Shaw warns that Freedom Mobile isn't adding as many customers as planned due to COVID-19
Wireless company says revenue and profit were higher last quarter
Shaw Communications executives said Thursday that the Freedom Mobile service won't meet its 2020 target for growing its subscriber base because the COVID-19 crisis has kept stores closed and customers distracted, but they said the lost revenue will be offset by lower operating costs during the coming months.
The comments came in a conference call to discuss the Calgary-based company's results for the second quarter, which ended Feb. 29, just prior to the official declaration of a global pandemic and unprecedented social-distancing measures designed to slow and reduce the spread of the novel coronavirus.
The quarter also ended before Saudi Arabia began a global price war that dropped the price of crude oil, a major source of revenue for Shaw's customers.
"While we generally feel very comfortable that we can manage through this crisis, it is difficult, if not impossible to accurately or precisely predict the impacts on Shaw," chief financial officer Trevor English told analysts.
Like other companies across Canada, Shaw and Freedom have closed most of their retail stores in response to official demands to avoid or limit activities that could move the virus through the community by person-to-person contacts. Freedom says 20 corporate stores are still open to deal with urgent customer matters.
English said that Freedom customers "are simply not making decisions to switch or alter their services during this time" and Shaw expects its wireline businesses will also experience "considerably muted" activity for "a period of time."
He said some of Shaw's business and residential subscribers may select less expensive packages or cut some services amid "increased difficulty for some customers to pay their bills."
However, English said those lost revenues will be manageable given Shaw's financial strength and the importance of its communications and entertainment services while most Canadians are conducting work and school from home.
The company said it will preserve cash by suspending a share buyback program that had cost Shaw about $130 million as of the end of March, but it will continue to maintain its dividend payments to shareholders.
During the fiscal second quarter ended Feb. 29, net income, revenue and free cash flow were up compared with a year earlier.
Net income was $167 million, or 32 cents per share, up from $154 million or 30 cents per share; Revenue was up 3.7 per cent to $1.36 billion from $1.32 billion. And free cash flow, which is the amount of cash available after servicing short-term debt obligations, was up 20 per cent to $191 million.