Shaw misread iPhone impact on Freedom Mobile

President hints at significant growth curve

executives knew a deal with was important for its wireless division Freedom Mobile, but they didn’t anticipate just how much of a game changer it would be to finally be able to sell iPhones.

“I underestimated the importance of the iPhone to our business,” president Jay Mehr said on a conference call with analysts Thursday. “It has changed all aspects of our wireless business.”

Mehr spoke hours after the Calgary-based communications giant reported financial results that slipped below analysts’ expectations for the three months ended Nov. 30. Its wireless results were strong — it added 34,310 subscribers, up from because it’s different than anything you’ve ever seen before,” he said. “It does feel like a new business starting in December.”

In late November, Shaw announced it would sell the latest iPhones after successful talks with Apple. Previous generations of the iconic device weren’t compatible with Freedom’s network, but upgrades allowed Shaw to sell its entire device line up. It sold the new models for $0 upfront, contrary to its competitors that typically wait months before such steep discounts.

The launch came a month after Shaw started selling 10 gigabytes of data for just $50 per month. About 1 to 2 per cent of its existing customer base upgraded to these plans and added $6 or $7 to average revenue per user, Mehr said, but the iPhone had a bigger impact. It plans to keep the data prices stable and compete with different device offers.

Still, Mehr said the coming quarter won’t be quite as good as initially expected since the Big Three offered promotions of 10 GB for $60 per month just before Christmas. This sparked a tremendous amount of activity as customers scrambled for the unprecedented deals on the incumbent networks, which are faster and more extensive than Freedom’s.

“We had four or five days of record disconnects,” Mehr said, though he added that must have been a “small, small fraction of the swap” between the larger competitors. Freedom has about 1.2 million customers. Rogers has roughly 10.6 million, while Bell and Telus have about 9 million each.

He argued Freedom will benefit even if the Big Three keep prices low because more people will shop around. Freedom’s customer base, originally Wind Mobile customers, traditionally wanted cheaper plans but Shaw hopes its new spectrum and improved network will attract a new clientele.

When it comes to cable, however, Shaw’s numbers were less rosy. It lost 18,713 cable television subscribers, worse than Bay Street’s consensus expectation of a 3,000 loss. Satellite subscriber numbers fell by 21,017, also more than expected. But it added 17,200 internet subscribers, up from 14,000 last year and in line with analysts’ predictions.