Q3 2020 Shaw Communications Inc Earnings Call
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No not really environment, Yeah. We go every other friends and good.
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Thank you for standing by welcome to shock Communications third quarter, 2025 calls and webcast today's call will be hosted by Mr. Bradshaw Executive Chair and Chief Executive Officer of shock communication [laughter] at this time, all participants participants are in listen only mode and the condo.
Recorded.
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Before we begin management would like to remind listeners that comments made during today's call will include forward looking information and there are risks that actual results could differ materially.
Please refer to the company's public we felt.
Filed documents for more details on assumptions and risks mystery shop, I will now turn the call over to you.
Thank you operator, good afternoon, everyone and thanks for taking the time to join us.
No later than usual on a Friday afternoon, we apologize for the timing of this call, which is clearly not ideal for those in the eastern time zone as we've had some scheduling conflicts we had to work around [laughter]. However, we're very pleased with the performance of our business over the last three months and look forward to our discussion this afternoon.
With me today are members of the senior management team, including President, Paul Mcaleese, and our Chief financial and corporate Development Officer Trevor English.
What's the threat of Cowen 19, still present, I hope everyone and their families are keeping safe and healthy is hard to believe that just three months ago. We conducted our first virtual board meeting an Investor Conference call.
Forward to today, and we just wrapped up another virtual board session and the majority of our employees and Canadians are still working from home navigating through an unprecedented environment.
During this rapidly evolving and uncertain period, we delivered solid third quarter results that were better than our initial expectations I'm. So proud of the exceptional performance of the network and our people during the last few months. The pandemic has been a critical lesson regarding the importance of our facilities.
Based infrastructure and the role that is played to keep Canadians connected and our economy running.
Approximately 75% of our staff continue to work from home and are doing so product productivity.
During the quarter, we introduced new products, such as our Fiberplus gigabit Internet service and we relaunched retail locations with increased safety standards.
Our business moved quickly to accommodate businesses had to close their doors due to cold bid and we have rehired approximately 50% of the stuff that we're typically laid off in mid April.
In addition, we successively assess the debt capital markets at a very attractive rates to shore up our already strong liquidity position.
I wanted to reflect on this tremendous work and take a moment to recognize.
Ill Shaw and freedom employees that contributed to this performance your commitments your colleagues the company and to our customers are driving great results and I'm. So proud of our accomplishments during this time.
While we are working towards having employees return to the office and perhaps deferring or more flexible work arrangements on a go forward basis.
We are taking a slow and cautious approach with their continued safety at the forefront of our decision making.
As you've seen from our Q3 operating and financial results coal would had an impact on subscriber activity in both our wireline and wireless businesses. However, the financial performance in the quarter was very strong as Trevor will discuss in a moment.
Wireline performance was reflective of the critical nature of our connectivity services, while subscriber net losses increased in the quarter due primarily to lower sales activity in promotions churn improved across all product categories and our self install performance continued to exceed our expert.
T since reaching 72% in the quarter.
Canadian stayed home, but they stayed connected.
Thanks to our strong an extremely capable facilities based infrastructure such as our Fiberplus network. The demands on the network have been extraordinary with traffic that increase as much as 50%.
Throughout the surge in demand our network performance was and continues to be exceptional.
We had no increase in congestion or material outages as a result of the billions of dollars of investment that we spend into building and improving our network over many years.
These facilities based investments have benefited Canadians immensely throughout this unforeseen crisis.
We continue to improve our broadband infrastructure in services and in the midst of coal bid, we launched and even faster internet speed with introduction of our new Fiberplus gig Internet plan.
I will do over 99% of our footprint. This faster speed tier has already demonstrated its appeal to both new and existing customers supporting the critical needs of Canadians during this difficult time.
In the early days of the pandemic and as a consequence of widespread business closures. Some of our Shaw business customers requested a temporary suspension of their business service.
These accounts, which were primarily in the hospitality and resource sectors are slowly coming back on building in the recent weeks, we're optimistic that as the economy continues to reopen we are well positioned to accelerate shop business growth as we have a relatively low market share and a role.
Yes portfolio of products and services that can support businesses as they look to manage costs in a post cobot environment.
Temporary store closures, which included approximately 90% of our corporate freedom locations combined with the stay at home requirements that were present throughout the quarter significantly reduced wireless sales activity and lower east postpaid churn to a record 0.96%.
