Shaw Communications Inc. (SJR) Q1 2018 Earnings Conference Call Transcript

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Shaw Communications, Inc. (NYSE: SJR)Q1 2018 Earnings Conference CallJan. 11, 2018, 3:30 p.m. ET

Contents:

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  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by and welcome to Shaw Communications' First Quarter Fiscal 2018 Conference Call and Webcast. Today's call will be hosted by Mr. Jay Mehr, President of Shaw Communications. At this time, all participants are in listen-only mode and the conference is being recorded. Following the presentation, there will be a question-and-answer session. To join the question queue, simply press * and 1 on your touchtone phone at any time during the call. Should anyone need assistance during the conference call, they may signal an operator by pressing * and 0 on their telephone.

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 publicly filed documents for more details on assumptions and risks.

Mr. Mehr, I would now like to turn the call over to you.

Jay Mehr -- President

Thank you, Operator, and Happy New Year to everyone joining Vito and myself on the call today. We appreciate everyone being flexible regarding the timing of the call this morning. Given last week's sad news of the passing of Shaw Communications Vice-Chair and former CEO, Jim Shaw, Brad and the family are in preparations for his service tomorrow and, therefore, are understandably unavailable to lead us through today's conference call. However, Brad did ask me to convey his deepest gratitude to everyone for their kind and thoughtful messages that he has received over the last week.

On a personal note, I wanted to take just a moment to express the immense impact that Jim has had on my career and me, personally, as I spent most of my 22 years at Shaw working alongside Jim. Those of you listening who knew him, know that he is a larger-than-life personality and was an icon within our industry and the overall Canadian business community. Jim was instrumental to our company's success as he led Shaw Communications as CEO for 12 years and has been part of our business for over 35 years. Jim's significant contributions to this company are evident today and it's reflected in our position as a leader in the Canadian industry.

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Jim was one of my most influential mentors, for sure, and I'll carry fond memories of him. Our hearts remain heavy with sadness as we say goodbye to a visionary leader and friend. Jim, you will be dearly missed and I know I speak for every Shaw employee, including myself, when I say we're focused on not letting you down as we continue to build this great company.

Moving onto the formal remarks, we've entered Fiscal 2018 in an enviable position. Last year, the optimization of our asset base continued as we deployed Corus and secured valuable spectrum that enabled us to continue the execution of our long-term strategic initiatives. Our financial position has never been stronger and we're making significant progress with respect to our wireless and wireline investments.

Our customers are our motivation, guiding our actions, and they're at the center of every decision that we make. We continue to invest in our business so that we can offer innovative products and services that will meet their demands and future expectations, as well as create value for all stakeholders.

Our wireless business is well-situated to deliver growth as we've built on a foundation of RLT advanced network, the reform of our 10 megahertz AWS spectrum, which was recently completed in Vancouver, Calgary, and Edmonton, significantly expanding Freedom to direct-sale market is this spectrum supports nearly all RLT devices in use in Canada. This work is also well under way in Toronto in the GTA.

At the same time, the company has also begun deploying the recently acquired 2500 megahertz spectrum further improving network quality with this efficient use of Spectrum over 4 million Canadians in our wireless footprint not in contract to now bring their own device to Freedom Mobile and enjoy the benefit of RLT advanced network.

More than ever, customers are acutely aware of the costs of their wireless bills and, until recently, they were forced to accept limited amounts of data as part of their premium price wireless service. We launched our Big Gig data plans in October and consumers, the media, and the competition took notice. Not only are we providing customers with options for 10-plus gigabytes of data in their monthly plan, but we can do so at a price that is both sustainable for us and affordable for Canadians.

We launched the iPhone in early December and have already seen significant improvements in the levels of our acquisition and retention of customers. We are excited that we were able to offer this iconic device prior to the holiday season and, in fact, December sales of iPhones have exceeded our expectations. The increased customer demand since launching Big Gig and the iPhone continue to highlight the desire from customers to get more data for less and supports our overall wireless growth strategy.

Throughout F18, we will continue to enhance the wireless experience as we deploy our 2500 and 700 megahertz spectrum across our footprint, improving both the quality and coverage aspect of the network as well as launching VoLTE by the end of the fiscal year. We'll also continue to improve the breadth of our current wireless distribution, including the increased marketing support for our recently launched online sales channel.

We believe all of these factors, including our network distribution improvements, iPhone carriage, and attractive data packages will have a meaningful impact on our subscriber loading, compared to the historical results since completing the acquisition of WIND in March of 2016.

In our wireline consumer business, we've delivered a sixth consecutive quarter of internet RGU growth, primarily due to the success of our flagship WideOpen Internet 150 product, which is available to over 99% of our footprint. Today, over 90% of our new internet customers are taking speeds of 75 megabits-per-second or higher and over half of those are opting for a two-year value plan. The strength of our network is evident in our broadband subscriber results and we expect the trend to continue as we meet and exceed the demands of our customers.

Video results reflect our balanced approach to subscriber growth and retention. We've reduced our promotional activity and focused our efforts this quarter on higher-value video subscribers. We continue to be excited about our premium TV service, BlueSky, now fully integrated with Netflix and the BlueSky roadmap, which enables further innovation, transforming the video landscape.

Shaw Business continues to deliver consistent growth. The success that we're experiencing in this segment is primarily due to our smart portfolio advantage services that focus on small-to-medium sized businesses. In December, we launched a fourth product in this portfolio, SmartSurveillance. Through our best-in-class partner approach, we will continue to provide innovative products and services to complement our connectivity services.

I will now turn the call over to Vito to review the Q1 Fiscal 2018 results.

Vito Culmone -- Executive Vice President and Chief Financial Officer

Thank you, Jay, and good morning, everyone. Before I get into a detailed financial results, I would like to remind listeners that, effective Q1 of this year, our reporting consists of two separate segments, wireless, which has not changed from previous disclosure, and wireline, now combines consumer and business. We will continue to provide separate revenue and RGU metrics for each of consumer and business and EBITDA will be a combined result on the basis that costs have become increasingly inseparable between the two segments.

