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Shaw logos are displayed at the company's annual meeting in Calgary on Jan. 17, 2019.Jeff McIntosh/The Canadian Press

Shaw Communications Inc. added a record-high number of new wireless customers in its fiscal first quarter, owing to strong demand for its new mobile service in Western Canada, but stiff competition from rival Telus Corp. led to a net loss in internet subscribers.

The Calgary-based company added 101,029 net new wireless customers during the three-month period ended Nov. 30, 2020, after the launch of its new Shaw Mobile service.

The telecom, which also owns wireless carrier Freedom Mobile, launched Shaw Mobile at the end of July, 2020, offering steeply discounted wireless plans with unlimited data as part of a bundle available to its internet customers. The strategy behind the new service, which is only available in Alberta and British Columbia, is to help the company snatch more internet market share in those provinces, where it has been losing ground to Telus.

However, Shaw president Paul McAleese said it will take some time for the strategy to bear fruit, given low growth in the overall internet market because of the pandemic.

“With a weakened economy in Western Canada and the practical impacts of COVID, things like students returning home, not having additional lines, most industry predictions right now suggest little to no organic internet subscriber growth in the west this year,” Mr. McAleese said during a conference call to discuss the company’s quarterly results. Shaw had $1.37-billion in quarterly revenue, down 0.9 per cent from a year ago, and $163-million in profits, an increase of 0.6 per cent.

The company lost 15,068 net internet customers during the quarter, compared with a net gain of 5,648 in the same period a year ago. The subscribers who left “didn’t abandon the internet – they likely went across the street to Telus,” Mr. McAleese said. “In recent quarters, Telus’s gains have been more reliant on discounted internet pricing relative to the market.”

However, Mr. McAleese said the majority of the internet customers that Shaw has parted with are “inherently more transient” – those who tend to hop around between providers to take advantage of promotions. They are also typically high-maintenance subscribers who require more customer service, making them less profitable for the company.

Instead, Shaw is focusing on those customers who generate more revenue, Mr. McAleese said: “We have made great strides in the last year to pursue higher value customer relationships and perhaps forgo some of the lower value, lower margin stuff that is out there in the marketplace.”

Shaw also lost 34,437 cable subscribers during the first quarter, compared with a loss of 13,948 subscribers in the same period a year ago.

Shaw’s quarterly earnings amounted to 31 cents per basic and diluted share, unchanged from a year ago. The results fell slightly short of analyst expectations of $1.38-billion in revenue and earnings of 32 cents a share, according to the consensus estimate from S&P Capital IQ.

Canaccord Genuity analyst Aravinda Galappatthige said Shaw’s internet business is unlikely to rebound quickly. That weakness “remains the key negative in the Shaw investment thesis, which otherwise carries compelling traits, including solid profitability growth despite COVID-19,” Mr. Galappatthige said in a note to clients.

Mr. McAleese also said Shaw will be launching fifth-generation wireless service in March. That puts it behind larger rivals Rogers Communications Inc., BCE Inc.’s Bell Canada and Telus Corp., who all launched early iterations of the new technology last year. However, it’s still early innings in the deployment of the technology, which promises faster speeds, less lag time and a vast increase in the number of connected devices. “I don’t think we’ve missed much of the party,” Mr. McAleese said.

Shaw shares closed Wednesday on the Toronto Stock Exchange at $22.52, down 6 cents or 0.3 per cent.

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