CALGARY – Shaw Communications saw fourth quarter profits drop by 44.2% despite double digit revenue gains, the company reported Wednesday.
For the three month period ended August 31, 2016, Shaw posted a net income of $154 million, well below the $276 million posted in the same period last year, which it attributed primarily to a $158 million non-recurring gain on the sale of wireless spectrum licenses recorded in the fourth quarter of 2015.
Net income for fiscal 2016 was $1.2 billion, up 40.9% compared to $880 million for fiscal 2015, driven mainly by the gain on the sale of its Media division, partly offset by various other non-operating costs and the prior year gain on the sale of spectrum licenses.
Consolidated revenue from continuing operations for the quarter and year-to-date of $1.31 billion and $4.9 billion increased 15.5% and 8.9% over the comparable periods, respectively. Operating income before restructuring costs and amortization for the quarter and year-to-date of $549 million and $2.1 billion improved 4.6% and 3.8% over the comparable periods, respectively. Excluding the results of Wireless (acquired on March 1, 2016), and the Media division (sold on April 1, 2016), revenue and operating income before restructuring costs and amortization for the quarter from the combined Consumer, Business Network Services and Business Infrastructure Services divisions were up 2.2% and down 1.0% in the quarter over the comparable period, respectively.
Consolidated free cash flow for the three and twelve month periods of $9 million and $482 million, respectively, were well below the $35 million and $653 million for the comparable periods, which Shaw said was largely due to lower free cash flow from the sale of its Media division and higher planned capital expenditures from continuing operations.
Total revenue generating units (RGUs) grew by approximately 8,000 in the fourth quarter, driven by Wireless and Consumer Internet. In aggregate, Consumer RGUs in the fourth quarter declined by approximately 37,000, an improvement over the fourth quarter of 2015 where the RGU loss was approximately 76,000.
Consumer division subscribers for the quarter were 1,671,059 cable video subscribers (down 93,464); 1,787,642 Internet customers (up 15,349); and 956,763 digital phone lines (down 70,503). Satellite customers totalled 790,574, a decrease of 21,414 year-over-year.
Business Network Services, which includes cable, satellite, Internet and phone, lost 16,556 subscribers to end the quarter with a total of 573,342.
Wireless had 1,043,288 total subscribers, comprised of 667,028 postpaid and 376,260 prepaid.
Shaw offered its fiscal 2017 guidance, which forecast operating income before restructuring costs and amortization of $2.13 billion – $2.18 billion in 2017, higher than the $2.11 billion this year.
CEO Brad Shaw said that fiscal 2016 marks “a very deliberate pivot in the strategic direction for Shaw towards long-term, sustainable growth”.
“We have entered fiscal 2017 with the necessary foundation in place to execute on our strategic initiatives”, he said in a statement. “We will continue to improve our wireline network through the implementation of DOCSIS 3.1 and use this strength to our advantage. We are currently monitoring and reviewing the results of our in-home trials of the X1 set-top box and are still on track for launching a best-in-class next generation video product. As the LTE Advanced upgrade progresses, we will combine our hybrid fibre-coax, WiFi and wireless infrastructure to create a seamless converged network that is more efficient and cost effective. We are focused on consistent and successful execution of our plan and thank our 14,000 employees who have leaned in to our strategic shift and are prepared to deliver an enhanced connectivity experience for our customers."
In a conference call with financial analysts Wednesday afternoon, company executives said it will launch the Comcast-created X1 Xfinity solution to its TV and broadband customers in certain Calgary neighbourhoods before the end of this calendar year.