On a consolidated basis, first quarter revenue of $1.25 billion increased 2.7% and EBITDA decreased 4.6% to $481 million over the comparable period. Let's review each segment in more detail.

Starting with wireless, revenue of $175 million in the quarter, increased by $37 million or 26.8%, and EBITDA of $35 million, increased 16.7%, over the same period in Fiscal 2017. Improvement in wireless is primarily related to the increase in subscribers of approximately 130,000, relative to a year ago, for a total wireless customer base of almost 1.2 million as of the end of November.

It's important to note that many of the positive developments Jay referred to earlier, such as the iPhone launch and the spectrum reform are subsequent to the quarter-end and, therefore, has no impact on the current quarter results.

In wireline, consumer revenue declined to $935 million, or down 1.3%, while business revenue increased 6.1% to $140 million. Wireline EBITDA of $446 million, declined 5.9% over the comparable period. The decline in year-over-year results was primarily driven by consumer video as the impact of increased promotional activity that took place in the second half of Fiscal 2017, as well as higher planned corporate costs, more than offset growth in internet and business. While, overall, wireline results were down year-over-year, consumer internet and business remain important growth drivers.

Capital spending in the quarter increased to $353 million, or $84 million higher than Q1 Fiscal '17. More than half of the increase was driven by wireless network investments, including spectrum reforming, deployment of 2500 small-cell coverage, and maintenance. Free cash flow in the first quarter of $51 million compares to $158 million in the prior quarter, excuse me, in the prior year. The decline in the current quarter is due to increased network investment and lower wireline EBITDA.

Net income for the quarter of $114 million, compared to $89 million in the first quarter of Fiscal 2017. The increased reflects the prior period non-operating loss, partially offset by lower EBITDA and higher income taxes in the current quarter. We continue to have significant flexibility as leverage remains at under 2.0X and we have approximately $445 million of cash and $1.5 billion in liquidity through undrawn lines of credit.

In summary, we delivered first-quarter results in line with our expectations and consistent with our message from last quarter. We remain committed to our balanced approach in wireline and we'll focus our efforts and spend on higher-quality subscribers. We can also confirm that we remain on-track to meet F18 guidance, whereby, we expect consolidated operating income before restructuring costs and amortization to go to approximately $2.1 billion, a year-over-year projected increase of approximately 5%, capital investments of approximately $1.38 million, and free cash flow of approximately $375 million.

I also want to remind everyone that we expect the majority of the EBITDA growth to come in the second half of Fiscal '18, consistent with our messaging that we provide when we provided guidance back in October.

Let me provide you with a bit more detail on the growth drivers in the balance of the year. Wireline EBITDA growth ramps in the second half of the year, due primarily to improved broadband margins. We see continued migration to higher internet shares and, as you saw in November, we increased the effective average internet pricing, including value plans, through a culmination of a reduced promotional period and pricing increases. We continue to believe that our internet products have pricing power as customers increasingly expect a fast and reliable internet service. Our business segment is expected to deliver consistent topline growth with strong margins and, in our wireless business, we expect to increase our subscriber base and load more customers on $50.00-plus rate plans as a result of the network enhancements and the Big Gig data plans.

With that, I'll turn the call back to Jay for some closing remarks.

Jay Mehr -- President

Thanks, Vito. We spent several years laying the foundation for growth and the potential opportunities for our business have never been better amid the unrelenting pace of change, disruption, and competition where we focus on execution and staying the course. I firmly believe we have a winning combination of products and services combined with a talented management team that will deliver growth for all stakeholders.

Thank you and we'll turn it back to the operator for questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. To join the question queue, please press * and 1 on your touch-tone. You will hear a tone acknowledging your request. If you are using a speakerphone, please ensure you enlist a handset before pressing any keys. If you wish to remove yourself from the question queue, you may press * and 2. Anyone who has a question may press * and 1 at this time.

Our first question comes from Vince Valentini of TD Securities.

Vince Valentini -- TD Securities -- Managing Director

Thanks very much. Let me start by just saying Jim will be dearly missed and pass on my condolences to everybody at the company and the family. I know it's a tough time. My question to start with, maybe for Vito, can we just level-set expectations on the wireline side? So, you went back to 3 and 6-month promotions versus the 12-month promotions in November. Does that mean we should see RPU and, therefore, margins immediately snap back in Q2 or does it take a little while for that to filter through your billing cycles?

Jay Mehr -- President

Yeah, Vince, it's Jay. I'll start and let Vito add some details to it. Yeah, so we're doing what we said we were going to do and we got the results that we expect to get. In fact, our Q1 results were a little bit ahead of budget and plan on EBITDA -- not really notably ahead, basically, right on top of the results. There's no question the way the change of promotional packages and prices work is you get RGU gain at the front-end and you get a financial gain in the back-end in the six-month time lag is about right.

As you think about the timing of all this, Q1 looks a lot like Q4 did and, on the wireline side of the business, Q2's going to continue to look a lot more like Q1 in the second half of the year. I mean, you won't recognize the wireless side of the business in Q2 because it's different than anything you've seen before, so that part of Q2 will be different. And the primarily revenue growth that comes from all of the pricing and promotional changes, our material's starting in Q3 and then you get the full value of it in Q4. So, it's a time lag, but we believe we've got the right approach.

Vito Culmone -- Executive Vice President and Chief Financial Officer

Yeah, thank you, Jay. I think you nailed it there. Vince, when you look at the EBITDA for the wireline versus prior quarters, we were actually flat prior quarter, obviously down versus prior year and I think you can see that that's the start of the pricing starting to take effect and the continued migration in packaging and we'll see that continue and improve as we move forward. So, definitely back-half-loaded as the base shifts into the higher pricing and the promos fall off a bit.

Vince Valentini -- TD Securities -- Managing Director

Okay. Great. And, if I can shift for a question on wireless, so, to pick up on what you're saying there, Jay, that we won't recognize things in Q2, are you willing to be any more definitive at this time as to what your sub-ads and RPU look like in the six-weeks or so since Q1 ended?

