Shaw Communications Management Discusses Q3 2013 Results - Earnings Call Transcript

Jun.28.13 | About: Shaw Communications (SJR)

Shaw Communications (NYSE:SJR)

Q3 2013 Earnings Call

June 28, 2013 11:30 am ET

Executives

Bradley S. Shaw - Chief Executive Officer, Director and Member of Executive Committee

Michael D'Avella - Senior Vice President of Planning

Peter J. Bissonnette - President and Director

Steve Wilson - Chief Financial Officer and Senior Vice President

Jean Brazeau - Senior Vice President of Regulatory Affairs

Jay Mehr - Senior Vice President of Operations

Analysts

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

Vince Valentini - TD Securities Equity Research

Glen Campbell - BofA Merrill Lynch, Research Division

Dvaipayan Ghose - Canaccord Genuity, Research Division

Maher Yaghi - Desjardins Securities Inc., Research Division

Operator

Good day, ladies and gentlemen, and welcome to the Shaw Communications Fiscal 2013 Third Quarter Conference Call. As a reminder, this conference is being recorded. Today's call will be hosted by Mr. Brad Shaw, CEO of Shaw Communications. [Operator Instructions] Please also note that an investor slide presentation in relation to this conference call is posted in the Investor Relations section of the Shaw website under Presentations and Meetings. [Operator Instructions] If the press has any questions, please contact Mr. Shaw's office after the call.

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. Shaw, I will now turn the call over to you. Please go ahead.

Bradley S. Shaw

Good morning. Thank you, operator, and thanks to everyone for joining us today to discuss our third quarter results for fiscal 2013. With me today are members of our senior management team, including Peter Bissonnette, President; Steve Wilson, Chief Financial Officer; Jay Mehr, Senior Vice President of Operations; Jean Brazeu, Senior Vice President of Regulatory; and Michael D'Avella, Senior Vice President of Planning.

Before we begin our discussion on our recent results, I wanted to take a few minutes to address the severe flooding that has impacted Calgary and Southern Alberta. As many of you know, the level of physical devastation is matched only by the personal loss felt by many residents, including some of our employees and our customers. Our thoughts and prayers go out to everyone affected by this disaster.

We are grateful that our operations are intact and operating at close to full strength. Everyone at Shaw has been doing what's necessary to ensure our customers can stay connected through Shaw services. Our technical, maintenance and customer care teams took immediate steps to maintain and repair Shaw services for affected customers and to prevent further damage to our infrastructure. This response, combined with the strength of our network redundancy, limited the impact to our customers throughout Calgary and Southern Alberta.

We have deployed maintenance and customer care teams to create pop-up service tents in affected communities. We have opened up our WiFi network in Southern Alberta to help people stay connected. We increased staffing levels in our call centers and brought in technical staff from across the country. Global Calgary imported producers, camera operators and reporters from other stations in order to maintain its excellent wall-to-wall coverage for our audience throughout Alberta.

We are truly touched by all the efforts of all of our employees to come to the aid of their neighbors and our customers. I want to thank them all for their commitment to our communities.

Moving to our results. This morning, we released our Q3 materials, and we are pleased with our performance. Operating and competitive environment continues to normalize. Our promotional activity remains rational. We remain focused on our strategy of generating sustainable and profitable growth.

In Q3, we generated over $1.3 billion in consolidated revenue and $585 million in EBITDA, representing 4% and 3% growth, respectively, over the previous year. Free cash flow for the quarter was in excess of $135 million. And year-to-date, we have generated over $540 million in free cash flow.

As we enter the final quarter of 2013, we are seeing continued positive momentum across all our divisions, with ongoing revenue growth and overall management of costs. As a result, we are increasing our fiscal 2013 guidance and expect free cash flow to range from $590 million to $600 million.

Given the improvement in free cash flow and assuming continued favorable market conditions, our board plans to target dividend increases of 5% to 10% over the next 2 years. This consideration further solidifies the confidence that our board has in the ability of senior management to invest and grow the business and execute our strategic priorities.

Over the last several months, we have announced a series of transactions focused on optimizing our portfolio of assets. On April 30, we closed Envision acquisition and welcomed approximately 40 new employees to our Shaw business team. The acquisition expands our fiber footprint and business capabilities in Calgary. Results to date have been encouraging as we're beginning to capitalize on the opportunities to sell our Shaw business products and services to Envision customer base, which was predominantly focused on connectivity.

Also on April 30, we closed the sale of our Hamilton cable system to Rogers. The final sale price was approximately $400 million or 10x EBITDA. During the quarter, we received an additional $350 million related to a series of agreements we entered into with Rogers. On June 11, we received CRTC approval regarding our purchase of the remaining third interest in TVtrop from Rogers, and we expect this transaction to close at the end of the month.