While the majority of our wireless retail network is now open for business customer activity in store traffic has not yet returned to pre cobot levels and is difficult to determine when customers typically shopping habits will re emerge.
Although our wireless financial performance was enhanced by our lower subscriber activity in the quarter our strategy remains to scale the business.
While Colin temporarily slowed sales activity, we remain confident in our strategy and believe that as Canadians emerge from the crisis, we're providing compelling value to wireless customers across our footprint.
Overall, we delivered Q3 results that were ahead of our expectations reinforcing the essential nature of connectivity services and our ability to manage cost quickly and effectively in our business.
That having been said covance and its related challenges will be a part of our story for the foreseeable future. Accordingly, we continue to monitor the health of our business on a daily basis and remain agile in our decision, making and approach to serving our customers.
Now I'll turn it over to travel to discuss the financial results in more detail.
Thank you Brad and good afternoon, everyone I hope everyone has been keeping well and enjoy your summer. So far however, I'm sure, it's a bit normal than a bit different than normal.
As Brad highlighted we're very pleased with the financial performance of the business this quarter during an uncertain and improved.
Predictable environment.
On a consolidated level revenue of $1.3 billion was approximately $10 million lower than the prior year. This was primarily due to lower wireless equipment sales in fact, removing wireless equipment revenue from the equation. Our consolidated revenue was up approximately 1.4% versus a year ago.
Consolidated adjusted EBITDA increased over 15% to 609 million, which includes $38 million related tire for a 16, excluding accounting impact we delivered EBITDA growth of over 8%.
As we discussed on our last earnings call or wireless business benefits financially in the near term for lower customer activity. Despite some softness on roaming revenue during the quarter. We still delivered service revenue growth of 17% to 206 million driven by continued strong wireless ARPU and ARPU growth of five.
0.7% in 2.6% respectively.
First we delivered substantial adjusted EBITDA of $101 million in the quarter, which included approximately $18 million related tire for 16.
We're moving the accounting impact wireless adjusted EBITDA growth was remarkable 57% increase compared to the prior year.
Decreased acquisition related costs, including subsidies advertising and other sales and distribution costs contributed to this performance.
Strong wireless adjusted EBITDA result is tangible evidence of the significant operating leverage in the business.
Wireline segment consumer revenue decreased 1.3% to 923 million business held steady at $140 million in the quarter.
Airline adjusted EBITDA increased almost 7% to 508 million, which includes approximately 20 million related tighter for 16 and as a reminder, in Q3 last year, we had a 15 million dollar payment related to IP licensing matters and when adjusting for the onetime charge and I have for a 16 in the quarter the year over year perform.
This is comparable.
While we have not experiencing material changes in consumer behaviors or trends to date.
We did have some business customers timber suspend or cancel some of their services throughout the quarter as they were dealing with cobot related impacts on their business.
Not all of which has been fully reflected in the Q O Q3 results considering the timing of the suspensions, whether Q3 business results are better than our initial views revenue growth stalled for Smith from its historical run rate of approximately 5% year over year growth to roughly flat during the quarter and down approximately 3% for.
As Q2.
In the third quarter, we recorded a modest 5 million dollar increase in our bad debt provision associated with increasing levels of unemployment and continued uncertainty in the small and medium business sector. Although to date, we've not experienced a material change in customer payments in either of our wireline wireless segments.
Capital investments were largely as per our original budget and slot in the quarter compared to the prior year as the business performance remains stable and projects that we thought would have been delayed such as Newbuilding development, we're actually accelerated in some instances. However, we did experienced a decrease in success based capital including.
CP in capitalized labor due to lower activity and a higher percentage of customers electing to self install.
In Q3, we generated free cash flow of over 220 million in 595 million on a year to date basis, which is 20% higher than the prior year and in line with our outlook and commentary regarding fiscal 2020, our balance sheet remains strong with Q3 leverage of two to four times, the substantially undrawn billion and.
Half dollar credit facility and approximately $650 million of cash on hand, as Brad mentioned in April we issued $500 million of 10 year senior notes and attractive rate of 2.9% to further enhance our liquidity position.
