Shaw Mobile’s early gains to come at expense of Rogers, Bell: analyst

Shaw Communications Inc.’s new wireless brand is likely to initially attract customers from BCE Inc. and Rogers Communications Inc. due to the overlap between their wireless subscribers and Shaw’s wireline base, Canaccord Genuity analyst Aravinda Galappatthige said in a Thursday briefing note. The company launched Shaw Mobile Thursday, which has a significantly cheaper price point — $45 compared to $85 for “unlimited” service — for customers who also subscribe to Shaw’s wireline services in Alberta and B.C., where Bell and Rogers don’t have a wireline footprint and can’t compete using a bundled offer. Galappatthige said those gains for the newly launched Shaw Mobile “may put pressure on the incumbents’ subscriber growth” in western Canada, but didn’t expect Telus Corp. customers to be targeted early on because they were already incentivized to bundle their wireline and wireless services together. “With that said, Shaw is still in a position to target zones where TELUS does not have Gig offerings and accrue additional gains,” Galappatthige said. Galappatthige said that there was a strong rationale for Shaw Mobile’s strategy given the company’s loss of wireline market share over the years to Telus, as well as the “obvious financial benefit of retaining high-margin wireline customers.” Shaw is able to target most of the more than two million households who have internet plans with Shaw, giving the company about five million prospective subscribers who can be directly marketed to, Galappatthige said, adding its “attractive pricing” may help the company gain a significant market share in western Canada. RBC Capital Markets analyst Drew McReynolds said in a briefing note that Shaw was “turning up the heat” on the incumbent telecoms but the “dialed-in” nature of the product means the company was still balancing profitability. Bundling internet and wireless together represents a step toward an “internet connectivity commercialization model” that’s expected to accelerate with 5G and wireline-wireless integration, McReynolds said, adding the offerings “take innovative and affordable wireless solutions to a new level in Canada, which could (and should) reinforce with regulators the sustained effectiveness of regional facilities-based wireless competition.” The unlimited plan’s price of $45 for Shaw internet customers -- speeds are throttled after the first 25 GB -- is “notably cheaper” than national incumbent pricing, McReynolds said in the note, but said he believed Shaw had repositioned itself on the “data-driven value proposition” given incumbents had offered $65 plans for 20 GBs of data at certain points during spring. The company clarified on Thursday that people who are not home internet customers can also purchase the plans, with the By the Gig plan costing $15 for the first GB and $10 for each subsequent one, while the unlimited plan costs $85. Despite the $45 unlimited plan being “well below the rack price” of Freedom’s 25 GB plan, Galappatthige said Shaw Mobile’s offering still provided attractive economic benefits for Shaw as there was no meaningful device subsidy, it would lead to increased retention of wireless subscribers and the cost is above the average revenue per user (ARPU) figure of $38. The service’s $10 per month roaming for the U.S. and Mexico is also “dramatically lower” than the price offered by incumbents and could prove a “significant differentiator” when international travel resumes, Galappatthige said. Shaw's terms and conditions show that usage outside of the Shaw and Freedom mobile network on the unlimited data plan is limited to 2 GB, even in Alberta and B.C., with customers needing to purchase additional data to continue browsing.

Shaw Mobile’s early gains to come at expense of Rogers, Bell: analyst

Brief | July 30, 2020

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Shaw Mobile’s early gains to come at expense of Rogers, Bell: analyst

Brief | July 30, 2020

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