Shaw Communications Inc. is preparing to launch 5G wireless services early next year into what its president describes as an intensely competitive market.
Canada’s three national wireless carriers – Rogers Communications Inc., BCE Inc.'s Bell Canada and Telus Corp. – began rolling out initial fifth-generation wireless services this year, leaving fourth-ranked Shaw Communications Inc. trailing behind. The latest generation of wireless technology, which is still in its infancy in Canada, promises much faster speeds and is expected to eventually power everything from smart cities to driverless cars.
Shaw, which owns wireless carrier Freedom Mobile and recently launched its Shaw Mobile service in Alberta and British Columbia, will be “fairly prominently in the 5G game” in the early part of 2021, Shaw president Paul McAleese said on Friday.
“At this point, we will be slightly behind the market in terms of timing, but [we’re] not concerned about that,” Mr. McAleese said during a conference call to discuss the company’s fourth-quarter results. Shaw grew its profit by about 5 per cent and added 60,000 net new wireless subscribers in the three-month period ended Aug. 31.
Mr. McAleese said he is not worried about Shaw being a “fast follower” because customer demand for the technology is not yet significant. “We’re hugely optimistic and bullish on 5G’s potential,” Mr. McAleese said.
However, industry executives have said it will take some time to realize the full benefits of the technology. Customers who have pre-ordered devices from the newly launched iPhone 12 lineup, which is compatible with 5G networks, are doing so because they want the latest Apple gear – not to gain access to early-stage 5G networks, Mr. McAleese said.
Shaw’s wireless growth came even as its competitors exercised what Mr. McAleese described as a “disappointing lack of discipline” in offering steeply discounted plans and other goodies in a bid to win more customers.
“The promotional pricing you’re seeing out there is intense,” Mr. McAleese said, noting that growth in the overall market has slowed owing to lower levels of immigration and the economic effects of the COVID-19 pandemic. “It feels like the market is chasing, at a pretty considerable expense, a very small pool of available growth.”
The steep prices carriers are paying to attract new customers make it tough for the wireless industry as a whole to grow service revenues, Mr. McAleese said.
“We do not drive this ship,” Mr. McAleese said, noting that Shaw has less than 20 per cent of the number of wireless subscribers each of the Big Three telecoms has. “As a new entrant, with a smaller, less mature network, we’re going to need to be priced below the incumbents. So there is a real risk that if this continues, it’ll drive us to price lower.”
Mr. McAleese added that competition in Western Canada continues to be stiff, with Shaw’s long-time rival Telus offering $500 Visa gift cards to new internet subscribers. Customers are essentially jumping back and forth between the two companies, Mr. McAleese said, characterizing the trend as “unnecessary” and “lost economic rent.”
The launch of Shaw Mobile helps the company fight back by allowing it to sell its customers bundled internet and phone services, Mr. McAleese said. For instance, earlier this week Shaw launched a new $25 plan, featuring unlimited talk-and-text and 25 gigabytes of data at full speeds, for customers on its top internet plan. But it will take some time for Shaw to start winning a larger share of broadband customers, Mr. McAleese said: “It is a process ... these things don’t happen overnight.”
A Telus spokesperson said the gift card offer was not highly promoted and is not a direct response to the launch of Shaw Mobile; it has been offered occasionally for more than two years.
Shaw reported a $175-million profit during its most recent quarter, up from $166-million during the same period last year. The earnings amounted to 34 cents a share, up from 32 cents a share a year ago.
Revenue for the three-month period ended Aug. 31 was flat at $1.35-billion, above the consensus analyst estimate of $1.33-billion from S&P Capital IQ.
Asked what role Shaw might play in cable-sector consolidation, a topic that has gained traction during a hostile takeover offer for Cogeco Inc. and subsidiary Cogeco Communications Inc. from Rogers and New York-based Altice USA Inc., chief executive officer Brad Shaw said Shaw still has “untapped growth opportunities.”
“As a family, we’re very committed to the long-term strategy at Shaw,” said Mr. Shaw, whose father, JR Shaw, founded the company during the infancy of cable television. JR Shaw died in March at the age of 85.
“We have a solid strategic plan, we’re delivering on our commitments and we have substantial and growing free cash flow,” Mr. Shaw said.
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