In summary, we were very pleased with our financial performance in the quarter as we look forward to Q4, we do expect some spending that was delayed in the quarter to return per particularly around marketing and based management support costs as well as the potential for any further adjustments to bad debt provisions as we continue to monitor the payment.
Trends of customers. However, we're very confident in the underlying performance of the business connectivity remains an essential services for residential and business customers and we believe well positioned to meet and exceed the demands of our customers.
With this strong foundation, we are pleased to confirm that we continue to expect to deliver adjusted EBITDA growth in fiscal 2020, both obviously on a pre and post for a 16 basis and substantial free cash flow in line with our previous guidance of approximately $700 million.
Thank you thank you Trevor.
While it is still too early to predict with a high degree of accuracy. The magnitude of the coded related impacts on our business. We continue to believe that the telecom sector is fundamentally strong and resilient under the most difficult and challenging set of circumstances, our network performance was except.
General and we delivered better than expected results, we know that additional investments will be required in the future to keep ahead of usage trends, while connecting more Canadians Ken is one of the best connected countries in the world by design and we're hopeful that the regulatory framework will continue to.
Support innovation and long term capital investment as a company as economy begins to reopen we're confident that our robust broadband and wireless infrastructure will continue to play a vital role and drive our economic recovery.
Thank you operator, we'll now take questions.
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The first question is from Vince Valentini with TD Securities. Please go ahead.
Yes, thanks very much.
Well I don't really like the timing of this call but.
I appreciate the fact that it wasn't because you're going to missed consensus numbers with the.
Results for putting too.
Congrats.
Maybe a.
Couple of for Paul, but one quick one for Trevor first is.
Just 5 million increase in bad debt expense it seems pretty low to me is this like I realized amount or are you, making estimates of what what future.
Results could be like basically taking provisions for the future based on economic activity.
It is based on.
The analysis, we did was really based on the future Vince obviously unemployment rates. We did we looked at other periods. When there is high levels of though employment in Western Canada, and even in Eastern Canada in the wireless segment were still we Havent noticed you don't we're watching the receivables closely on a daily basis, and it's holding up really well Vince, but we still.
I will have some concerns going forward specifically as some of the stimulus programs be come unwound through the government what does that mean for your bad debt and customer's ability to pay their bills I will just say.
Since I think it was disclosed in our 19 annual dues roughly about $40 million of bad debt in our EBITDA on an annual basis, so an incremental $5 million, it's about a 12% increase on that current run rates. So but it is really more about looking forward in the provision that we've made going forward.
One wireless and wireline question wireless.
I think you pushed back at me in the past when I've said can wireless margins eventually get to 40% when the business matures in growth slows down and I think you've got your doctor down to industry down in mid Thirtys.
This quarter, you did 40% I mean, it was a bit of unintended experiment.
Shutdown, all sales activity, but doing 40% obviously, there's some boost from averaged 16 that you may have not a thought of a couple of years ago, but is is 40% I realistic goal a few years down the road once the business matures.
Vince Yes, thanks for the reminder of our history together.
We are.
We're more than what the last quarter demonstrated in terms of the leverage that or wireless business already has in it.
But I would still be cautious given the downward pressure that we're seeing on retail pricing in some of the.
Activity that you're seeing out of the big three particularly on a limited it it is increasingly difficult to get the ARPU boost that we might have forecast for four years ago until we had a very strong quarter, but it was.
Against the climate that is very challenging with with the degree so I'd still be cautious there, but it certainly was.
I'd be more confident now than it would have been two years ago on on that mid thirtys target, but.
Yes, I'd still be wary of 40 at this point I think this will just when we looked at the sort of the quarterly expense reductions in wireless you know about $10 million of that was related to sort of.
Commercial costs related to growth that really frankly ground to a whole yeah theres. Some gene a discretionary costs advertising spend was at an all time low I would say during the quarter. So.
Well, the 40% margin I.
I don't want us to sort of many of us get too far over skews that thats, but something in the near term, we really do hope that we can come back to sort of scaling and growing this business.
With subscriber activity and putting the subsidy dollars to work, where it makes sense and have a very balanced scorecard on customer growth and profitability. It wasn't lovely test of your thesis, though events in terms of we'll just what to think can produce when we get to a degree of maturity.
And I think we demonstrated nicely. They did you as you pull back on the engines.
