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Shaw Communications Inc. is stepping up advertising for its wireless business and continuing to expand its retail presence as it works to woo customers away from the Big Three national carriers following a slump in new subscribers in its second quarter.

The Calgary-based company’s Freedom Mobile division added 65,000 customers on contracts during the three months ended Feb. 28, but lost 17,000 prepaid subscribers. On balance, the company added 48,000 new wireless customers, down sharply from a total of 90,000 in the same period last year when it had just added Apple’s iPhone to its handset lineup and launched new plans with generous monthly mobile data limits.

Shaw also shed subscribers at its legacy cable division, which continues to account for about 90 per cent of the company’s operating income. It lost 39,000 cable and satellite television clients and shed 15,000 home telephone subscribers in the second quarter, although it did add almost 10,000 internet customers.

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Despite the subscriber setbacks, Shaw swung to a profit in the period largely because of lower restructuring costs. At this time last year, it had just launched a massive buyout program that saw 3,300 employees (about 25 per cent of Shaw’s work force) volunteer to take packages and leave the company.

Now, Shaw hopes to convince investors it is on track to reap the rewards of that program, keeping costs lower at its cable division as it manages a declining television business and at the same time investing in network upgrades and expanding the reach of its wireless operation Freedom.

Paul McAleese, president of wireless at Shaw, told analysts on a conference call Tuesday that Freedom – which operates in Ontario, British Columbia and Alberta – is actively trying to win customers over from national carriers Rogers Communications Inc., Telus Corp. and BCE Inc.

“We’re doing a number of things to stir the market right now,” he said, referencing a new advertising campaign featuring a fictional company, “Monolithic Wireless,” headquartered in a dark office tower in which executives share evil laughs and the slogan is “Charge more. Give less.”

Mr. McAleese said Freedom wants to “remind Canadian consumers that there are strong alternatives and better value in the marketplace." He also said that the company has recently launched new prepaid options in an effort to win back some of the lower end of the market.

The regional carrier has been upgrading its network by installing radio and antenna equipment to make use of lower-frequency airwaves it acquired from Quebecor Inc. in 2017. It has also expanded its coverage area, launching service in Victoria and Red Deer in the quarter and adding retail locations through distribution partnerships with Loblaw Cos. Inc. and Walmart Canada. Shaw also announced a new agreement Tuesday with Mobilinq, a wireless accessories store, where it will offer prepaid services. The company expects to sell Freedom Mobile products at 650 locations across the country by the end of the year.

Revenue from wireless services in the second quarter increased by 26 per cent to $169-million as customers spent more on mobile data, but Freedom saw a dip in equipment sales, which declined by 40 per cent to $78-million. The company said that was because of a tough comparison with last year, when it had more new customers and most of them purchased smartphones through Freedom. Operating income before restructuring costs and amortization increased by 189 per cent to $52-million with more subscribers paying for higher-value plans.

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On the cable side, revenue was up less than 1 per cent to $1.07-billion, but operating income before restructuring costs and amortization increased by 7 per cent to $497-million. The company said that was partly because of $27-million in savings from the voluntary buyout program.

“Shaw’s [second-quarter] results reinforced our view that the [cable] segment will need to demonstrate greater stability before investors give the company full credit for its progress in wireless and the robust growth in [operating income before restructuring costs and amortization] we are seeing,” Canaccord Genuity’s Aravinda Galappatthige said in a note to clients Tuesday.

Shaw’s overall net income for the second quarter was $155-million or 30 cents per share, compared with a loss of $175-million, or 35 cents, in the same period last year, during which the company spent $417-million on restructuring charges.

Shaw’s revenue in the second quarter declined by 1 per cent to $1.32-billion, which analysts said was largely because of the decline in wireless equipment sales. And despite the drop in sales, lower costs helped contribute to a 14-per-cent spike in operating income before restructuring costs and amortization, which came in at $549-million.

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