Freedom Mobile parent company Shaw announced its third-quarter financial results today, revealing strong wireless additions alongside a second straight quarter of financial loss.
While Shaw beat analyst consensus on how many wireless subscribers it would add, it reported a major $284 million charge related to its Corus Entertainment investment.
Shaw added 54,200 net wireless postpaid subscribers during the quarter. This shakes out to 46,700 net wireless revenue generating units (i.e. customers), after accounting for the loss of 7,500 prepaid subscribers.
The number is a major improvement on the company’s Q3 2017 numbers where it added 20,000 net additions, as well as far above analyst consensus predictions of 45,000.
Average revenue per unit (the average monthly bill customers are paying), also beat expectations, increasing by 7.5 percent to $39.84.
CEO Brad Shaw was happy with Freedom’s performance.
“We are pleased with another strong quarter of Wireless performance as evidenced by over 54,000 postpaid net additions and ARPU growth of almost 8% compared to a year ago,” Shaw said in a press statement. “Customers continue to reward us by choosing Freedom Mobile as their wireless provider due to our differentiated value proposition led by data-centric service plans.”
Wireless revenue increased to $237 million, an improvement of 54 percent year-over-year. Counting out restructuring and amortization, wireless operating income was $62 million, representing a 48 percent year-over-year improvement.
The number benefits from higher ARPU, subscriber growth and approximately $13 million in a one-time recovery fee related to retroactive roaming rates.
Corus investment and wireline loss
But overall, the company faced a net loss for the quarter of $91 million compared to net income of $133 million in the third quarter of fiscal 2017.
Shaw says the loss reflects a $284 million impairment from the company’s investment in Corus Entertainment. The Globe and Mail reported earlier this month that Shaw was looking to sell its 39.4 percent stake in Corus, which reported unimpressive results earlier this week.
The company was quick to point its savings following its massive employee buy-out program, though.
It said 1,200 employees will depart the company before the end of fiscal 2018, reducing cost for the year by approximately $48 million. Already, it noted, the company has saved $19 million through the voluntary departure program, with 850 employees exiting in Q3.
As for wireline, Shaw lost approximately 14,400 subscribers in the quarter, compared to a gain of approximately 44,400 in the third quarter of 2017.
Shaw chalked the losses up to seasonal disconnects by students for internet, promotions from the competition and its own pricing discipline. Wireline revenue remained flat at $1.06 billion before restructuring costs and amortization, while operating income increased 3.4 percent year-over-year to $485 million.
Also in the company’s earnings release, Shaw announced a new retail partnership for Freedom with Walmart Canada.