Corus stake hits Shaw even as wireless grows

Despite strong performance in its wireless division, Shaw Communications Inc. posted a quarterly loss largely due to a $284-million writedown of its stake in Corus Entertainment Inc. amid ongoing struggles at the conventional media company.

Calgary-based Shaw on Thursday reported a $91-million loss for the three months ended May 31, down from a profit of $133 million in the same period last year.

The bright spot was continued growth at Freedom Mobile, the wireless business that the traditional cable company launched in 2016 after buying Wind Mobile for $1.6 billion.

Shaw doubled its quarterly wireless revenue in the period, adding 54,000 wireless customers on contracts, up from 20,000 in the same period a year ago. Over the past year, Shaw has made significant network upgrades and started selling iphones, both of which helped grow average revenue per user as customers continue to buy larger data plans.

But Shaw’s wired businesses — television, internet and landlines — lost more customers than analysts anticipated as the company undergoes a massive restructuring to reflect the increasing importance of broadband as more consumers cut their television packages to watch video over the internet.

Some of the focus on internal changes hurt sales activity, management said on a conference call with analysts, but they also partly blamed the declines on attractive deals from competitors.

Cable and internet subscriber counts fell by 16,583 and 2,941, respectively, well below analysts’ expectations of about 6,000 losses in cable and an anticipated gain of 14,000 internet customers.

“We’re not pleased with the overall execution within our wireline business,” chief executive Brad Shaw said on the call, adding the company needs to more effectively price services and target customers.

“Our focus has not changed. I firmly believe we have significant growth opportunities,” he said, pointing to the Comcast X1 platform and upgraded cable connections that will enable connected homes.

Nevertheless, Shaw’s financial results were in line with expectations due to scaled-back pricing promotions and cost cuts from the restructuring, with 850 of the 3,300 employees who accepted buyouts exiting the company this quarter.

Shaw’s overall revenue rose 6.9 per cent to $1.3 billion and operating income before restructuring and amortization increased seven per cent to $541 million.

Shaw also announced a new partnership with Wal-mart Canada Corp. to sell its wireless products in 140 locations and said it would expand its partnership with Loblaw Cos. Ltd. to distribute Freedom in 100 stores in Ontario, Alberta and British Columbia.

Wireless president Paul Mcaleese praised the distribution partners as “fantastic” in helping Freedom move up the value chain. Almost a quarter of Freedom customers are now on “big gig” plans that launched in October, he said, and more than one-third of its customers are using Apple devices, which started working on its network in November.

“We just love what we’re seeing on the inflow of new subscribers,” Mcaleese said.

Freedom’s network is not as robust as the Big Three national carriers, but it has been upgrading to an LTE network. These improvements helped Freedom retain and improve the customer experience for existing subscribers, Mcaleese said.

“We’re keeping customers at record rates for the company,” he said.