One year into its wireless strategy, Shaw Communications Inc. is taking steps to integrate Freedom Mobile more closely with its cable business as mobile subscriber numbers begin to surge.
Calgary-based Shaw said Wednesday it added 33,000 new wireless customers in the second quarter of its fiscal year, leading the company to its best quarterly performance on subscriber numbers in five years as it also stemmed cable TV losses and saw continued growth in Internet services. The company's shares closed up 4.8 per cent on the Toronto Stock Exchange.
Shaw acquired Wind Mobile in March, 2016, and rebranded the wireless business Freedom Mobile in November. It's currently rolling out LTE (fourth-generation) service and trying to secure more handsets that will work on its network. Alek Krstajic is stepping down as chief executive officer of the division as Shaw's Calgary-based management team takes more control.
"The [purpose of the] acquisition of Wind was never to operate a standalone wireless business. It was always a strategic acquisition and we're taking the next steps as planned," Shaw president Jay Mehr said on a conference call. "You'll see us integrate all of our corporate functions. So we'll have one finance team and we'll have one HR team."
Shaw said Paul McAleese – a wireless executive with experience in Britain and the United States who also worked for Rogers Communications Inc. in the 1990s – will take over as chief operating officer of Freedom Mobile and will report to Mr. Mehr. Freedom Mobile, which operates in Ontario, Alberta and British Columbia, will remain based in Toronto.
Freedom Mobile's new brand and more aggressive marketing and promotions during the December holiday season gave it a boost after a disappointing first quarter that saw it add just 9,500 new wireless customers.
Promotions contributed to a decline in average revenue per user (ARPU), which dropped to $36.44 in the three months ended Feb. 28, down from $36.84 in the first quarter. But the company said those discounts helped entice customers to sign up for higher-priced plans that will eventually lead to an increase in ARPU.
Nonetheless, Mr. Mehr repeatedly said Wednesday that the company intends to position Freedom Mobile as an "affordable" option amid competition from discount brands operated by the Big Three wireless carriers Rogers, BCE Inc. and Telus Corp. That is a subtle shift from previous quarters when Mr. Krstajic placed more emphasis on the profitability of the wireless business.
In his remarks Wednesday, Mr. Mehr alluded to Shaw's hope that the federal government will give the company favourable treatment in a coming public auction for cellular airwaves. (In previous auctions Ottawa has reserved cheaper spectrum for new wireless players to encourage competition.)
"I think Canadians want something different from what's been offered by the Big Three and low-[frequency] spectrum will help us do that," Mr. Mehr said. "It's super important for us and for Canadians that there is spectrum that goes to folks besides the Big Three."
On the cable side of the business, Mr. Mehr said he hopes Shaw will record a net increase in cable TV subscribers in the third quarter buoyed by the launch earlier this year of its new television platform BlueSky TV (which it is licensing from Comcast Corp.). He said the continuing success of that business will depend in part on competition from Shaw's main rival Telus, which he expects will soon reveal upgrades to its own Internet-protocol-based platform Optik TV.
In the second quarter, Shaw lost 7,000 retail cable customers, an improvement over a loss of 26,000 in the same period last year. Over all, Shaw's consumer division (which sells television, Internet and home phone to residential customers) lost 5,000 subscribers in the second quarter, up from a loss of 42,000 last year.