CALGARY – While Shaw Communications reported a 4.3% increase in first quarter profits, it also lost close to 30,000 cable customers for the period ended November 30, 2013.
In a media briefing on Tuesday afternoon, CEO Brad Shaw blamed the customer loss on promotional activities staged by an “aggressive competitor”.
“We have a 98% overlap of IPTV within our market with Telus. I think when you look (at) North America, we have the biggest overlap from a competitive point of view”, he said. “If we wanted to go out this quarter and get 80,000 revenue generating units, we could certainly do that, but there’s a financial impact to that and we’re very sensitive to that and so we’re finding the balance… I think at the end of the day, you never like to lose a customer, but I think in our strategy we’re focused on the mid- to long term to where we need to go.”
First quarter consolidated revenues grew 3.3% to $1.36 billion from $1.32 billion last year, while consolidated operating income before amortization increased 1.2% to $608 million over $601 million. After adjusting for the net impact of fiscal 2013 acquisition and disposition activity, operating income before amortization was up 2.0%.
Net income for the quarter was $245 million, up 4.3% compared to $235 million for the same period last year, which the company attributed to improved operating income and lower interest expense which were partially reduced by higher income taxes. Free cash flow declined to $157 million from $244 million year-over-year primarily due to increased capital investment and higher cash taxes.
Revenue in Shaw’s cable division was $844 million, up 4% over $809 million in the first quarter of fiscal 2013. Driven by rate increases and lower promotional activity, the increase was partially reduced by expense increases including employee-related amounts and higher programming. After the loss of 29,619 customers , Shaw Cable ended the quarter with 2,010,628, and gained 2,746 Internet customers for a total of 1,893,252. Digital phone lines increased by 1,351 to 1,361,311 at quarter end.
Satellite revenue of $218 million for the three month period was up 1.9% compared to $214 million in the same period last year. Revenue growth at Shaw Direct, primarily due to rate increases, was more than offset by higher expenses including operating costs related to the new Anik G1 satellite, employee-related amounts, and programming expenses. Shaw Direct lost 9,323 customers this quarter to end the period with 894,242.
Over at Shaw Media, revenue before amortization in the quarter was up 2% to $325 million over $319 million recorded in the same period last year. The company said the increase was primarily due to the favorable impact of a retroactive adjustment in Global’s share of royalties for distant signal retransmission from 2009 – 2013. Improved subscriber and other revenues in the current quarter were reduced by lower airtime revenue and higher employee-related costs, and offset by lower advertising and promotion costs.
“Our performance was driven by growth in our commercial business, discipline around customer acquisition, and strength in our Internet business”, added CEO Shaw, in a statement. We are continuing to make investments in the customer experience, brand, and residential and commercial infrastructure. These further increase the value of our offerings and simplify the ways our customers engage with us.”