Jay Mehr -- President

Yeah, sure. Well, I would tell you that I'm going to share a bunch of stuff and you'll probably come away thinking I haven't shared that much because that's what you usually say, Vince. I think, if you look at our transition into Big Gig, the launch of Big Gig was certainly successful for us and we saw some nice but small migration in the base. In the month of October and November -- end of October, beginning of November -- we didn't really see impact. We didn't see an increase in growth sales volume.

We saw the ads coming in at a higher price point and around starting to approach the $50.00 -level at that point, and so we're seeing a healthier base and we were seeing about 1% of the base a month moving up in terms of $6.00 or $7.00 a month in RPU. So, that's what you've seen in November. We might have frozen the market a bit, both with our iPhone announcement and then also with our iPhone presales, so starting on Black Friday, we did iPhones on presale, but all of those iPhones we sold we see in the December numbers because they were all filled -- most of them -- that December 8th/9th weekend kind of activity.

I would say a couple things about our new business -- because it does feel like a new business starting in December -- and it was, on the last call we said to you nobody every underestimated the importance of Apple to our business, which meant to say that we were in active negotiations and we knew how important it was. To be clear, I underestimated the importance of the iPhone to our business. It has changed all aspects of our wireless business. We're adding customers, all of them north of $50.00 in recurring revenue.

We're selling a lot of phones and you can see this in our numbers. We haven't historically been a place that sells phones -- it's a high percentage of our net-adds and that has changed -- so I think you're going to see a net gain in Q2 that's meaningfully stronger than what you've seen from us at any time and that's imported a really, really healthy revenue component to those net-adds. Obviously, we had four or five days of record disconnects when we had our competitors jump into the space right before Christmas on greater distribution. And, to be clear, our 3G base is exposed to those kinds of things -- we've been exposed to Public Mobile in the past and we were certainly exposed over those four or five days -- so maybe not quite the net quarter that we might have thought at one point it was going to be, but it's going to be very different than what we've seen in the past.

Vito Culmone -- Executive Vice President and Chief Financial Officer

Jay, I'll just add the RPU commentary there, Vince, very similar to the wireline side. I think it's going to obviously take some time for these customers who are coming in at a rate greater than $50.00 to have a more meaningful impact on our overall weighting and you'll see that more back-half end-loaded and into F19, obviously, as we move forward.

Vince Valentini -- TD Securities -- Managing Director

Okay. If I can add one last clarification, there, so you obviously had this huge surge of iPhone sales, given the promotions you had Black Friday and the beginning of December. From your learnings from that experience, do you think you need to be that aggressive in the future, offering $0.00 8s and 10s, or is that viewed as a temporary versus your more consistent promotional behavior? How should we think about that?

Jay Mehr -- President

Yeah, I would say to you the thinking this way: The Big Gig pricing is our pricing and Paul will tell you he doesn't like the change rate plans pricing -- there's lots of complexity in distribution, it takes people a period of time to get in the cycle, it takes customers a period of time to get into the cycle. Our Big Gig pricing is our pricing and don't expect to see us move from that on weekly or monthly basis. We're going to have a pricing umbrella so, if we have some things that happen on pricing -- like happened before December -- I think we came down $10.00, which I think was a measure of growth to get in the marketplace. We need a pricing umbrella just for where we are in the segment and I think everyone understands that.

So, Big Gig pricing is our pricing -- device pricing and financing is a lever that we will use as we come in and out of the market. You only get to launch the iPhone once. This business has waited for an iPhone for a long time -- we chose to launch it with impact and we think that was a great call. What we do with device pricing, that's much more in response to the competitive environment and what happens on a go forward basis. And part of it is the zero-down component and part of it is the amount of subsidy -- all of that is being worked into our analysis. With that having been said, we like the results that we're getting on the current pricing and we think it's sustainable, but you might see us make some adjustments on hardware pricing.

Vince Valentini -- TD Securities -- Managing Director

Thanks.

Operator

Our next question comes from Jeff Fan of Scotiabank.

Jeff Fan -- Scotiabank -- Equity Research Analyst

Thanks. Good morning, and I just want to express my condolences to the Shaw family as well. Just a few follow-ups from the questions before and the answers before. Jay, I think you mentioned that bids around the wireless competition in those three or four days. You mentioned that you saw a bit of a record disconnect -- is that what you pointed to -- and I guess you mentioned the 3G base and so I guess my next question would be how big is your 3G base how quickly are you whittling that down? And then, just along the lines of competition in wireless, I think you made the point that you only launch an iPhone once and that, since your coming party, did what the big three did in the market kind of dull some of, I guess, the upside that you would have expected to see from the iPhone, given how active they were in responding in those three or four days' period?

Jay Mehr -- President

Yeah, great. Thanks, Jeff. I don't know that I intended to use those exact words, but I did use the words "record disconnect" so they were correct. Look, the market got activated and, if you were in a mall over those four or five days or talking to people, the wireless market got active and I guess you could argue we were a source of that activation. And I would make the argument that, if the big three want to activate the market, in the long run, we'll win because we'll benefit from people shopping around and so forth. We took big disconnects over those four or five days, as you can imagine.

You've seen our historical base at $37.00 RPU and they're exposed to those kinds of offers from other competitors so we were going through strong daily net gains going into those days and, clearly, that short period of time, our gross sales held up nicely and we continue to get lots of movement from the big three, but they got some movement from us over that period of time. That having been said, not to overstate that -- unfortunately, you can't replace the five key selling days before Christmas with five days in February, which is probably by design, but I think it was a healthy moment in time where the marketplace had a chance and, probably, in the medium term, if 10-gig for $60.00 including voice has become a thing, we're the place you can get it in the marketplace and so I think, in the medium term, that helps us.

When I made the comments about the 3G base, correct me, I identified that, as we reform and move into LT, that large chunks of the 3G base will convert to LTE on a network basis and we will get to the point where we have, maybe, 250,000 or 300,000 3G customers on the 3G network. I was maybe being a little lazy in my words.

