Shaw Communications shows strong performance in Q2, revises 2020 outlook due to coronavirus

Shruti Shekar
Telecom & Tech Reporter

Calgary-based regional carrier Shaw Communications (SJR) (SJR-B.TO) has revised its 2020 outlook as it faces impacts from COVID-19.

“Due to the speed with which the situation is developing and the uncertainty of its magnitude, outcome and duration, in addition to the recent commodity price challenges, our current estimates of our operational and financial results are subject to a significantly higher degree of uncertainty,” the carrier said in its Q2 earnings report that was released on April 9.

“Consumer [behaviours] could change materially, including the potential downward migration of services, acceleration of cord-cutting and the ability to pay their bills, due to the challenging economic situation.”

Shaw reported $167 million in net income, or 32 cents per share, up from the $154 million or the 30 cents per share it reported the same period a year ago.

At the close of the trading day, the carrier’s A-class shares were up 0.61 per cent, trading to US$16.37.

CEO Brad Shaw said in the report that the carrier will continue to be “resilient,” but now the carrier has “a more cautious and prudent view of our expected performance in fiscal 2020.”

During this period of uncertainty, Shaw indicated during the earnings call that it has seen internet network traffic increase 50 per cent.

“What used to be a peak period that lasted for three to four hours in the evenings has now become over 12 hours of peak usage, seven days a week,” he said.

Shaw also added that the carrier has seen a 25 per cent increase in voice traffic “as more calls are being placed to friends, family, and colleagues on a daily basis.”

A Scotiabank report indicated that the company will still grow as the company has “less exposure” to COVID-19. The report was in line with how many monthly wireless subscribers the carrier was expected to add in the quarter.

The company added over 54,000 new monthly paid subscribers in its wireless division, a drop from the more than 64,000 it added in the same period a year ago.

“The increase in the postpaid subscriber base reflects continued customer demand for the Big Gig data centric and Absolute Zero pricing and packaging options,” Shaw said.

Shaw’s Average Billing Per User (ABPU) for the quarter was $43.84, a 6.8 per cent increase from the $41.05 it reported in the same period a year ago.

The carrier’s Average Revenue Per User (ARPU) for Q2 was $38.45, a 3.1 per cent year-over-year increase.

Trevor English, executive vice-president and chief financial and corporate development officer at Shaw, said on the call that subscriber activity is down significantly because of the closure of most of the company’s stores.

“Customers are simply not making decisions to switch or alter their services during this time. However, this also results in significantly fewer disconnects,” he said. “We will not achieve our wireless subscriber loading targets this year. However, we do not expect that the lower net [additions] will have a material near term impact on our wireless financial performance.”

Postpaid wireless churn rate, the measure at which a carrier is able to retain subscribers, was reported at 1.57 per cent for the quarter. This was an increase from the 1.37 per cent that was reported in the same period a year ago.

Shaw said it was due to “the aggressive competitive and promotional offers available in the market during the quarter, particularly in December 2019.

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