Freedom says data strategy attracting higher-value customers

Shaw Communications Inc. says its wireless business has reaped the fruits of a strategy — in the form of a sub base that pays more — that focused its efforts on making data-related issues a thing of the past. Freedom president Paul McAleese said on a conference call with analysts on Monday that the roughly half of the approximately 20,000 prepaid sub losses it posted in the first quarter of 2019 were due to customers migrating to its higher value postpaid plans -- typically defined as the two-year, device-financed, Big Gig plan with a high-value device. “We made it appealing for customers to move up and spend more with us this quarter and we were grateful that they had the confidence to do so,” McAleese said, emphasizing the company’s Big Binge Bonus plan this holiday season. That plan, which came within the three month reporting period that ended Nov. 30, gave customers on eligible, higher-priced plans, an additional 100 GB of data to play with. “We’re continuing to hear from customers that they are loving being able to get out of a scenario where they have excess overage charges, and we’re going to continue to poke at that,” McAleese said, adding they’ll continue to focus on the Big Gig pricing that the company launched in 2017. “That aspect of the competitive environment we just find unconscionable and we’re going to continue to leverage that -- customers are voting with their feet and their wallets; they’re staying in record numbers,” he added. Those record numbers refer to the 1.28 per cent churn that the company managed, an improvement over the 1.64 per cent it posted in the same period the year before -- when it added 1,260 prepaid subscribers. Churn measures the rate at which customers leave the company. While McAleese said he is “thrilled” with the team on getting them to that churn, he warned about potential swings in that rate. He said that because, compared to incumbents, Freedom’s base is smaller and the company has more customers who bring their own devices -- instead of subsidizing the purchase of their phones through a contract -- he expects to “see a little bit of movement” but no sub-one per cent churn like Telus Corp. anytime soon. Though he noted that the churn rate should remain in that range over the next couple of quarters. The company had a 12 per cent increase in its average billing per subscriber (ABPU) to $41.99, adding credence to its rationale that customers are paying more for higher priced plans. It also added 86,000 postpaid subscribers in the quarter. The company also pegs the improvements to network enhancements and customer experience. The postpaid additions beat Desjardins analyst Maher Yaghi’s estimate of 81,500 and represents an improvement over the 33,050 it added a year ago. “The company now has a more attractive product offering with iPhone in its lineup as well as enhanced network performance due to the deployment of low-band spectrum,” Yaghi said. Shaw noted that its deployment of the low-band 700 MHz spectrum is now at 25 per cent completion. Canaccord Genuity analyst Aravinda Galappatthige said in a Monday note that he expects the company to achieve 350,000 to 375,000 new postpaid subscribers for the year, “which is substantial when one considers the national estimate of 1.5M and the fact that Freedom mainly operates in only three provinces.” The company had a total postpaid wireless base of 1.12 million. Adding the prepaid base of 352,686, it has a total subscriber total of roughly 1.47 million. Wireless revenue was up 60 per cent to $273 million compared to the equivalent period the year prior. The numbers come at a time when Freedom is staking out Western Canada for expansion. It is focusing on reaching an additional 1.3 million people, one million of which will be in the west. As such, it announced that its network will expand into new cities through the year, including in Victoria, B.C. and Red Deer, Alta. “in the coming weeks.” That, McAleese said, will shift the traditional divide that sees the company split 70 per cent in the East and the rest in West. But, he cautioned, that will take a little bit of time to materialize. Galappatthige noted that the West expansion gives Freedom room for more subscriber growth. Shaw’s revenues in the quarter increased 8.8 per cent to $1.36 billion, with net income at $187 million -- up 68.5 per cent over the year. On consumer wireline, the company added 5,606 internet subscribers in the quarter, less than the 17,694 it added in the same period the year before -- for a total of 1.88 million subscribers. On cable video, the company lost 23,768 subscribers, more than the 18,000 it lost in the same period last year, for a total base of 1.56 million. Satellite video lost 28,893 for the quarter, close to 9,000 more than the year before for a total of 721,510 subscribers. Meanwhile, the phone segment lost 15,857 subscribers, less than the 17,418 it lost in the same period in 2017. Across the segments, the company lost 63,012 subscribers in the quarter, for a total of roughly five million. Shaw fared better on the business side, with the sum of the segments amounting to an increase of 10,201 subscribers in the quarter. Though because of the weight of the weaker consumer wireline side, the company lost a total of 52,811 subscribers for a quarter-end for consumer and business for an overall base of about 5.63 million. Total wireline revenues were up 0.7 per cent to $1.08 billion. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Freedom says data strategy attracting higher-value customers

News | January 14, 2019

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Freedom says data strategy attracting higher-value customers

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