It can very strongly throw off a lot of free cash flow and.
In EBITDA.
Okay, and sorry, one last one on wireline you mentioned a downward trend on ARPU in.
In wireless.
I'm wondering about the upward ARPU trend in in broadband.
Now do you put these new prices in place as of the end of May do you have any initial data on what new sub adds and maybe anybody renewing with the ARPU on those customers looks like versus the legacy base of customers.
I don't put us into two pieces. So on the new subscribers in a reminder, that the pricing that we launched on May 27th was four new subscribers in the vast majority of instances.
We've seen a nice lift not surprisingly.
The we're seeing as much of volume for example, our former highest rate plan with 600 speed tier.
That percentage of volume that came from that here is now the same percentage of line that we're getting from our 750 engaged speed tiers. So we've seen the market shift nicely to the right on that front.
And you're not surprisingly when you put it on the mix.
Seem to kind of changes we sign rate are they we are producing a much stronger cohort now, which I think frankly this is reflective of the investments. We've made I mean, where we spent hundreds of millions of dollars in on the reviews on improving the reliability and speed of that plant and is this is an appropriate.
Price for that I think we've seen that is when you start to look Eastwood east to west here, So new subscribers definitely coming in.
On a meaningful lift.
And maybe maybe the thing that will produce more value overtime as we speak with exists with current customers, who either renewing or migrating we've managed in.
One quarter to turn that from something that has historically been a dilutive conversation to one that's now accretive so annual days when we spoke with customer cost us money and now because of the of the availability of higher speed and frankly, the demand related to co bid in the pressures on residential internet speeds.
Indeed, just degrading utility we're demonstrating we've managed to turn that into something that's a positive for us. So it's been a very favorable last six weeks.
Thank you.
Okay.
Our next question comes from drew Mcreynolds with RBC. Please go ahead.
Yes, thanks, Thanks, very much and good afternoon.
Back on this after you Paul just to broaden the conversation over the past six weeks interested.
No in the opening remarks.
Brad and trying to provide some commentary around kind of how the business is evolving here as we go forward can you just flush more of that what are what kind of sequential improvement are you see.
Across the business, particularly as we've gone intent to that June and July period, and then secondly, and maybe related to that.
Yeah, Shaun has been through a couple of recessions before.
And we really see.
The recessionary behavior kind of rear its head here, whether that folks kind of tearing down cord cutting cord shaving you've talked a little bit on that business side, but there does appear to probably be a little lag here once we get through fiscal support.
Through the unusual tier four months here.
I would just love to hear your thoughts if we're still kind of not out of the woods, particularly on the broader kind of recessionary impacts on the business. Thank you.
Ill start with in reverse order, if I could maybe turbine type in as well up. It is early on this was because we were still seeing so much federal support for the folks that have been impacted by.
By the pandemic it is difficult to tell where this is all going to flush out in when that starts when that we own. The music stops there is definitely going to be a degree of.
Pressure on the household so so far you noted to brides opening comments, we've we've weather did very well right up until even today, we havent seen any dramatic changes in customer behavior. So nice stable franchises, we like to discuss internally here on nothing really to kind of flattish.
Yes, maybe I'll just add drew I mean party analysis. We did do is an accounting team, we went back and looked at sort of over periods of low.
Unemployment levels and things I mean, frankly on the wireless side, we didn't see any correlation people just kept paying their bills just for that service and again, if it goes back to the ARPU.
From that perspective that it's fairly good value for less than $40. So people can tended to pay their bills on the wireline side of things.
Although not all recessions are the same and I think thats why were a little bit cautious on this one to sort of declare.
Any sense of that were out of the woods, we're still a bit nervous that being said in 14 and other periods. When there is some some oil price challenges I'd say, our business held in pretty well there was.
Before cord cutting in cord shaving on the video category during that time period, but it was fairly modest an immaterial, but it is one thing that we're just watching very closely no material changes to date, but it is something that we're still concerned about going forward.
And then drew on the first part of your question.
I'll speak a little bit to June, but I don't want to get too far ahead of.
Kind of guidance on this thing.
We spent from May 27th until July eight.
Materially above the retail price points of our primary competitor in the west and still managed to have.
A strong month and not see a major competitive shift.
Which is encouraging.
