Consolidated revenue increased 2.1% and adjusted EBITDA improved 8.1% year-over-year, in line with expectations and including the impact of IFRS 16 in fiscal 2020

Wireless service revenue increased 18.1% year-over-year as Freedom Mobile continues to grow its customer base, including net postpaid additions of approximately 67,000 customers in the quarter

Introduction of BlueCurve Total and Freedom Home Internet enables improved bundling and customer segmentation initiatives in the Consumer division

Initiated the previously announced normal course issuer bid program during the month of November with approximately $25 million in Class B non-voting shares repurchased and cancelled

Calgary, Alberta (January 13, 2020) – Shaw Communications Inc. (“Shaw” or the “Company”) announces consolidated financial and operating results for the quarter ended November 30, 2019, including the impact of adopting IFRS 16, Leases (IFRS 16). Consolidated revenue increased by 2.1% to $1.38 billion and adjusted EBITDA increased 8.1% year-over-year to $588 million. Removing the $38 million impact from IFRS 16, adjusted EBITDA growth was approximately 1.1%.

“We continue to demonstrate consistent execution across our business units and remain focused on our growth segments including Wireless, Business and Broadband,” said Brad Shaw, Chief Executive Officer. “As the competitive landscape in wireless continues to intensify and evolve, our positioning in the market remains strong. Freedom Mobile’s reputation of providing high quality and affordable wireless services, not just during the highly competitive holiday period, but every day, resonates well with customers and through the introduction of Freedom Home Internet, we have reinforced our dual brand strategy that enables us to effectively segment the broadband market.”

The Company continues to grow its wireless subscriber base, which is now over 1.7 million customers, including approximately 67,000 postpaid net additions in the first quarter, along with solid year-over-year ABPU and ARPU growth of 4.5% and 1.0%, respectively. Postpaid churn increased marginally in the quarter to 1.5% compared to a year ago as Freedom Mobile successfully began the renewal of its initial iPhone cohort from the Christmas period in 2017, a positive outcome given the intensity of competitive offers heading into the holiday shopping period. Wireless network investments to improve the customer experience continue to be a priority, with deployment of 700 MHz spectrum now substantially complete in Western Canada and scheduled for completion in the remaining markets in Ontario throughout fiscal 2020.

In the Wireline segment, Consumer Internet net additions grew by approximately 5,600 and with the launch of BlueCurve Total, which bundles BlueCurve Internet with BlueCurve TV, Shaw delivered its best Consumer video subscriber result in over two years. The roll-out of IPTV across its cable footprint is 76% complete and the number of customers electing to self-install increased to over 48% in the quarter, supporting the digital transformation initiatives and the lower cost to serve model. Shaw Business continues to attract customers in the small, medium and enterprise market, delivering top-line revenue growth of 3.6% year-over-year to $143 million, or approximately 5% growth excluding the effect of prior year revenue from the Calgary1 data centre sold on August 1, 2019.

Selected Financial Highlights

Fiscal 2020 results include the impact of adopting IFRS 16 using the modified retrospective approach. Under the modified retrospective approach, fiscal 2019 results have not been restated and are not comparable to fiscal 2020 results. Supplementary information is provided in the accompanying Management’s Discussion and Analysis (“MD&A”), under the heading “Accounting Standards,” which discusses the changes on adoption of the new standard.

In the quarter, the Company added approximately 57,900 net Wireless RGUs, consisting of 66,900 net postpaid additions and 9,000 net prepaid losses. The increase in the postpaid subscriber base reflects continued customer demand for the Big Gig data centric and Absolute Zero pricing and packaging options. The decrease in the prepaid customer base reflects higher churn due to increased competitive activity.

Wireless service revenue for the three-month period increased 18.1% to $196 million over the comparable period in fiscal 2019 due to an increased subscriber base and growing penetration of Big Gig data plans. First quarter ABPU grew by approximately 4.5% year-over-year to $43.60 and ARPU increased 1.0% to $38.76, reflecting the increased number of wireless customers subscribing to higher service plans. Wireless equipment revenue for the three-month period increased 15.1% to $122 million as more customers acquired devices through Freedom Mobile. First quarter Wireless adjusted EBITDA of $71 million improved 61.4% year-over-year, partially due to decreased operating expenses of approximately $17 million resulting from the impact of adoption of IFRS 16 and increased service revenue. Removing the accounting impact, Wireless adjusted EBITDA increased approximately 23% over the prior year.

