CALGARY – A surge of over 62,000 new wireless customers helped to propel third quarter revenues and profits at Shaw Communications, the company said Thursday.
For the three month period ended May 31, 2019, consolidated revenue increased by 2.7% to $1.32 billion year-over-year, and operating income before restructuring costs and amortization dipped 1.5% to $530 million. Excluding adjustments related to a $13 million retroactive roaming benefit in the third quarter of fiscal 2018 and a $15 million payment to address intellectual property (IP) licensing matters this quarter, consolidated operating income before restructuring costs and amortization increased 3.8% to $545 million.
Net income bounced back from a net loss of $99 million in the third quarter of fiscal 2018 to $229 million this period. The company said that the increase was primarily due to a lower loss associated with its investment in Corus, a deferred tax benefit associated with the future reduction in Alberta's corporate tax rate announced in May 2019, and gains on the dispositions of certain real estate holdings and minor investments in fiscal 2019.
Shaw added approximately 62,000 net Wireless revenue generating units (RGUs) in the quarter, consisting of 61,300 postpaid and 800 prepaid additions. The continued increase in its postpaid subscriber base reflects customer demand for the Big Gig data-centric pricing and packaging options, while the increase in the prepaid customer base reflects new plans that were launched in the market in early April, continued the company.
Shaw credited its continued focus on improving its customer experience through the deployment of 700 MHz spectrum resulted in an 18-basis point reduction year-over-year in postpaid customer churn to a record low 1.18%.
"Freedom Mobile maintained its strong momentum in the quarter, growing wireless subscribers and operating margin,” said CEO Brad Shaw, in the news release accompanying the financial report. “We are reaching more Canadians with our affordable data-centric plans, expanded retail and consumer friendly practices, all of which are changing the competitive landscape. The deployment of low band spectrum is significantly enhancing the customer experience and consistently reducing churn. With our successful acquisition of 600 MHz spectrum across our entire wireless operating footprint, we can continue to improve our network experience and provide affordable options for our customers."
Wireless service revenue for the three-month period increased by 22% to $178 million over the comparable period in fiscal 2018 due to the growing penetration of Big Gig data plans. Wireless equipment revenue decreased by 9% to $73 million as a higher proportion of customers elected the Bring Your Own Device ("BYOD") option compared to the prior period. Third quarter ABPU grew approximately 6.2% year-over-year to $42.30 reflecting the increased number of customers that are subscribing to higher service plans and have purchased a device through Freedom Mobile. Wireless ARPU grew 2.2% to $38.36 reflecting the promotions in the market and increase in prepaid customers.
Wireline RGUs dropped by approximately 35,100 in the quarter compared to a loss of approximately 14,400 in the third quarter of fiscal 2018. The current quarter includes growth in Consumer Internet RGUs of approximately 6,600 whereas the mature products within the Consumer division, including Video, Satellite and Phone, declined in the aggregate by 42,600 RGUs. Shaw said that it remains focused on growing broadband subscribers, primarily through two-year ValuePlans, and on attracting and retaining high quality video subscribers which supports its consumer profitability objectives.
"Our Wireline division is delivering solid and consistent financial and subscriber performance in fiscal 2019,” added CEO Shaw. “We continue to improve Consumer broadband net additions through increased speeds and innovative new products. The launch of Shaw BlueCurve is the latest way in which we are delivering more value to our customers with speed, coverage and control. Our BlueCurve platform is the foundation on which we will continue to introduce more innovations and drive broadband growth."
Click here for Shaw’s Q3 financial report.
