CALGARY – A surge in wireless customers helped to lift first quarter results at Shaw Communications, the Calgary-based company said Thursday.
For the three month period ended November 30, 2017, net income jumped 28% to $114 million from $89 million in the same period last year. The increase reflects a prior period non-operating loss partially offset by lower operating income from continuing operations and higher income taxes in the current quarter.
Consolidated revenue from continuing operations for the quarter of $1.25 billion increased by 2.7% year-over-year, while operating income before restructuring costs and amortization of $481 million was down 4.6% over the comparable period.
Free cash flow for the quarter was $51 million compared to $158 million in the prior year, largely due to planned higher capital spending and lower operating income before restructuring costs and amortization.
Wireless revenue and operating income before restructuring costs and amortization of $175 million and $35 million improved 26.8% and 16.7% respectively year-over-year. The improvement in Wireless results was led by an increase of approximately 130,000 subscribers this past year.
In the quarter, Shaw added approximately 34,000 wireless subscribers, a notable increase from the 9,470 net additions achieved in the first quarter of fiscal 2017. At the end of the quarter, Shaw reported 797,141 postpaid and 384,342 prepaid customers for a total of 1,181,483 total wireless customers.
The company said that the increase in its customer base reflects the ongoing execution of its wireless growth strategy to improve the network and customer experience.
“We have created tremendous positive momentum in our Wireless business and we are committed to delivering Canadians sustainable and exceptional value and choice”, said CEO Brad Shaw, in a statement. On the back of our robust LTE-Advanced network, which is improving with every passing day, we launched our Big Gig data plans and the iPhone 8 and iPhone X to strong early demand. With continued improvements to our network and enhanced line up of smartphone devices, customers are recognizing the value proposition of our Big Gig data plans. It is increasingly clear that Canadians have been waiting for a credible wireless alternative and we are ready to deliver.”
First quarter Wireline revenue and operating income before restructuring costs and amortization of $1.08 billion and $446 million decreased 0.4% and 5.9%, respectively. The year-over-year decline in Wireline results was driven primarily by Consumer video flow through of promotions that were initiated in the second half of fiscal 2017. The current quarter also reflects increased levels of planned corporate costs relative to the comparable period.
Shaw Business continues to deliver stable results, with revenue in the first quarter of $140 million, representing a 6.1% year-over-year improvement. Growth in Business is primarily related to market share gains in the small and medium-sized businesses driven by the Smart suite of products, now including Smart Surveillance which launched in mid-December.
Wireline subscribers declined by approximately 34,000 in the quarter compared to a loss of approximately 30,000 in the first quarter of 2017. Continued Internet gains of over 17,000 in the period were more than offset by video, phone and higher seasonal satellite losses.
Consumer division subscribers for the quarter were 1,653,269 cable video subscribers (down 18,008 year-over-year), 1,878,703 Internet customers (up 17,694) and 908,113 digital phone lines (down 17,418). Satellite customers totaled 753,037, a decrease of 20,505 year-over-year.
“Given our balanced approach to Wireline subscriber growth, first quarter results were as expected as we reduce promotional activity and are more selective with retention offers, particularly with video customers", added CEO Shaw. "However, demand for our Internet products remains strong and customers continue to value our high-speed services which are available in over 99% of our wireline footprint. Over 90% of new Internet customers are taking speeds of 75 Mbps or faster and over half of those same customers are opting for Shaw’s two-year ValuePlan, showcasing the strength of our network and effectiveness of our flexible packaging options.”
Shaw’s Q1 report is available here.
