in a competitive marketplace."
