Shaw sees BlueSky video rollout as growth engine for its fixed-line services

CALGARY – Shaw Communications says the rollout of a new generation of cable services has gotten off to a strong start, and helped the company to deliver its first growth in video subscribers in nearly seven years.

The Calgary-based company (TSX:SJR.B) — which lost significant video market share to Vancouver-based Telus in recent years — said one factor for the revival was the launch of its voice-powered BlueSky TV product across the entire Shaw cable network in April.

“Over time, we believe this platform — through our partnership with Comcast — will become the digital hub for the home,” chief executive Brad Shaw told a conference call with analysts Wednesday.

Shaw says it gained 12,000 cable video subscriptions during the quarter ended May 31 — nearly one-third of the 38,000 subscriptions added overall by its consumer division, which includes Internet and satellite video services as well.

However, analysts said that a significant reason for the gains in cable video subscribers during Shaw’s fiscal third quarter ended May 31 was less “churn” as the company retained customers with price-competitive video and Internet packages.

Shaw president Jay Mehr said that stabilizing the subscriber base was part of a three-stage plan that also included the rollout of its new WideOpen Internet service and the BlueSky launch during the quarter.

“What I hope you see during the quarter is a plan coming to life — step by step,” Mehr said.

But he cautioned that “it’s hard out there. There are competitive responses and things are happening back and forth.”

In the wireless market, where Shaw is a newcomer competing with entrenched national providers Telus, Rogers and Bell, its Freedom Mobile unit added about 20,000 subscribers during the quarter. Freedom, formerly named Wind Mobile, was acquired by Shaw last year,

Analyst Drew McReynolds of RBC Dominion Securities said in a note to clients that wireless subscriber growth during the quarter was in line with his estimates but below the analysis consensus estimate of 28,000 net additions.

However, McReynolds said Freedom’s revenue was much stronger than either RBC or consensus estimates.

Overall, Shaw’s third-quarter revenue for the quarter was $1.31 billion, up 2.8 per cent from last year. Net income was down 81 per cent to $133 million or 27 cents per share, mostly because of gains Shaw received last year from asset sales.

Net income from continuing operations was $164 million, up from $74 million in the third quarter of 2016.

Shaw stock was virtually unchanged at midmorning, trading at $30.27.