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April 09, 2019
Shaw’s Freedom Mobile sees Q2 revenue fall due to lower hardware sales

CALGARY - Freedom Mobile’s revenue was down in the second quarter, mostly due to reduced sales of Apple devices, but the regional carrier also faced more aggressive pricing from its rivals, Shaw Communications executives said Tuesday.

Shaw’s wireless arm dragged down the company’s overall revenue, which was otherwise flat, but Shaw executives said they expect to meet their key financial estimates for the full year ending Aug. 31.

“We continue to make progress on our strategic priorities and our journey to a modern Shaw, and we are excited about a number of recently announced initiatives,” chief executive Brad Shaw told analysts on a conference call.

He and other Shaw executives noted, however, that the company’s wireless division was affected by promotional pricing by its rivals during the December-February period, one of the busiest selling periods of the year.

Expect To See Hardware Revenue Sales Slow & Fall In Growth In Operator P&Ls

Freedom is an example of what will be occurring with greater frequency over the coming months.

Airtime revenue and the associated ARPU has been growing at roughly a 15% to 30% premium to the underlying rate of inflation which means that ARPU is growing at 1.5% to 3.5% per year depending upon the country. The reality is that this is marginal growth.

What has been propping up operator revenue is hardware sales where operators have seen 15% to 20% quarterly growth associated with hardware financing programs and outright purchases.

Given the global trend of longer device cycles; expect to see hardware sales revenue flatten and possibly decline in Freedom’s case.

How will the operators respond – Increased prices on the core plan – They need the revenue to pay off debt let alone invest in 5G infrastructure.

Shaw’s Freedom Mobile sees Q2 revenue fall due to lower hardware sales