CALGARY – A drop in video subscribers helped to flatten first quarter profits at Shaw communications by 7.3%, the company reported Wednesday.
Consolidated revenue for the first quarter of fiscal 2015 ended November 30, 2014 was $1.39 billion, up 2% from $1.36 billion in the same period last year, while total operating income before amortization dipped to $606 million from $608 million last year.
Net income fell 7.3% to $227 million from $245 million for the same quarter last year, though the current period included higher amortization and an equity loss related to new SVoD service shomi, a joint venture with Rogers Communications, which was partially offset by lower income taxes. That said, both company CEO Brad Shaw and Shaw Media president Barbara Williams both said they are pleased with the results of the service, still in beta test mode, so far.
Free cash flow for the three month period of $193 million improved over $157 million year-over-year, primarily due to lower capital investment in the current quarter.
Effective September 1, 2014, Shaw's cable and satellite business segments were realigned into consumer and business network services. Consumer provides cable telecommunications services including video, Internet, WiFi and digital phone, and satellite video to Canadian consumers. Business Network Services, through a national fibre-optic backbone network, provides data networking, video, voice and Internet services as well as satellite video services, and fleet tracking services to North American businesses and public sector entities. Media remains unchanged, and Business Infrastructure Services, which provides data centre colocation, cloud and managed services, was created with Shaw’s acquisition of ViaWest last September.
Revenue and operating income before amortization in the Consumer division of $927 million and $405 million, respectively, dipped 1.9% compared to $945 million and $413 million for the same period last year.
Business Network Services revenue of $127 million grew 6.7% to $119 million versus the same period last year, and operating income before amortization for the quarter increased 5.2% to $61 million from $58 million.
Consolidated Consumer and Business Network Services subscribers for the quarter were 1,942,038 video subscribers, 1,944,449 Internet customers and 1,374,735 digital phone lines. During the quarter, video subscribers dropped by 15,591, Internet customers increased by 14,048, and digital phone lines dipped by 599. Satellite customers totalled 862,643, a decrease of 17,980 year-over-year.
Shaw said that its strategy is to balance financial results with maintenance of overall revenue generating units (RGUs). Consumer and Business Network Services, excluding named and wholesale customers, have 6.1 million RGUs, which represent the number of products sold to customers. During the quarter RGUs declined by 20,122.
The company pledged to continue to invest in and build awareness of Shaw Go WiFi and as at November 30, 2014, 55,000 hotspots and almost 600,000 Internet customers were registered on the network.
Quarterly revenue in the Media division dropped 5.5% to $307 million from $325 million last year, and operating income before amortization fell 13.1% to $119 million compared to $137 million last year.
Business Infrastructure Services revenue and operating income before amortization for the current quarter were $55 million and $21 million, respectively.
CEO Shaw said that the company “remained focused on disciplined and sustainable growth, customer retention and driving performance through continuous improvement” during the quarter.
"We are off to a solid start in fiscal 2015 with positive operating momentum across our businesses”, he said in a statement. “The positive change in Consumer Video – Cable and Internet net growth year-over-year reflects the shift in the competitive dynamic in Western Canada. We continue to make decisions and launch initiatives driven by the imperative to bring quality, reliability, innovation and value to the customer and viewer experience.”