So prospectively I think thats something that we're confident we'll get back to kind of a normal 50 50 share of net is the way that I'd use our objective here.
Frankly for the last three years or so we have underperformed on that some of that is is attributable to the improvements that are competitors seen on fiber to the home, but is that sort of starts to hit a wall our expectation to be plane is that we will get a 50% share of net broadband activations going forward.
Very soon.
And I'm pleased now that we have retail pricing that is more reflective of the investments that we've made so they were getting the appropriate return on that.
And then we're ensuring that our customer experience you asked about can we don't happen in the last number weeks and months than we've done a number of things we started to see pretty significant changes in the way, we're able to service customers. So.
Brad talked about that 72%.
Self install we've even seen that number increase in recent weeks.
We have moved a huge amount of customer contact into platforms that are more efficient for us and more efficient for customers things like messaging improved and ramped up materially over the course of the initial months of the pandemic and have stayed there.
We've taken a lot of steps to improve our call center activity. So early on frankly, we were a little bit overwhelmed by some of the.
Some of the surges in demand for contact that's flattened out and we've done a better job of meaning it.
We are also now getting our arms around more of our sort of value based service model. So were in the past, we had a sort of peanut butter approach and spread our care around equally in the future and really just kind of starting now drew you'll start to see us.
Segment, our care to higher value model. So again looking to take our best tenured higher value customers and have a slightly different beat for the treatment for them than we would for customers are lower economic value for us. So we're kind of marrying up those to those two investments. So we use this opportunity I think quite a lot thoughtfully in the last 90 days we've tightened.
Up some things that needed tightening up.
Everything from how long it takes to answer the phone to how long it takes us to ship of modem have improved over the course of the last 90 days and we'll continue to improve and.
Customers are responding and I suspect now because we've got closer to parity with our pettitte our competitor on the cost of Internet.
We love, where where we are positioned right now so it's been it's been a good 90 days.
Yes, that's that's great. Thanks for that I'll leave it there. Thank you. Thank you.
The next question comes from Jeff Fan with Scotia Bank. Please go ahead.
Thanks, Good afternoon, everyone hope.
One is keeping well.
But a couple of questions one foot rubber and then for Paul.
Well treiber regarding the guidance.
You guys posted a very good quarter financially.
You kept your guidance for the year as adjusted EBITDA growth.
In sort of implies that Q4 is going to be down that something's going to happen. So I'm wondering if if theres something that you're forecasting regarding the fourth quarter or this is just about being.
More on the conservative side, and what would pertain I guess do both EBITDA and free cash flow.
Thanks, Jeff.
I guess at this stage, it's probably more conservatism.
We feeling really good about the business, obviously really happy with the financial performance of Q3.
That being said Theres still volatility in the business talked a little bit about bad debt.
We talked a little bit about just deferring some of the payments and costs in Q3 versus Q4 on wireline as well.
On wireless you seeing what happens to EBITDA with volume and when when the gross sales activity is down so much.
Still difficult thing for us to sit here on July 10th to say what is it back to school environment look like and obviously, that's an important point in time for the categories wireless, but also wireline. So I think we're being probably overly cautious.
Clearly.
We don't see anything scary as we sit here on July 10th the June numbers are in we're feeling really good about the business, we withdraw our formal guidance of 4% to 5% EBITDA growth last quarter. We know consensus is right around 2% in terms of what that is after we were through debt with through that last quarter.
And we're feeling comfortable with the business, Jeff, but we just didnt see a lot of benefit putting in a new range. At this time for the last few months of ups of the year and and hopefully we'll be back in October talking about 21 and talking about in F 21 guidance in an environment that has a little bit more.
As a little bit more stable in a little bit more predictable going forward looking into the next fiscal year.
Anything free cash flow I think we still have the levers you can see that we didn't pull back on capital we didnt need to in fact, some of the capital projects that we thought we were going to go a bit slower actually accelerated and we think thats good capital to spend in the business. So we're happy with that and clearly our free cash flow profile of the.
The company is extremely strong.
Let me just a couple of very quick follow ups Trevor.
You mentioned some trends regarding the business.
The business revenue and some of the pensions.
Some numbers that those trends if I if you look at it on a on a month to month basis.
At war, so it did things actually stabilizes.
As we open I guess that question may be a point.