We recently announced at our Media Upfront presentation that we intend to rebrand this channel in the fall to DTOUR. This channel further strengthens our relationship with Scripps and is focused within the lifestyle category.

Regarding the swap transaction we announced with Corus, we have closed the sale of our interest in ABC Spark and our acquisition of their 20% interest in the Food Network. The sale of our stakes in Historia and Series+ remains subject to CRTC approval, and we expect that these transactions to close in the fall. At that time, we expect to receive approximately $95 million in cash in connection with the swap.

We continue to made good progress with respect to our build-out of our WiFi network across our operating footprint. We are excited that we have been able to enter into a series of agreements with key municipalities across Western Canada as these sites will complement our existing WiFi network in these cities. Access to these venues is important as we intend to provide our customers with a fairly ubiquitous coverage and a consistent experience throughout the city. The agreements we have entered into with each municipality differ. However, under each scenario, we believe we are creating tremendous value for Shaw's existing and potential customers.

We believe that by bringing more awareness to our WiFi service, along with the capability of our network, we are providing an exceptional experience and are enhancing the value proposition of Shaw products and services.

During Q3, Anik G1 was successfully launched. And on May 29, we introduced more than 120 new HD channels to our Satellite customers. Shaw Direct now carries the most HD channels in Canada and continues to be the only Canadian satellite company that offers streaming video on demand to its set-top boxes. This month, we have launched a national marketing campaign to build awareness and drive additional growth as we are excited about our satellite HD leadership position.

Our Media business continues to perform well as our conventional and specialty rankings improve and our news organization remains dominant in Western Canada. In March, we launched our BC regional news channel and recently, were pleased to learn that we have been awarded the prestigious Edward R. Murrow Award for overall news excellence in network television. We are the first Canadian network to earn this recognition in the award's 42-year history.

During the quarter, our Media team was busy securing content for the important fall schedule. We are excited about our new commitments, and feedback from our Upfront presentation, where we showcased our new shows, has been positive. A total of 18 new programs have been secured, including 11 dramas. We believe these new programs complement returning favorites to the lineup, such as Chicago Fire and Elementary.

As we approach the end of fiscal 2013, we remain committed to our balanced approach to subscriber growth. As we discussed on our last call, we will be introducing service contracts, which include equipment to our customers. This additional choice for our customers will be introduced this summer, and our pricing of the service contract represents a continuation of our strategy regarding rational, sustainable and profitable customer acquisition and retention initiatives.

In conclusion, we are pleased with our Q3 results. Our solid growth in revenue, EBITDA and free cash flow demonstrates the soundness of our strategy, our operational strengths and our competitive advantages. As the operating and the competitive environment normalizes, we are proving that we are differentiating ourselves from our competitors based on the strength of our products and customer service.

I want to thank our senior management team and all of our employees for their commitment to our customers.

Before I turn the call over to the Q&A portion, I wanted to take this opportunity to announce that Michael D'Avella, our Senior Vice President of Planning, will be retiring at the end of fiscal -- at the end of this fiscal year. Michael has dedicated over 22 years to Shaw and has added a tremendous value to our organization throughout his tenure. Over the years, he has impacted and led a variety -- in a variety of areas across our organization. Michael has been a member of the Shaw leadership team from day one, and he has helped to create and shape what Shaw is today.

On behalf of myself, our family and all of our colleagues at Shaw, we want to thank you for your contribution and efforts. We are pleased that you're continuing to help us in an advisory capacity, and we will continue to benefit from your insight and expertise. Thank you, Michael.

Michael D'Avella

Thank you, Brad.

Bradley S. Shaw

Thanks to everyone for joining us today. And we'd now like to open the phones to any questions, operator.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Jeff Fan of Scotiabank.

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

I've got a couple of questions. First, on the Cable business, just wanted to touch on the ARPU and margin strength there. Obviously, based on Brad's comments about a more rational competitive environment and pricing environment, that's obviously helping. But I guess, you're also coming across some relatively easier comparison to last year when a lot of these pricing impacted your numbers. So I'm just trying to see how you look -- as you look forward, how this will likely trend over the next number of quarters or next couple of years?

Bradley S. Shaw

Yes, so I would start by saying that if you look at last year, our average total service ARPU was $116. And this year, we're at $122 average for the first 3 quarters. And right now, for Q3, we're at $125. So we are seeing continued growth in consolidated service ARPU. That's for the Cable business. Video ARPU has increased slightly, and Internet ARPU continues to increase. We believe that with the strength of the network and the value that we're providing for our customers with the WiFi service, that there is value and pricing power in the Internet side of the business. We'll have to see what happens on video and phone. Both those are high-margin products, and there's opportunities there for increases. But the key going forward really will be looking to the Internet as being a growth area.

