(Reuters) - Canadian telecom services provider Shaw Communications Inc said on Tuesday it expects growth in the second half of the current fiscal year to be “tempered” by heavy investments in network infrastructure.
The Calgary-based company has been infusing capital in wireless network expansion into new areas, mostly in Western Canada, and on developing next generation 5G network to lure more customers. Last October, Shaw launched high-speed wireless spectrum in Calgary.
In the second quarter ended Feb. 28, the company added about 65,000 postpaid subscribers to its core wireless business, it said.
“We are capitalizing on the network investments that we have made, and continue to make, in pursuit of providing customers with a superior connectivity experience,” Chief Executive Bradley Shaw said in a statement.
In the face of stiff competition from the Big Three of Canadian telecom firms - Telus Corp, Rogers Communications Inc and BCE Inc’s Bell Canada - Shaw is trying to up its game by offering higher-margin, data-heavy postpaid plans.
Customers are sure lapping up plans with bigger data buckets. The average billing per subscriber rose 7.5 percent in the quarter compared to a year ago, the company said.
It launched data plans in Victoria and Red Deer in February and for communities in Eastern Ontario in early March, and looks to penetrate further in the market.
In third and fourth quarter, the company expects to spend more on campaign marketing, roughly C$15 million, chief financial officer Trevor English said in a post earnings conference call with analysts.
The company said it was on track to meet its fiscal 2019 outlook, which include an estimated free cash flow of C$500 million and capital investment of about C$1.2 billion. But “growth in the second half of the year will be tempered by reinvestments back into the business and more difficult year-over-year comparable results,” Shaw said.
Net income in the reported quarter came in at C$155 million ($116.63 million), or 30 Canadian cents per share, compared with a loss of C$175 million, or 35 Canadian cents a share, a year earlier bit.ly/2D6uvyz.
The wireless business registered a 6.9 percent decline to C$247 million in the quarter, mainly due to lower equipment revenue.
Excluding items, the company earned 30 Canadian cents per share, against the average analysts’ estimate of 30 Canadian cents, according to IBES data from Refinitiv.
Shares of the company down 2.5 percent at C$27.08 in morning trade.
Reporting by Arundhati Sarkar in Bengaluru; Editing by Shinjini Ganguli