I've known bad debt as well if you think about it from a month to month basis, Yes incident that it is for business customers as well.
Good question, Jeff, we're seeing sort of slowly businesses coming back I would say they may not be coming back at the same level. They were the video category for example, and hospitality, we're seeing them come back with their broadband service, but video just in light of what's happening still with the sports environment and things. So we'll see.
We did a book to business trends, but you know the growth profile new customers. The funnel wallets looking okay. We're just a bit nervous in terms of what does that environment, it's actually looks like when some of the stimulus programs.
You'll get pulled back from the government and we're not sure on the timing of that we probably expect a little bit a sequential quarter over quarter. When you looked at what happened from Q2 to Q3 similar trend not getting worse I thinking Q3 to Q4, when you look at what happened with the business revenue side, but probably is still a little bit.
Little bit of downward pressure on Q4 business revenue versus what we posted for Q3, just because of timing of the suspension of the accounts and then when there is actually coming back and then frankly, some not coming back because of the troubles that they're facing.
Theres a lot of moving parts and.
Now I understand.
But it's all the things like all up.
Question for Paul.
So you talked a little bit about how.
The full supply chain to the you made how things are going sounds like Q quite happy with with what's going on there I guess this week tell US also made some plan changes just wondering if Bob if you still feel comfortable I guess since July eight with the changes lots and lots of puts on the spot about what's happened in the last two days.
Loading, but just in terms of world, where you sit right now do you still feel about you can get to that 50, 50, chairman ads with with the cost for Thats in place right now.
Yes, Jeff I won't speak too much about both the tell us moves I think there they were sensible opportunity for them to recapture some of their significant investment in recent years as well in there in their plant.
So we're we're pleased and positive with the way that the market is price currently I don't think we need to be right on top of each other dollar for dollar this.
There's a reasonably close proximity and we're comfortable that we'll be able to meet our objectives kind of as things currently stand.
We're making a number of other changes.
That we think will support the business in our objective there as well so I spoke about some of them earlier in terms of just the went mayor, which we're going to improve the customer experience but.
The team engineering and I teams have done just a spectacular job and making sure that we have the speed and reliability.
I think we caught some people off guard with how little we were impacted on the network side with the surge of coded and our customer experience has never been better we are barring some tricks from.
The old wireless playbook over the coming weeks, so you'll see a number of additional retail stores in our retail stores opened in the west.
And those are just frankly long overdue, where are we kind of we've been underrepresented in terms of the way that we go to market. So.
If you would do a quick to you'll see a number locations.
Radiate ready to open over the coming weeks and we're excited about having greater retail penetration for for our consumer products as well. So I think we'll theres lots of things the contribute to net growth and we know how to do that so we feel right you'll see a number of things come into play that will help contribute to it.
Okay, Great also.
Thanks.
Our next question comes from our themed Gallup Petite day. Please go ahead.
Thanks for taking my questions, one wireless and wireline question from me on the wireless side not surprisingly the industry has seen lower volumes and you see that in your Q3 as well.
But as you said, appearing extensions naturally you're going to see sort of a bigger share of free agents in the market some pent up.
Demand.
Some of these contracts.
Hi, Stags fiery.
I wanted to get your thoughts on how you see that as an opportunity for freedom, given sort of where the economic conditions are instead of obviously pricing differentials would be incumbents.
Not trying to get set of near term views on wireless.
Volumes for you guys, but how do you sort of approach that opportunity that was my sort of wireless question and then on the wireline side.
With respect to the price changes in the west.
Obviously encouraged by what you said the adding it was Paul.
And the do you are seeing the same mix in terms of the subs coming into the higher tier plans.
Kevin said the stick a shop that just significant change obviously that you've seen in the last six weeks in terms of pricing that is there risk that you get some subscribers that start to move down.
Speed in terms of maybe to add to 75 to 150 because of the sticker shock there.
I wanted to get your thoughts on that as well thanks.
Here and it's Paul I'll take those in reverse order as well.
It's just it's worth noting that one of the things that may get missed when we launched our rate card on May 27th was we also launched a new entry level rate speed tier four.
Canadian households, we speak to customers all the time and get their feedback on where we are on on kind of meeting their needs. One of the things. It emerged very quickly into into the pandemic was household today, we're under economic pressure in duress needed something different than what was on our card. So we introduced.