When you talk about the old legacy base that's at the $37.00 RPU, we're going to be able to move a portion of that base up into our $50.00-plus RPU pricing but, remember, a bunch of that base is in a different space -- it's in the space now occupied by Public Mobile Chatter and Lucky and where we're occupying now is a more mid-market space that's almost above that.

So, we're not necessarily going to be able to wave a magic wand, convert that space to LT, and have it all miraculously come to $50.00 RPU so I think we're going to continue to do our best in serving the segment that we have while we're growing a very different looking customer profile as we go forward.

Jeff Fan -- Scotiabank -- Equity Research Analyst

Great. And then maybe just a quick one on the Corus cable side. The video loss in the quarter -- when you compare to last year, you didn't have BlueSky in the market but, this quarter, you had it -- and the loss seems to be a little bigger. So, I understand you slowed down some of the promotional activities which probably caused that, but I guess the question would be how should we think about, I guess, video ads or maybe cable RGUs, overall, for the remainder of the year of Fiscal '18?

Jay Mehr -- President

Yeah, I think so. A couple things to think about there: one is we are certainly in an adjustment quarter and our plan is to also have it be pretty substantive increase in Q2, although a smaller increase than we had in Q1 and then our plan to adjust it will be able to move as we move through that segment of customers to neutral or slight positives starting in Q3 and continuing into Q4 is the way we look at the business today. If you think about the impact of BlueSky in the business, BlueSky is working.

You probably heard us talk before about the three video segments that are evolving in the marketplace. There's the TV-lovers, that is the TV customer who watches TV on a television set, often in a shared family room or some kind of shared room where more than one person in the household is watching the TV together a couple of times a week. Those are our classic BlueSky customers. We do very well in this segment, we did very well in this segment in Q1, we continue to do well. The other two segments are the price-sensitive and the streamer segments. The price-sensitive is that group that is prepared to pay $15.00 or $20.00 a month for video.

We have played in that space, promotionally, but we never make any money there. And part of it is because we've been trying to market our legacy product to that group and you can't make money on a $20.00 video product with a legacy cost structure, and a set-top box, and $100.00 truck roll, and three calls into the call center -- that space just doesn't make sense -- so you've seen it pause on that group and you see that in our 2-1 video subsidy and you see that a little bit in Q2. On the streamer segment, it's a little similar to the third segment -- it's a little similar to the price-sensitive group -- but it's really about consuming on devices and we don't have a pure play product there -- you can watch the Chromecast Roadmap and predict what we're going to do in those areas.

So, we think BlueSky's working and our customers that have BlueSky love it and they're our highest value customers. And I think you'll just see us stabilize the base as we go through the rest of Q2 and then go to RTU side in Q4. In general terms, phone has been pretty sticky for us, internet is doing well and we're going to continue to see gains.

Satellite was a hair softer in Q1 than expected. There's the normal seasonal factor in Q1 -- I don't know that there's anything all that structural happening in satellite, but we are a few thousand behind where we, ideally, would want to be. We should look forward... satellite business is going to be tough. We're going to manage it for profitability. RPU is holding up nicely on satellite video and I don't think we're going to chase the RGU number to try and replace high-end value customers with where the low-end low-customer lifetime value. I think we're really going to be focused on retention there.

Jeff Fan -- Scotiabank -- Equity Research Analyst

Great. Thanks, Jay. I'll pass it along.

Operator

Our next question comes from Phillip Wong of Barclays Investment Bank.

Philip Wong -- Barclays Investment Bank -- Quantitative Analysis

Hi, good morning. First, I also want to express my condolences on the passing of Jim. In terms of my question, I want to ask, first, on the BYOD RPUs, was wondering if you could give any color on the types of RPUs that, first, you're seeing or that you expect to get, just given the expanded adjustable market. Yeah, on the BYOD market from the reforming, I'd imagine that we'll see a nice lift in the segment, in addition to those customers buying a new iPhone from you. Just trying to assess the magnitude of the corresponding lift to RPU from the BYOD segment that you expect.

Jay Mehr -- President

Great. Thanks, Philip. So, to be clear, our whole business has been a BYOD business for a long time. We have sold a small percentage of phones on activations, well beneath the average. The challenges in our BYOD business has put everybody on this 3G network because the phones were not compatible with even our LT spectrum. So, we've always been in the BYOD business and you see that in our $37.00 RPU.

Over the course of November, we did see a nice uptick in RPUs similar to what we were seeing on the base of that $6.00 or $7.00 in the BYOD space. As we balance subsidy with monthly recurring revenue, we're working on is there a $10.00 break, which there often has been for BYOD and we'll work our way through that? To be clear, in Q2, we haven't put any energy into BYOD. We only have LT-activated in the western markets so I think you'll see us fire up on that when we're ready to go everywhere. And then, also, it's hard to say two things at once and we've been saying iPhone as loudly as anyone will listen. So, our BYOD customers tend to come on about $10.00 less than our iPhone adds today, in terms of their monthly, and it's a space we have not really leaned into LT yet.

Philip Wong -- Barclays Investment Bank -- Quantitative Analysis

Right. Got it. No, that's very helpful. I was just wondering, from the 3G, say if I'm an iPhone 7 user and now I can go onto your network, whereas that would have been 3G before the reforming, then how much more I would be willing to pay to go on your network and the $10.00 remark is helpful.

Jay Mehr -- President

I guess big opportunities for the second half. We're not going to get bored with iPhone -- because we've been waiting a long time, we're going to drive that and, the second half of the year, the value proposition you just described is going to be right at the heart of our market.

Philip Wong -- Barclays Investment Bank -- Quantitative Analysis

Got it. No, that's very helpful. If could sneak in a second one, you've obviously talked a lot about the strong demand on the iPhone for you guys and having a much bigger lift for your business than you had expected. Was just wondering, to the extent that it's also requiring you to spend a little bit more to support that growth, is there any corresponding offset to potentially mitigate the impact to the full-year free cash flow?

