Shaw earnings miss expectations, but wireless grows to 1.7M clients

Shaw Communications reported fourth-quarter income that missed analysts’ estimates, although its wireless business grew more than expected.

Adjusted operating income during the quarter to Aug. 31 fell 4.1 per cent from the same period a year ago to $537 million, the company said. Analysts polled by Bloomberg had forecast a range of $544 million to $557 million.

The Calgary-based company added 90,700 wireless customers during the quarter after analysts had expected fewer than the 85,000 new users added in the same period a year ago. Shaw’s total of 1.7 million subscribers in three provinces makes it the largest regional wireless provider in Canada.

“We have firmly established Freedom Mobile as the industry innovator and recognized champion of wireless affordability for Canadians,” CEO Brad Shaw said in a statement Friday. “Through years of thoughtful and strategic capital investing, we have built a high quality, facilities-based wireless network that is capable of meeting the evolving needs of our customers and continuing to fuel Freedom’s momentum.”

The wireless unit, although small compared to its main business as one of Western Canada’s biggest internet and TV cable networks, began in 2016 when Shaw bought Wind Mobile. Over fiscal 2019, Shaw’s Freedom launched in 19 new markets in Alberta, British Columbia and Ontario, bringing in 1.4 million new customers, it said.

The company forecasts 2020 free cash flow of $700 million compared with analysts estimating $577.6 million, Bloomberg said. Next year’s capital spending prediction is $1.1 billion, slightly less than a range of $1.16 billion to $1.26 billion suggested by analysts, according to Bloomberg.

The jump in expected free cash flow is “a testament that the significant transformation undertaken in the past few years is yielding meaningful results that are flowing to the bottom line,” CEO Shaw said.

Fourth-quarter revenue rose 1.2 per cent to $1.35 billion though estimates had been in the range of $1.34 billion to $1.38 billion, Bloomberg said.

Net income during the quarter was $167 million compared with $196 million in the year earlier period, primarily because of lower equity income associated with an investment in Corus, Shaw said.

Shaw stock jumped 3.25 per cent to end the day at $25.72 on the Toronto Stock Exchange.