What is to my knowledge, the lowest priced nine government supported internet rate right here in Western Canada.
50 dollar plan that is.
He should provide a lot of people the opportunity they need to sort of rationalize their savings.
We've seen good moving into that so when I talked about the kind of a net of all other things still being positive that includes the dilutive effect of.
A fairly significant number of people that have had the opportunity to move down in terms of their obligation and we're happy to support that and we think Thats. A that's just part of our obligation and so we built kind of opportunities for people, who wanted to harden their internet and.
Increase their speed tier up to 750 or gig we'd equally allowed people to go near the direction in the net of all that is positive. So I'm quite confident that we have the market kind of well positioned to.
On the.
Free agent cohort for wireless on paper, you're absolutely right.
This is a group it's sort of been dragging the PUC. If you will for four or five months waiting to get their upgrades or the new phone or deal with it.
Yes.
It's a little bit difficult for us right now to predict where that's all going to go into terms point given some of the economic things that may happen toward the end of the some early in the fall a support programs may cease the other thing to be mindful of is we've got two other things kind of pushing or the direction for wireless one is a surprising for me.
[music].
Competitive dynamic that is really quite aggressive I've seen 20 gig plans from some one of the big three as low as $54 regularly priced at $65. We've had a good part of the last month, where the big Dthree had their unlimited plans price below freedom.
So probably better asking them wider doing not bidding thats, probably going to be reflected in.
Fairly painful ARPU numbers for them in the coming next little while so some of you have already reported on what appear to be lowering expectations additive.
And of our competition.
And a point in time I don't know, whether we ended the runway is there, but I'd be starting to get pretty uncomfortable. If I were piloting that plane. So we are able to continue to grow as long as we have a rational pricing environment, we tried to demonstrate that on the wireline side.
On the wireless side I think we have the exact opposite thing happening with our competition.
So that is a negative.
If you were to continue preceding and then a smaller thing just to kind of make sure everyone on the same page our retail.
Stores, while we opened I believe now 90% of our store doors.
Our best locations, our highest volume locations proved to be locations in malls that are not yet thriving or kiosks in malls that are not yet necessarily active. So by no means has traffic returned to yorkdale in should know Canadian center in Pacific. These are all places that are open but kind of barely and.
For us we need to see that traffic returned to its former Laurie we thrive as a wireless business when customers can go to the mall in shop for carriers and in demonstrate our value when its client. This way. This is not on strategies turbos likes to say, so we do need that to come back. So it's a long answer.
The short question about that cohort in theory, there, we believe that we will be able to meet them. When they are but there are some things still have to kind of worked their way through the competitiveness being the primary driver there is.
You when you look at where unlimited launched last June and where it has tumbled to precipitously.
The pricing discipline or lack thereof at some of our comp competition is astonishing to me.
Thats great color. Thank you Paul Thank you.
Our next question comes from my Harry Yaki with says you're done. Please go ahead.
Okay.
Yes. Thank you for taking my question I just wanted to follow up on an on your answer regarding that cohort.
Does that include the iPhone cohort.
Two years ago that.
The roll off and.
Can you discuss maybe some of the churn numbers on that goes on the iPhone cohort I know its.
Slow motion right now with the market being being down.
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Have you Tron some conclusions when it comes to China for the iPhone cohort.
I have a few questions after.
Yes, I want to make sure I am just understood it to our iPhone age cohort, which started in December January of two and half years ago. Now is largely through and there has been completely managed by our base management team, we started that as Youll recall our Bakken.
Sort of.
Late summer early autumn of last year.
As a trend it tended toward renewal.
But the vast majority of those people, who have either left us or renewed.
And moved onto another device or or simply reiterate plan with us. So that's kind of behind us now and you've seen by the way in ARPU numbers, which I suspect will be category leading.
You know that we were able to move them successfully that's a big part of our base and we were able to manage that very successfully.
Okay great.
I wanted to ask is some of your large competitors in the east that seem to have some had some material cost in the second quarter.
Jeff the operations to react accordingly.
Specifically like customer service and work from home et cetera.
I don't see any material such cost in your results can you talk about how you manage this transition and having to have incurred some large cost to make change in your operation.
Our hearts Trevors, so there wasn't there.