Vito Culmone -- Executive Vice President and Chief Financial Officer

Philip, it's Vito here. Clearly, these subscribers that are coming in, there's a reinvestment there in the lift in RPU into subsidy and into cost acquisition -- all that is embedded in our EBITDA guidance. In respect to, obviously, recent capital requirements and whatnot, we guided last October, we expect to see, to some degree, the effect that we're exceeding our own expectations. We'll have adjustments to that, but all very, very manageable, obviously, with our balance sheet liquidity and cash on hand so nothing significant to report at this point.

Philip Wong -- Barclays Investment Bank -- Quantitative Analysis

Right. Got it. No, very helpful. Thanks very much, guys.

Operator

Our next question comes from Greg MacDonald of Macquarie Capital Markets.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

Thank you. Good morning, guys and, like the rest, I'll express my condolences to the group. So, quick question I want to have is on the wireline basic subscribers, in particular, and maybe just a little more color on the profile of the declines and, potentially, impacts on RPU or pricing power there? We do know that there was some competitive activity in the quarter -- pull back its promotional activity, I think, it was in early December -- so there was an impact from a competitive standpoint there, but the press release also makes reference to a change in customer mix. I wonder, are you talking cord-cutting or, Jay, the reference to streamers that you're talking about? To what extent is cord-cutting -- which is having a bigger impact in the U.S. -- to what extent is that having an impact in Canada, either in basic customer declines or also in the loss of pricing power? Thanks.

Jay Mehr -- President

Great. Thanks, Greg. It's not the perfect quarter for us to talk about the video landscape because we have the adjustment things around promotional customers that we don't make a lot of money on and so I don't want you to look at our video RPU numbers and say the world is changing for video. But, that having been said, even after our video numbers stabilize again, the world is changing for video.

The video landscape is changing for the entire industry. I don't necessarily accept that Canada's all that different than the U.S. -- I think, in North America, things are changing. Things are changing with the amount of streaming content, things are changing, quite frankly, just the amount of content that's available in the cloud for free through what people call "piracy" and whatever words they use to describe it, including on sports. The video world is changing and there's things happening on video that people will try and lean in and adjust to make their own numbers look better and stuff like that. There is stuff going on here.

To be clear, of all companies, I think our two-year head start on BlueSky, combined with our wireless assets, put us on the sunny side of where the most industry changes are and I don't think there's anything scary for us. I think we've had such video competition early that others haven't had that our video RPUs have already adjusted and our video market shares have already adjusted. So, I think we're on the sunny side of the changes in the video market, but the world and consumers are changing and we can't control that.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

So, to be clear, Jay, when you're describing in the release on change in video customer mix, I thought that that was more related to what's happening in your promotional activity, as opposed to quarteting. Am I correct in making that assumption?

Jay Mehr -- President

You are correct on that piece. So, to be clear, what that statement totally refers to is we had a mix of TV-lovers and price-sensitive customers that we're playing in. We basically removed all of the offers that made video available for $15.00 and $20.00 a month and, as such, we didn't add any price-sensitive customers. You can imagine that segment has a high degree of churn as it comes off promotional periods. Now, what you saw, we had a good quarter in our traditional TV-lover space. So, that comment on the press release was about the structural change in our promotions.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

Okay. Great. That's helpful. And a quick follow-on, if I could, on wireless. For the second half of the quarter with Big Gig being in the market, could you talk even contextually about the profile of existing customers increasing their data plans going onto the Big Gig plan versus the impact of gross adds? That would be helpful. Existing versus new?

Jay Mehr -- President

Yeah. Thank you, Greg. If you look at migration within the base, there's always migration in the base and, because so much of our base has been BYOD and so forth, there's lots of room for customers to move up and down. In the history of WIND and in our time owning the asset, all of that would net up over the course of a month to be about 1% of the base, maybe 2% in an active month and, historically, that would be quite neutral or maybe down $0.50 in terms of monthly recurring.

From October 22nd to the end of November, that activity increased a bit in terms of overall migration and, when you net all the pluses and all the minuses in terms of people adjusting their monthly billing, they came up about $7.00. And, interestingly enough, as November unfolded, that moved a little bit even more forward in moving high $5.00s into the low $7.00s in terms of the activity. So, it's clear that we've hit the marketplace so that there's a portion of our base that really likes this Big Gig abundant data approach and is going to buy into it. To be clear, though, you need to be patient.

Vito Culmone -- Executive Vice President and Chief Financial Officer

Yeah. About 1%, right?

Jay Mehr -- President

If you've got 1% or 2% of your base adjusting on a monthly basis and all of our new adds coming in at over $50.00, we're going to get a lot of RPU in a year or two here.

Vito Culmone -- Executive Vice President and Chief Financial Officer

But heading in the right direction.

Jay Mehr -- President

But it takes a period of time for that to flush through the base.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

Yeah, and I'm drawing the conclusion that, clearly, the bigger impact is the iPhone and the ability to sell that type of product into the Big Gig plan, right?

Jay Mehr -- President

That's correct.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

But, when you say increased a bit, am I to conclude 1% going to 2% or something like that?

Jay Mehr -- President

Directionally, you're on the right track.

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

Okay. Thanks very much, guys.

Operator

Our next question comes from Aravinda Galappatthige of Canaccord Genuity.

Aravinda Galappatthige -- Canaccord Genuity -- Managing Director

Good morning. Thanks for taking my questions and I also want to pass on my condolences to the family. My first question is on wireless. I know you can't get too detailed here, but I was wondering if you're willing to offer some kind of color on the mix of the net adds you're winning in wireless these days, both regionally and in terms of general standings, obviously, most of the wins are still in the city in Toronto -- has that mix changed in recent times? Are you seeing more of a balance to the west, as well, or has it been steady mix over the last several quarters?

Jay Mehr -- President

You've correctly identified that our wireless business is quite heavily awarded to the GTA -- has been. We saw some pickup in Alberta, in B.C. for sure, and there was some really interesting movement in the Vancouver market. Vancouver's actually, I guess, not unlike Toronto to a point. It's quite a price-sensitive market just because of the relationship of the cost of housing to people's income and so we saw some nice movement in the Vancouver market. But, to be clear, our December business continued to be anchored in Toronto -- maybe slightly less slow than in previous months with the GTA matters to our wireless business.

