Price rises can’t offset cord-cutting for Shaw as yearly revenue falls

CALGARY – Price hikes and a one-off sale of wireless spectrum were not enough to offset falling subscriber numbers as profits at Shaw Communications Inc. (TSX:SJR.B) declined over the past year.

The cable and telecom operator has been dealing with fierce competition from Telus Corp. in Western Canada and is looking to the recently acquired ViaWest data centre business to drive growth at a time when its core businesses face challenges from cord-cutting.

In its latest financial report, released Thursday, the Calgary-based telecommunications provider said profits for its 2015 fiscal year were down by nearly one per cent as growth stalled at its consumer and media businesses despite a 4.7 per cent increase in overall revenue to $5.49 billion.

Despite the fall in yearly profits, the company saw a fourth-quarter bump in net income, up nearly 44 per cent from a year ago to $276 million, thanks in part to a one-time sale of mobile spectrum to Toronto-based Rogers Communications (TSX:RCI.B).

Revenues in the fourth quarter, which ended Aug. 31, were higher as a result of an Aug. 1 price increase for residential Internet and TV plans.

Shaw’s subscriber losses accelerated as the company’s core cable business has been hit by the increasing popularity of online alternatives such as Netflix. Unlike Rogers or BCE Inc. (TSX:BCE), Shaw has no wireless package to bundle with its cable, Internet and home phone services.

Its consumer division lost more than 76,000 subscribers, including nearly 34,000 cable customers, in the quarter, up from a loss of around 30,000 in the fourth quarter of its 2014 fiscal year.

The company added 1,590 subscribers to its business telecom services, compared with the 16,200 new subscribers in the same period last year.

On a conference call with investors, CEO Brad Shaw blamed the losses on increased competition and the economic downturn in Alberta, which he said has hit consumer spending.

Shaw Communications is looking beyond its core cable business for growth.

Last year it bought data centre provider ViaWest for US$1.2 billion, and the company opened two new facilities in Oregon and Calgary in the fourth quarter.

“The demand in the market is only increasing,” ViaWest president Nancy Phillips said on Thursday’s conference call.

Revenues at Shaw’s media business were up by 0.4 per cent in the quarter to $232 million despite a full-year drop of 1.5 per cent to $1.08 billion.

The company said it saw less advertising revenue at its specialty channels, but that decline was partially offset by higher subscriber revenues.

On the Toronto Stock Exchange, Shaw shares closed down 58 cents or 2.15 per cent at $26.44.