Wireline RGUs declined by approximately 57,500 in the quarter compared to a loss of approximately 52,800 in the first quarter of fiscal 2019. The current quarter includes growth in Consumer Internet RGUs of approximately 5,600, which is comparable to a year ago. While the mature products within the Consumer division, including Video, Satellite and Phone declined in the aggregate by 72,000 RGUs, Video RGU losses of approximately 14,000 in the first quarter improved from a loss of 23,800 in the prior year due primarily to the introduction of BlueCurve Total. Through the launch of BlueCurve Total and Freedom Home Internet, the Company continues to improve its customer segmentation initiatives and remains focused on growing Internet subscribers, primarily through two-year ValuePlans, and on attracting and retaining high quality Video subscribers.

First quarter Wireline revenue of $1,067 million decreased 1.5% while adjusted EBITDA of $517 million increased 3.4% year-over-year. Wireline adjusted EBITDA growth was due primarily to decreased operating expenses of approximately $21 million resulting from the impact of adoption of IFRS 16. Removing the accounting impact, Wireline adjusted EBITDA was comparable to the prior year. Consumer revenue of $924 million decreased 2.2% compared to the prior year as growth in Internet revenue was offset by declines in Video, Satellite and Phone subscribers and revenue. Excluding the effect of our disposal of the Calgary1 Data Centre on August 1, 2019, our Business revenue increased approximately 5% year-over-year to $143 million, reflecting continued Internet revenue growth and demand for the SmartSuite of business products.

Capital expenditures in the first quarter of $260 million compared to $271 million a year ago. Wireline capital spending was comparable to the previous year, while Wireless spending decreased by approximately $11 million year-over-year due to timing of expenditures and higher costs associated with the deployment of 700 MHz spectrum and expansion of the wireless network into new markets in the previous year.

Free cash flow for the quarter of $183 million compared to $163 million in the prior year. The increase was largely due to lower capital expenditures and cash taxes.

Net income for the first quarter of fiscal 2020 of $162 million compared to $186 million in the first quarter of fiscal 2019. The decrease of $24 million was primarily due to $23 million in equity income recorded in the first quarter of fiscal 2019 attributable to the Company’s investment in Corus Entertainment Inc. This investment was disposed of in the third quarter of fiscal 2019. The adoption of IFRS 16 did not have a significant impact on net income.

In the first quarter of fiscal 2020, approximately 370 employees exited the Company, bringing the total number of employees who departed under the Voluntary Departure Program (“VDP”) to approximately 2,700, which represents approximately 84% of the employees that accepted the VDP package. The Company expects to complete the VDP in fiscal 2020 and remains on track to achieve the anticipated annualized savings of $200 million (approximately $125 million attributable to operating expenses and $75 million attributable to capital expenditures (i.e. labour costs that can be identified or associated with a capital project)) in fiscal 2020. See also “Introduction,” “Other Income and Expense Items,” and “Caution Concerning Forward Looking Statements,” in the accompanying MD&A for a discussion of the Total Business Transformation (“TBT”), the VDP and the risks and assumptions associated therewith.

As at the end of November 30, 2019, leverage stood at 2.5x, within its target leverage range of 2.5x to 3.0x, which was recently updated to reflect the impact of the Company’s adoption and the application of IFRS 16 in fiscal 2020 on its balance sheet. On December 9, 2019, the Company closed its offering of $800 million of senior notes comprised of $500 million principal amount of 3.30% senior notes due 2029 and $300 million principal amount of 4.25% senior notes due 2049. The net proceeds from the offering were used to fund the redemption of the $500 million principal amount of senior notes due December 7, 2020 and the $300 million principal amount of senior notes due February 19, 2021.The redemption of both of these senior notes occurred on December 24, 2019. In the month of November, the Company repurchased 919,731 Class B Non-Voting Shares under its normal course issuer bid (“NCIB”) program at an average price of $27.18 per share.

Mr. Shaw continued, “Our focus on the execution of our strategy, including the stabilization of our Wireline business and capitalizing on growth opportunities within our Wireless and Shaw Business segments, has resulted in a solid start in the first quarter and we remain on track to meet our fiscal 2020 commitments. In addition to our strong free cash flow profile and balance sheet position, we repurchased approximately $25 million worth of shares through our NCIB, our first buyback since 2011, supporting our previously announced initiatives to return additional capital to our shareholders.”

-30-