Vito Culmone -- Executive Vice President and Chief Financial Officer

I'll just add that, on a net basis, as well, predominantly post-paids is where it all landed -- healthy gross adds both on post-paids and pre-paids, but nice churn improvement on post-paid so, when you look at the net adds, significant majority of it is, effectively, post-paids. Again, another RPU future indicator.

Aravinda Galappatthige -- Canaccord Genuity -- Managing Director

Okay. Great. Thanks for that. And, just a quick follow-up on the wireless side, your experience as you reform the AWS-1, I know you've completed that in the West -- what's been your experience in terms of network performance and capacity there? And what are your expectations as you move that process to Ontario where there's probably going to be much greater need for capacity? Do you feel that reforms spectrum can support what you potentially add in terms of demand in Ontario?

Jay Mehr -- President

Great. Yeah, to be clear, the reforming happened so quickly in the west and has also happened in most parts of Ontario, with the exception of the GTA -- it's hard to sell other communities until you get the GTA up to speed so it really hasn't been our focus. It happened so quickly because it wasn't congestion, right, and so you could simply... we didn't have enough customers to cause congestion in the west and so you could simply move the spectrum over and there were a small number of sites you had to fill in with 2500 in order to relieve congestion.

The fact that Toronto's taking longer is partially just because some of construction is harder in Toronto and it just take longer to get that connected there, but it's more because we've got a lot of customers in Toronto and a lot of activity and so we just can't pull back that 10 megahertz of AWS-1 without replacing it with 2500. The team has done a terrific job and a shoutout to our entire technology team and, particularly, the team under Brian in wireless. The planning process of, of course, 2500 is extremely dense and allows us to manage tremendous amounts of capacity.

The plan works and we're able to actually improve the customer experience as we do the reform. And, as the LT network continues to be wide open, even internal, so from a congestion point of view, it all works -- it just takes us a little bit longer. The good news is we've had the iPhone to be our focus for this four, five-month period so we haven't lost anything and we'll be able to come hard with the LT as we complete it.

Aravinda Galappatthige -- Canaccord Genuity -- Managing Director

Great. Thank you. I'll pass the line.

Operator

Our next question comes from Tim Casey of BMO Capital Markets.

Tim Casey -- BMO Capital Markets -- Analyst

Thanks. I just wanted to revisit a comment you made, Jay, where you thought... the expression you used, you thought you were on the "sunny side of industry developments," yet you described your video business as really focused on TV-lovers -- you can't make money in the price-sensitive statement and you don't have a product yet for the streamers, yet, by your own admission, that legacy component or market is the one that is transitioning away. And it seems that, whenever you stop price lever, there's almost an immediate impact in subs. I'm just wondering if you could square those comments for us? And, I guess, as a follow-on, you've indicated, on the wireless side, your pricing is your pricing. That doesn't seem to be the case on wireline -- it seems to be more dynamic -- and I'm just wondering if you can reconcile those thoughts? Thanks.

Jay Mehr -- President

Yeah. Great. Thanks, Tim. If you think about our approach to video, we continue to do well in that TV-lover space and we love the BlueSky product and so does our customer because it integrates the internet digital experience and TV and it's the best in cost, experience in the globe. To be clear, even within our BlueSky base, maintaining RPU is a new up. We're not seeing big RPU gains as we deploy Blue Sky into that base, but we are seeing increased stickiness, reduction of churn, the combination of BlueSky and Internet 150 is a terrific package and when we also add wireless to that customer, that's a beautiful customer -- lifetime value customer -- so that's a super important part of our business.

When we said clearly that we couldn't compete in the price-sensitive or streamer space on our legacy cost structure, that was about us being very clear that the old cable company is not going to be able to compete with Netflix, and Google, and Amazon in the video space. To be clear, Shaw's going to compete in that space, but we're not going to compete in that space as a traditional cable company.

We've got a tremendous roadmap in the whole Chromecast so BlueSky's our first deliverable but the whole Chromecast roadmap is what we've signed on for and we are wholly committed -- and this will be a bigger thing on the wireline side of the business just because of scale -- we're totally committed to creating a modern digital experience, which can both drive customer satisfaction and material bottom line savings. And, as we deliver that modern service delivery model with the modern push, there's money to be made in that space. I think, to be fair, it's probably less money than in the legacy space --

Vito Culmone -- Executive Vice President and Chief Financial Officer

Less monetary results.

Jay Mehr -- President

Yeah. Less monetary results, but we're working hard on not just the next set of product offerings but, probably more important, that digital self-serve no set-top box cost structure that'll be critical for us to be in that space. So, today, you see us focus on TV-lovers because we've got the best product on the globe for that and we're working hard not only to deliver the next set of products, but digital, low-cost, self-serve, data-driven business model that really becomes the new Shaw in that space.

Tim Casey -- BMO Capital Markets -- Analyst

When do you think we get there, Jay?

Jay Mehr -- President

I think you get the customer-facing solutions, certainly, in Calendar 2018, certainly, and you get major inroads in terms of self-install in Calendar 2018. If you start talking about the completely digital mobile phone Shaw, I think, really, you make progress in that area, but that's more of a 24 to 36-month to completion in the transformation. We're spending an awful lot of time on the wireline side of our business -- multi-year transformation, new operating model. We'll have more to say on this in the Q2 call and you may even see it in the next coming weeks on the operating model side that we're starting to make some significant moves on that time.

Vito Culmone -- Executive Vice President and Chief Financial Officer

And, Tim, in the meantime, you've got internet really strong, you've got our B&B really strong, you've got, obviously, wireless and everything we've talked about, so feeling pretty good about those four components and how they're working through.

Tim Casey -- BMO Capital Markets -- Analyst

Thank you.

Operator

Our next question comes from Drew McReynolds of RBC Capital Markets.

