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Cable/Video

COVID-19 drags down Shaw's quarterly sub totals

Bouncing back somewhat from the pandemic-induced financial wreckage of the previous quarter, Shaw Communications reported flat overall revenues and higher net income for its fiscal fourth quarter Friday morning. But the large Canadian operator still showed why it could use a novel coronavirus vaccine, as its wireless subscriber growth lagged behind the year-ago rate and it suffered across-the-board declines in video, broadband and telephony customers.

Shaw — one of the two largest communications service providers in Canada with 1.9 million Internet, over 1.4 million cable video, nearly 700,000 satellite video and close to 1.8 million wireless subscribers on the residential side — said its net income for the quarter ended August 31 climbed to C$175 million ($131 million), up 5.4% on a year-over-year basis. That increase occurred as the company's overall revenue came in flat at C$1.35 billion ($1.01 billion), or 34 cents per share, with higher wireless service revenues neatly offsetting lower wireline service revenues.

As it did in the previous fiscal quarter, COVID-19 certainly took its toll on Shaw's results in Q4. Beginning with the wireline side of the business, the operator continued to kiss pay-TV subscribers goodbye over the summer months, shedding nearly 33,000 residential cable video and 7,300 satellite TV subscribers. While the overall video sub losses were slightly smaller than in the year-ago period, the provider still lost about 140,000 residential video customers over its full fiscal 2020 year. As a result, even with its typical annual rate hikes, Shaw saw its overall video revenues dip again from the same period a year earlier.

Even more notably, Shaw suffered its second straight quarterly loss of broadband subscribers in the quarter even though many Canadians continued to do work or school from home and the operator rolled out faster speed tiers and a new broadband-centric mobile service over the summer. The company shed about 14,500 residential Internet subs in the quarter, a reversal of its gain of approximately 11,400 subs in the year-ago period. (We'll have more to say about Shaw's broadband results in a story on our sister site, Broadband World News, later on.)

With the additional loss of nearly 25,000 residential cable phone customers, Shaw dropped a total of 79,500 consumer wireline revenue generating units (RGUs) in the company's fiscal fourth quarter. That represents a bigger loss than a year ago, when it shed approximately 57,900 consumer wireline RGUs. As they did on their Q3 earnings call back in July, company executives blamed the higher RGU losses on the pandemic.

The Shaw story was more upbeat on the wireless side of the business as the carrier returned to growth in Q4. Shaw added about 60,000 mobile customers in Q4, reversing a loss of 5,500 mobile customers in the spring. But it still posted a much lower gain than the 91,000 mobile subs added a year earlier, once again due to the pandemic, even as it boosted its total mobile sub count back to almost 7.1 million.

On their earnings call Friday morning, Shaw officials said they expect their broadband and mobile numbers to improve over time as their new Fiber+ 1-Gig broadband and Shaw Mobile services take hold in the Canadian market, especially in the company's western Canada stronghold. But they expect the improvements to take hold gradually over time, not in a sudden burst of new subs.

Shaw executives said they are also prepping for the rollout of the company's much anticipated 5G mobile service in the first half of next year. But they also damped down expectations for any major boost from that launch, noting that they will be "followers," not leaders, in that market because bigger national wireless players like Rogers Communications have already rolled out 5G service.

Shaw's share price slipped in trading earlier Friday. As of 1:45 p.m. EST, its shares were trading at C$21.55, down 3.3% on the day.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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