CALGARY – Despite an influx of new wireless customers, Shaw Communications posted a second quarter net loss related to its voluntary departure and restructuring programs.
For the three month period ended February 28, 2018, the company said its net loss of $164 million “substantially reflects” $417 million restructuring related costs recorded during the period due to its Total Business Transformation initiative that will see some 3,300 – or about one quarter of its current workforce – leave the company within the next 18 months. Approximately 1,200 are scheduled to depart during this fiscal year. Shaw posted a $150 million profit in the second quarter of 2017.
Led by a “breakout performance” in its wireless division, consolidated revenue from continuing operations for the quarter of $1.36 billion jumped 12.4% year-over-year, while operating income before restructuring costs and amortization for the quarter of $501 million was virtually flat when compared to $503 million in the same period last year.
Shaw said Thursday that it added 89,702 net wireless subscribers this quarter, up from 33,427 a year earlier, driven by demand for the iPhone, which it began offering in December, as well as its Big Gig data plans.
Total wireless revenue of $290 million skyrocketed 106% year-over-year as equipment revenue of $148 million compared to $24 million in the second quarter of fiscal 2017, and service revenue improved 21% to $142 million. Wireless operating income before restructuring costs and amortization of $36 million improved 24% year-over-year, primarily due to the growth in subscribers and higher average revenue per unit (ARPU), partially offset by incremental costs from higher subscriber loading in the period and margin pressure from significantly higher equipment sales.
“Our strong second quarter results clearly show that Canadians have a demand for a truly competitive wireless option,” said CEO Brad Shaw, in a statement. “Our strategy to grow our Wireless business has been simple: create a wireless provider that offers fairness and value to Canadians and that respects people’s desire to connect when they want, how much they want, and on the iconic devices they want.”
Shaw is also expanding its distribution channels after finalizing an agreement that will see Freedom Mobile handsets and service plans in approximately 100 of Loblaws’ ‘The Mobile Shop’ locations starting this month.
Wireline subscribers fell by approximately 25,600 this quarter compared to a loss of approximately 6,900 in the second quarter of 2017. Internet gains of approximately 5,500 in the quarter were more than fully offset by video, phone and satellite losses, the company said.
Consumer division subscribers for the quarter were 1,635,554 cable video subscribers (down 17,715 year-over-year), 1,884,179 Internet customers (up 5,476) and 893,271 digital phone lines (down 14,842). Satellite customers totaled 748,736, a decrease of 4,301 year-over-year.
Second quarter wireline revenue and operating income before restructuring costs and amortization of $1.07 billion and $465 million remained flat and dipped 1.9%, respectively. While revenue held flat, the year-over-year decline in wireline operating income before restructuring costs and amortization continues to be impacted by a challenging consumer video environment, including a declining customer base and a general shift into lower priced video packages. The decline in video and phone subscribers more than offset the positive impact of continued Internet growth.
Shaw Business saw second quarter revenue rise 5.3% year-over-year to $140 million.
“Our company is at a pivotal moment and we are solidly committed to our long-term growth strategy to capitalize on efficiencies, streamline processes and improve our business through the Total Business Transformation initiative”, added CEO Shaw. “Our teams of dedicated people are working every day to enhance our customers’ experiences – by building on the strengths and potential of our Wireless operations while creating an operating model in our Wireline business that allows us to improve and streamline our service.”
Click here for more on Shaw’s Q2 report.