Drew McReynolds -- RBC Capital Markets -- Managing Director

Thanks very much and condolences to everyone as well. Two questions: first, Vito, maybe just provide us an update on your thinking with respect to the Corus stake -- if anything, it's changed there. And then, secondly, on the internet side, clearly, you guys are holding your ground and probably doing a little bit better. Can you just comment on the competitive dynamics within fiber-to-the-home footprints? Have they changed relative to, perhaps, some of your commentary over the last year or two or is it just fairly status quo within those footprints from a competitive intensity standpoint? Thank you.

Jay Mehr -- President

Vito, why don't you take the internet and then maybe sweep up the Corus one, as well?

Vito Culmone -- Executive Vice President and Chief Financial Officer

Sure. Okay. Well, let's start with the internet one. Look, the strength of our wireline networks has us well-positioned. We're making moves into Docsis 3.1 and we have built into the model another level of speed and service in the marketplace that would allow us to compete with fiber-to-the-home activity from our competitors so we think that we're in good shape there. We think there are significant customer value in our broadband product and, quite frankly, in the broadband product that we offer rather than fiber internet provider.

And, with that value comes pricing power and so, as we continue to deliver faster speed and unlimited data, I think we think we're moving in that regard. And I think it's fair to say, Drew, that fiber-in-the-home area isn't our competitor compared to non-fiber-to-the-home -- that, in general terms, we are now in that same three or four points higher in the non-fiber-to-the-home competitive area, as opposed to three or four points lower in the fiber-to-the-home competitive areas.

We have quite equal market share in most of the markets that we are in -- very different than the U.S. and I think even different than parts of Canada -- so there's still upside for us in that space. We don't think we're missing anything and we continue to make investments in our wireline network and feel pretty good with where we are on there. If I can comment briefly on Corus -- I don't really have a lot to add to the public discussion around Corus -- I think we'll leave that for others. It was never our intention to hold this investment in perpetuity and, from our perspective, or from my perspective, look, we have a terrific balance sheet, we've got a solid EBITDA growth story, and we have no urgent cash requirements. Yeah. Good?

Jay Mehr -- President

Nothing much more to add there.

Drew McReynolds -- RBC Capital Markets -- Managing Director

Okay. Thank you.

Operator

Our next question comes from Maher Yaghi of Desjardins Securities.

Maher Yaghi -- Desjardins Securities -- Media and Tech Analyst

Thank you for taking my questions and my condolences to the family as well. I wanted to ask you, Jay, about your comment on the promotional activity that happened in December. You discussed it to a good extent, but I wanted to understand why do your customers who pay in the $35.00, $40.00 range -- as you said, mostly are 3G customers -- seeking promotions at $60.00 for 10-gigs while you have in the market a product for $50.00 and 10-gigs? What is driving or what drove these customers to go to the competitor for something that you already offered and they could have taken advantage of already? So, I'm trying to understand what you need to do to keep those customers happy more than what you are doing already.

Jay Mehr -- President

Thank you for the question. I would say two things on that. One is I know I understand the philosophy that the direction of the base of customers that we bought when we bought WIND is determinant of our success in the wireless business. I would make the argument that, when we bought WIND, it wasn't about the customer base -- it was about the spectrum, and the network, and the opportunities, and the chance to point the business in our direction that we're now pointing.

And so, I understand that people would like to see us aggressively monetize the historical base and bring them up the chain. We're going to do some of that but, clearly, when we talk about our aspirations in the wireless business, it's to play in a different space and, today, we're in quite a different market position because that's what was available to us. The reason the big three are having such success with Lucky and Chatter and, perhaps, while it's very difficult for us to compete with them in that space -- when we look at their distribution, when you look at their network, when you look at their in and out of roaming areas -- that just the fact that we don't have that many levers and the consumer who is angry at the big three for their data overcharges, there's lots of room for us there and it's harder for them to respond in that space than it is for them to come up with something cued on Public Mobile or Chatter.

So, I think that's how we're thinking about the business. If you're asking us about why we have higher churn than the other carriers and why we're exposed to that side of the base, I think that's, quite frankly, where our business was and is. We do have higher churn. We have a pre-paid base that's available for competitors to reach into. We don't have our base secured in the same way as others have their base secured. There is no question, in the voice world, there's still in and out of service areas -- with included roaming and other things -- that has the complexity in our value equation that isn't a complexity with the big three.

And so, when I talk about our pricing umbrella, the reason why we're not going to be a junior member of the big four is, if we offer exactly the same prices like the other three guys do with exactly the same offers, we won't win -- there is in and out of market roaming, and there's some things with network, and there's we've got a less secure base and higher churn than they have. We are playing a different game which is what we're up to.

Maher Yaghi -- Desjardins Securities -- Media and Tech Analyst

And, just a follow-up, I always thought it's cheaper to, let's say, upgrade a customer that you already have than going out and grabbing a customer from the competition and having to subsidize or do any... Is there an opportunity to, now that you saw that there is a good amount of customers -- your own customers -- on 3G that are readily willing to pay $60.00 for 10-gigs, is there an opportunity here to upgrade them before they go somewhere else?

Jay Mehr -- President

Yeah.

Maher Yaghi -- Desjardins Securities -- Media and Tech Analyst

And what do you need to do to do that?

Jay Mehr -- President

For sure, there's an opportunity. For sure, there's an opportunity and I think we have the opportunity to focus as we go forward and more relatively simple wireless operation and we're doing one thing at a time and with the opportunity to expand our addressable market with iPhone -- and we chose to do that and we've got no regrets on that level of focus. I understand we could have focused on other things in December, but I think we focused on the right thing.

To be clear, we saw disconnect, in those four or five days, I really don't have that much to say -- I guess on the phone first -- I don't have much to say about the wireless desktop that we are primarily a spectator in. The big three were the primary participants in this. Our loss, our disconnects over those four or five days, must have been a small, small, small fraction of the swath that those three guys did to each other and we were kind of a spectator in the shopping malls over those four or five days. So, we indicated that we went from making some of those days on the previous days -- slack days for a few days -- which was a tremendous amount of activity for us. That four or five day-story isn't really for us to tell -- the big three will have a lot more to say about that than we will.