We had some cost savings frankly from some temporary lay offs and you don't see dot in the numbers as well there were somewhat offset by some of the covert related costs were doing other things like talking ups and paid to some folks.
We were doing some other things, where we made people hold on their pay which include commissions that can't be deferred.
Over a period of time related to customer acquisition activity. So we had the expects that in Q3. So there was a lot of moving parts and book.
Other than the bad debt expense that we wanted to call out the kind of all work that have a wash it relatively immaterial. So we didnt have any significant.
Q1 time cost items related to.
Corporate 19, and that being said not as significant level cost savings related to temporary lay offs and people related costs. So.
What sort of coal in the numbers frankly in our current run rate.
Okay, and that's been percentof workforce that to temporary laid off how much of those have come back and are you holding the level of getting getting most of them.
50% have opened you're already being recalled and we've had no issues, bringing those folks back correct.
Okay, so they're not going somewhere else you're not noticing.
Quite the opposite angle, we were thrilled to come back I think they were frankly weve.
Brad empowered us to treat that group of people very very well over the course about number of months and I think it's paying a dividend right now we've seen fundamentally on will then come back on requests.
Yep.
Okay.
One last question is on.
Nominal price increase on on wireline.
I noticed and mining of the would we have not had an increasing our base.
Internet TV et cetera, I think it's as seen in Ontario from BC.
Are you able to pass the price increase these days on your existing customer base I noticed.
You mentioned that you if that's the price increase on your new customers, but help us to date.
I think is an industry you saw a really empathetic approach to this and again, we had a conversation really only brand around how you want to handle this in terms of.
I think we had one scheduled for April and May we held off on that we have signaled to customers that again, we will be doing anything on that until at least the autumn.
And we will kind of reserve the right to do that so we'll be will be well behind our typical timing on that but.
We're comfortable that Thats the right move in light of the economic pressure that on a high schools are facing so we've we've held off and I do think that thats been mirrored largely across the industry, which is again credit to the way the facilities based players have managed themselves through the course of this this pandemic annually thing I would also out are we talked about this I think last year that the annual.
Eight adjustment for Shaw is not as pronounced as it once was we have so many customers that are on your contracts and at different times that contracts. So the idea of this sort of onetime big Bang of a rate adjustment and what it does to your financially and how you see it in the numbers I think we're we're pricing and packaging for customers every day.
So that annual event isn't as pronounced as it used to be.
Okay and then my last question I was on on churn rate in general in the wireless market.
In June.
Have you started to see that churn increase overall for the for the industry and.
That's the case it should be good right for you guys.
Yeah, I think it's fair to say that you do more toward the end of it but kind of normal service has restored it's kind of getting back to its regular rhythm, which would instructed we're not going to see a 0.96 churn rate in the fourth quarter I don't mind, giving guidance on that.
The.
I think the industry is just starting to kind of come out of its slumbering will be.
We'll be back to kind of normal levels hopefully of growth and.
Insurance pretty quickly.
Okay and can you remind us on your fiveg plants.
Timelines I mean, you've seen announcement by tell us Rogers NBC.
What's your expectations when it comes to Fiveg.
Placement and promo.
We haven't signal too much I'll, just remind people I think where we have disclosed as we have.
We've been making life calls we have fiveg ready core we have been testing here in the Calgary market on a number sites for a number of months now clearly for US. The implementation of 600 is a critical bedrock band for for Fiveg, and we'll be rolling out as quickly as we can and.
Packet from the broadcast side and get access to it so ferocity or you'll start to see that more toward Twitter or other kind of calendar 21.
But a lot as I said number calls ago that we were going to conduct our fiveg launch by press release.
I know, there's some opportunity out there in this some great working product, but it is it's early.
We are.
Narrowing the gap more increasingly in terms of our time to market behind the big three who of course on a considerable spectrum advantages over us based on their history.
But we are we're letting our position here and the networking is well ready for it so im more on that probably on the next call in October that will give you a considerably more detail than.
Okay. Thank you very much. Thank you. Thank you.
This concludes the question and answer session I would like to hand, the call back over to Mr. Shaw for his closing remarks.
Great. Thank you operator, thanks, everyone and.
Stay safe with a yourself in your families in will speak in October.
Thanks.
This concludes the time allocated to today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
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Okay.
Okay.
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