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

Okay, great. My second question is just a clarification. On your cash flow statement, it looks like Rogers has paid you guys a refundable deposit of $200 million for the spectrum license. I guess my question is, was this contemplated at the beginning when this was signed? Is there anything that Shaw has to do on your side to get this upfront refundable deposit?

Bradley S. Shaw

That's a good question, Jeff, and this was contemplated in the original deal. Rogers paid $50 million for the irrevocable option to be able to purchase the spectrum. As part of the deal, they also provided us with a $200 million refundable deposit in the event that the option was not exercised. So if the option wasn't exercised, we would keep the option premium, and the $200 million would be refunded back to them. And that kicked in after the sale of Hamilton. So basically, we closed Hamilton in the quarter for $400 million, and $200 million of that reverted into this nonrefundable deposit -- refundable deposit, sorry.

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

So there's no other obligation on your side to receive that $200 million?

Bradley S. Shaw

No.

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

No. And just one final question along those lines on the spectrum transfer. We saw the new policy come out this morning. I'm not sure if you guys had time to go through it. But it looks like my understanding is because the framework came out today, it doesn't apply to the option agreement that you and Rogers signed? Is that correct?

Bradley S. Shaw

That's our understanding, Jeff.

Operator

And we'll move to our next question from Vince Valentini of TD Securities.

Vince Valentini - TD Securities Equity Research

Three questions. First of all, congratulations, Michael, on the retirement. So I'll try to ask one that you can answer. On set-top boxes and developments there, if you can give us any update on what you're doing with the platform and if you have any thoughts about wireless set-top boxes. I'll throw out my other 2 questions as well, probably for Steve. Just on the accelerated CapEx fund, the $100 million, I think, is still the plan for how much of that you'll spend this year. Can you give us any sense how much has already been spent? Sorry if it's in the MD&A and I didn't see. But how much was already spent year-to-date? And third one, just to clarify on the spectrum thing or maybe expand on it a bit, for Jean. The option is already done. You didn't have to get pre-approval for that, but, I mean, these rules still apply to the final decision on whether Rogers can acquire that spectrum in 2014. I wonder if you can just clarify that. And have you had a chance to think about this framework and do you have any update on your level of confidence that, at this point in time, Rogers will be allowed to own that spectrum or whether they'd be viewed as having too much of an undue concentration of overall spectrum if they were to pick up that 20 megahertz?

Peter J. Bissonnette

Okay. Vince, it's the old guy, Peter here on set-top boxes. So we have, as you know, 2 primary boxes, one being the Gateway, which is really, I think, being well, well received by our customers. It provide -- it's our premium box. It's the one that allows us to record up to 8 -- sorry, 6 different channels at the same time and play them independently in different rooms. And again, that's kind of state-of-the-art. We also have the DreamGallery box, which is [indiscernible] sort of medium but very high-quality experience for our customers, and it comes both in HD, as well as the PVR. And as you know -- you were at the show -- that set-top boxes and wireless set-top boxes is certainly something that will become a part of our fare as well. But right now, what we're doing is we're making sure that the best experience possible is coming out of our DreamGallery and our Gateway.

Steve Wilson

Vince, on the accelerated capital fund, for everybody's benefit, it's bottom Page 10. And we'll will continue to have this role as we go forward on the spending, what's been spent year-to-date and what the target spending is. In the quarter, we spent $40 million. In the previous quarter, we spent $ 10 million. So we're up to $50 million for this year. We expect to be just a little over $100 million for the total year. The proceeds have gone to the preliminary exploration of IPTV; expediting our WiFi build; the data center, which we have under construction here at our Barrie [ph] facility; and increasing network capacity through our DNU activities.

Jean Brazeau

Vince, it's Jean here. On the option, we had approached Industry Canada when we were negotiating the original option. So they were certainly aware of it. As for 2014, it's very difficult to speculate what 2014 will look like and how the markets will evolve in the next couple of years. So I think it's pretty speculative right now for us to have any view on what the minister will be thinking at that times, but we're pretty hopeful that the transaction will be approved in September 2014.

Operator

And will move to our next question from Glen Campbell of Merrill Lynch.

Glen Campbell - BofA Merrill Lynch, Research Division

I had one on revenues and a few on expenses. So the Cable revenue performance, again, quite strong. I know rate increases this quarter. Could you comment on the level of discounting? I'm assuming that continues to reduce. And then can you give us your thoughts on whether we'll see a rate increase on the September anniversary date and how big that might be? And then a couple on cost to follow.