Vito Culmone -- Executive Vice President and Chief Financial Officer

And, Maher, I'll just add to Jay's comment that, in fact, on the focus in December, clearly, with the iPhone launch, upgrades were significantly higher than they have traditionally been in the month and we recognized the cost of acquisition differential there for sure.

Maher Yaghi -- Desjardins Securities -- Media and Tech Analyst

Thank you, guys.

Operator

Our next question comes from David McFadgen of Cormark Securities.

David McFadgen -- Cormark Securities -- Analyst

Oh, great. Thank you. Thanks for taking my question and please also convey my condolences to the Shaw family. Just a couple of questions. So, on the video subscribers, you talked earlier about Q2's probably going to be negative, as well, Q3, neutral to positive, Q4 positive. Do you think that you could actually finish up Fiscal 2018 on a neutral basis or is the result in Q1 just too much of negative? And then, secondly, on the wireless RPU, if you look at Quebecor's experience -- within two quarters of them offering iPhone, their RPU is growing at a double-digit rate -- do you think we could start to see some meaningful uplift on your wireless RPU within two quarters or is it just too early to say?

Jay Mehr -- President

Yeah. Great. I'll take the first one, David. I'll let Vito take the second. Look, we don't guide on RGs, particularly because it's such a competitive environment and things go up and down. I don't want you to think we're sitting with a control panel, and we're adjusting the various levers, and we know exactly to the single-units where we're going to land. We are being very purposeful in our step-by-step approaches in both wireless and wireline. And, to be clear, our wireline plan that we're operating the business to, today, does not get us back to neutral in video, but does get us back to potential growing and being more neutral on a quarterly basis in Q3 and Q4.

And there's a good news story: as you do the math back from guidance, you can see the benefit of what we're doing here and what that means for the EBITDA story in the back-half. And I'm sure you can do the math there, yourself, on that. We're not prepared to give up that financial benefit that we're winning in the second half of the year that add another 5,000 video subs or something like that, but we are excited about getting through this part of the business so that we can get back to some stability. You want to talk about wireless?

Vito Culmone -- Executive Vice President and Chief Financial Officer

Sure. David, your comment about Quebecor is interesting. We've got some network, perhaps, differentials there between us and them on that side of things but, you know what, circle Q4 of this Fiscal '18 as one to watch. Definitely, we've talked about, through the course of the call, the weighting of the incoming value customers should start to see some meaningful impact in our back-half, particularly, Q4 and into F19 as well.

David McFadgen -- Cormark Securities -- Analyst

Okay. And if I can just add one additional question on wireless -- do you think, within, say, the next 12 months, you would actually bundle a wireless product with your existing telecom services OS?

Jay Mehr -- President

Yeah, clearly, as we work our step-by-step approach on both the wireline and wireless sides of the business, bundle's going to be a hugely important part of the modern digital Shaw experience. 12 months? It's possible. You might be on the light end, but it's certainly possible.

David McFadgen -- Cormark Securities -- Analyst

Okay. And would that at all be contingent upon any, say, CRTC ruling on wireless roaming or something like that?

Jay Mehr -- President

Yeah, there are so many variables in our business and we are in a disruption-heavy competitive environment so, yeah, there's a level of agility that is required and I think it's actually a competitive advantage of ours, not only as consumers' behaviors and needs change, but also as regulations change. I think there's decent line in sight that the costing model on roaming is a model with calculations and a decent line of sight of where we'll probably land there, which is probably good on voice, not great on data.

We'll see where it lands and I think that'll be instructive -- 600 is super important for us -- but we're building a business around that stuff landing wherever thinking it's going to land. I don't think that will be determinant. I think the bigger part of this is really we're taking a step-by-step approach to wireline and a step-by-step approach to the wireless and then, over time, those steps bring those things closer together in support of a more modern service-delivering model and a model of a new Shaw, really, in terms of how we're approaching things.

And I think, if you look at the last 18 months closely, you can see, in terms of our quota markets, we've already started out with BlueSky, and WideOpen, Internet 150, and the Smart suite of services, and Big Gig and hero devices with iPhone. And you see lots of those quota markets come together in many ways in the operating model -- the digital self-serve, the data segmentation -- we'll come in behind that and enable the coming together of the two sides. And so, I think we're in control of our destiny and aren't necessarily waiting for external things to happen.

David McFadgen -- Cormark Securities -- Analyst

Okay. Alright. Thank you.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Mehr for any closing remarks.

Jay Mehr -- President

Yeah, thank you again for the call. It's going to be a difficult day here today with the AGM and the services for Jim tomorrow. Again, on behalf of Brad, I want to thank you for all of your kind thoughts and we know that Jim would want us to be completely focused on the business. We're going to take a minute or two and not be totally focused over the next day or two, but we are going to continue to build this business as we go through these difficult times.

We have a plan -- we're being purposeful with what we're doing with both the wireless and the wireline side, meaningful moves on operating level coming forward in the next couple of weeks, more in store in Q2 and we couldn't be more excited about the opportunities for our business, both in terms of market share gains on the wireless side, internet, revenue opportunities, opportunities in business in our long-term story. Thank you very much for your time today.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Duration: 68 minutes

Call participants:

Vito Culmone -- Executive Vice President and Chief Financial Officer

Jay Mehr -- President

Vince Valentini -- TD Securities -- Managing Director

Jeff Fan -- Scotiabank -- Equity Research Analyst

Philip Wong -- Barclays Investment Bank -- Quantitative Analysis

Greg MacDonald -- Macquarie Capital Markets -- Managing Director

Aravinda Galappatthige -- Canaccord Genuity -- Managing Director

Tim Casey -- BMO Capital Markets -- Analyst

Drew McReynolds -- RBC Capital Markets -- Managing Director

Maher Yaghi -- Desjardins Securities -- Media and Tech Analyst

David McFadgen -- Cormark Securities -- Analyst

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