Wireless no longer a growth market: Shaw’s McAleese

The lack of pricing "discipline" in the wireless market could have negative consequences for key economic indicators like service revenue and average billing per user (ARPU), according to Shaw Communications Inc. wireless president Paul McAleese. And it's not Shaw's fault, McAleese said. Referring to competition between Shaw and its main competitor in western Canada Telus Corp., McAleese said on a fourth quarter earnings call Friday that "you've heard me be very plain about our view on the level of swapping between the two companies in a mature market. We continue to think that that's unnecessary, and lost economic rent." "We do not drive this ship, and if we're going to see that lack of discipline, I think any casual observer would come to the conclusion that you can't solve a service revenue problem and an ARPU problem by discounting at this level, particularly when there's not a lot of market growth," McAleese said, pointing to a decrease in immigration and more general economic difficulty related to the COVID-19 pandemic. The wireless market, McAleese went on, should no longer be thought of as a "growth market." "Maybe it's worth observing that for a long time these have been growth businesses for the big three, and right now they're just not growth businesses, not really on a net basis," McAleese said. "Maybe they need to be managed more like a mature business than a growth business. And if that was the case, I think we'd probably stop doing stuff like 20 GBs for $50, and chasing each other around the market." The company reported a 5.4 per cent profit increase to $175 million from $166 million at the close of the same quarter in 2019. Overall revenue was completely flat in the three months ending Aug. 21, with the company reporting the same $1.35 billion as in the same quarter last year. In its wireless division, Shaw reported a five per cent increase in revenue, up to $294 million from $280 million, while the wireline division saw a 1.3 per cent drop to $1.06 billion from $1.07 billion. In the quarter, Shaw added 44,957 wireless postpaid subscribers, down from 75,913 wireless postpaid adds this time last year. That went along with 14,867 prepaid additions for the quarter, a marginal increase over the 14,831 the company added this time last year. Altogether, the company posted a total of 7.08 million wireless subscribers, an 11,419 drop from this time last year. The company pegged most of the additions to loosening of lockdown restrictions over the summer. "The increase in the subscriber base reflects improved in-store traffic after the re-opening of wireless retail locations as well as the launch of Shaw Mobile in British Columbia and Alberta, partially offset with increased competitive activity and a less active back-to-school season compared to the prior year," the company wrote in the quarterly report. On the wireline side, Shaw posted subscriber losses across its consumer division, losing 32,989 cable video subscribers, 7,300 cable satellite subscribers, and 14,452 internet subscribers. The company reported a total of 4.62 million total consumer wireline subscribers, down from 4.86 million at this time last year. On the business wireline side, the company added 4,156 internet subscribers, as well as 1,749 satellite video subscribers and 1,680 cable video subscribers. It posted a total of 639,444 business wireline subscribers. Shaw reported that its average revenue per user (ARPU) increased to $39.65, a 4.2 per cent increase from the $38.06 the company reported in the fourth quarter of 2019. The growth in the number "reflects the increased number of wireless customers subscribing to higher service plans, partially offset by lower roaming revenue in the last two quarters of the year due to less travel and roaming outside of the Freedom home network resulting from the impact of the COVID-19 pandemic," the company wrote in its quarterly report. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Wireless no longer a growth market: Shaw’s McAleese

News | October 30, 2020

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