Shaw anticipates cable rebound

‘RIDING WAVE’

Western footprint last week, for quelling declines due to attractive bundling that helped retain customers.

President Jay Mehr told analysts he will be “disappointed” if Shaw doesn’t have positive video subscriber numbers in the next quarter. “To be clear, winning looks like positive video subs on cable,” he said on a conference call with analysts.

Whether Shaw posts positive subscriber gains for every quarter going forward will depend on what its main competitor, Telus Corp., offers in a “very intense competitive environment,” Mehr said. But for now, Shaw said an equal mix of new and existing subscribers are adopting its high-speed Internet and TV package.

“People are paying more to get more and enjoying a terrific service, and we’re just going to ride that wave,” Mehr said.

Shaw’s financial results were largely in line with analysts’ expectations, with revenue and earnings before interest, tax, depreciation and amortization increasing 13 per cent and 7.6 per cent respectively largely due to the wireless division.

Without including Freedom Mobile, which wasn’t on the books at this time last year, Shaw’s revenue and adjusted income rose by 1.1 per cent and 1.8 per cent respectively from this period last year.

Shaw also posted decent wireless results this quarter, with 33,000 customer additions slightly beating expectations even though average revenue per user dropped due to steeper promotions.

Its wireless division is in a “complicated” situation as it transitions its network to LTE from 3G, Mehr said, adding that it’s tough for consumers to bring their own devices since most aren’t yet compatible with the network. Executives expect volatility in the division until 2018 as competitors act on their network advantages.

Shaw announced that Freedom’s CEO Alek Krstajic is stepping down, just over a year after Shaw entered the wireless market and five months after he led the brand transition to Freedom from Wind Mobile, a brand Shaw believed had too much baggage due to historically poor network quality.

Krstajic, who founded Shaw credited the attractive bundling of its high-speed Internet offering and its new television product BlueSky TV for helping retain customers. It had a surprising loss of Public Mobile, told analysts he will remain a “significant” shareholder.

Industry veteran Paul McAleese will become chief operating officer of Freedom, which will no longer have a CEO. Freedom will operate as one of Shaw’s business units and will be served by centralized finance and human resources teams.

“While the change was expected, it came a bit earlier than we anticipated,” Barclays analyst Phillip Huang wrote in a note to clients that outlined McAleese’s experience at Rogers, Telefonica and i-wireless. “At first glance, McAleese appears to be exactly who Shaw needs to grow Freedom Mobile.”

Shaw’s profit fell 10 per cent to $147 million from $164 million, a decline attributable to last year’s sale of its media assets.