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Shaw says wireless revenue up in Q1 but phone and video revenues down

CALGARY — Shaw Communications Inc. says intense competition in the wireless space is having an impact on subscriber numbers but it continues to see revenue growth in the segment. 

“The pricing environment was extremely aggressive, as it has been since the incumbents’ launch of the unlimited plans last summer,” said CEO Brad Shaw on an earnings call.

The Calgary-based telecom company had a net loss of 9,000 prepaid subscribers, and saw postpaid turnover, or churn, rise by 0.22 percentage points in the last quarter even as it had net addition of 67,000 subscribers in the segment. 

Subscriber numbers were in flux as major telecoms rolled out a series of aggressive promotions starting on Black Friday and continuing through the holiday season, including “desperate” programs to win back customers, said Paul McAleese, president of wireless.

“It is as competitively intense right now, and has been for the last two months, as I’ve ever seen it,” he said.

He pointed to much larger handset subsidies, massive discounts on second lines, expensive gift purchase bonuses and airtime credits as some of the promotions major telcos have rolled out to win customers.

Shaw wireless revenue rose 18.1 per cent in its first quarter of 2020 despite the increased competition and the added strain of contracts for its first wave of iphone users running out in the quarter.

Overall revenue in the quarter ending November 30 was $1.38 billion, up from $1.35 billion last year, as the increased wireless revenue helped offset declines in some of its non-wireless consumer segments including in video, satellite and phone subscribers.

Net income came in at $162 million or 31 cents per share for the quarter ending Nov. 30, down from $186 million or 36 cents per share for the same quarter last year.

Analysts had expected earnings of 33 cents per share, while revenue was in line with expectations, according to financial markets data firm Refinitiv.

The comparative decline for the first quarter was largely due to $23 million of equity income in the quarter last year from its investment in Corus Entertainment Inc., said Shaw.

RBC Capital Markets analyst Drew McReynolds said company results were slightly below expectations, mainly on lower wireless margins even as some areas of the segment improved.

“A decent quarter for wireless in a competitively intense environment,” said McReynolds in a note.  

This report by The Canadian Press was first published Jan. 13, 2020.

Companies in this story: (TSX:SJR.B)

The Canadian Press