Jay Mehr

Glen, it's Jay. There's been a tremendous amount of focus in the business as we go through our step-by-step discipline strategy on our recurring monthly revenue and our recurring monthly expenses. We're seeing some positive responses from all of those efforts. In terms of Cable revenue, for sure, our philosophy that last-in, best-served is the opposite of how we'll do business, is continuing to lower promotional activity. I think we're also benefiting from the move from 12-month promotions to 6-month promotions to 3-month promotions until the customer base is settling down nicely from a revenue perspective. We're certainly sticking with our step-by-step strategy as we move forward in the coming quarters. In terms of your specific question on expenses, can you help us with that again?

Glen Campbell - BofA Merrill Lynch, Research Division

I'm sorry, should we expect to see rate increases this September and have they've been determined?

Jay Mehr

Yes, I think you'll see an annual rate increase in the early fall and probably can have some idea what the magnitude to that is. We continue to invest heavily in our Internet service, and it's likely where you'll see some adjustments in terms of pricing. And as you know, other costs in the business, like network fees, increase, but I think you'll see something in the early fall.

Bradley S. Shaw

And I'll just add to that, Glen, that we've now seen 4 consecutive quarters in Cable of 48% margins. And so I think in terms of what we talk about in terms of balancing profitability and subscriber retention, once again, when we look at our 6.2 million RGUs this quarter, we lost 7,600, which is a nominal sum, but we're maintaining the business at a rate of profitability of 40% in Cable, which is very strong.

Jeffrey Fan - Scotiabank Global Banking and Markets, Research Division

That's great. On the expense side, you've outlined some initiatives that will help drive revenues in the future and I just wanted get a sense of what costs might be attached to the ones I was thinking of were first the Anik satellite, how much OpEx would come there; the new TV lineup for the fall, what kind of cost increase we might expect; and then finally, the advertising campaign that you mentioned.

Bradley S. Shaw

So in Anik, Anik adds about $2 million per month, and there was a little bit of that in 1 month of this quarter. So it's about $24 million a year for Anik G1. On advertising, our budget for next year is relatively flat in advertising overall, but we will see some redirection of funds as we're going to be launching a campaign, as we said in our press release, to promote Satellite. And Shaw Direct has been fairly quiet from a marketing perspective over sometime, and so that marketing will be directed toward Satellite.

Glen Campbell - BofA Merrill Lynch, Research Division

And then the new TV lineup?

Jay Mehr

Glen, on Satellite, is that what you're referring to?

Glen Campbell - BofA Merrill Lynch, Research Division

No, I think it's on the Media side, the new programming lineup?

Jay Mehr

Well, I mean, we did incur some additional costs in terms of the shows that we've added. Brad mentioned 18 in the opening comments. But we are seeing a nice, let's call it, cautious recovery in the advertising market with the automotive sector, the retail sector coming back. We have acquired additional rights for TV Everywhere, which, we think, will ultimately pay off here in terms of protecting the overall ecosystem for the television programming area. And those rights are pretty decent. I mean, we've got a total of 17 shows with full season stacking rights for TVE. That includes pretty much everything, so live streaming of that programming available to any device to authenticated subscribers. So that's an incremental cost, but we do expect incremental revenue associated with that.

Bradley S. Shaw

And on the linear said of the business, in terms of program value, while we did have a marginally increase in foreign programming by cost, we've also increased our simultaneous substitution from 13.5 hours per week in our schedule to 15 hours. So that is a net positive from a revenue perspective.

Operator

And we'll move to our next question from Dvai Ghose of Canaccord Capital.

Dvaipayan Ghose - Canaccord Genuity, Research Division

I'm glad to hear that the situation in Calgary has been manageable for you. If I can ask some questions about your financial guidance, as well as your dividend growth objectives. First of all, you've increased your fee cash flow guidance for this year by $40 million to $50 million. I'm wondering if you can tell us whether the driver is increased EBITDA assumption or reduced core CapEx assumptions? Obviously, you've maintained your accelerated CapEx assumption of $100 million.

Bradley S. Shaw

The driver behind that, Dvai, is just continue to control in promotional pricing. Some of the price -- grandfather [ph] price increases that we did in the spring and also just careful control of our base CapEx.

Dvaipayan Ghose - Canaccord Genuity, Research Division

Okay. So it's a combination of EBITDA and CapEx?

Bradley S. Shaw

There is some in CapEx. And our guidance for the full year was that we expected to see CapEx come down from last year. Last year, we had $810 million in Cable CapEx. This year, we expect it to be more in the area of $750 million to $760 million, as we indicated before.

Dvaipayan Ghose - Canaccord Genuity, Research Division

Right. But obviously, you think it's going to be less than 3 months ago when you gave the previous guidance. You've increased your guidance since the last call, so I'm saying that you've reduced that as well. Right?

Bradley S. Shaw

Yes, I would say that the -- our view on the business is more optimistic in a number of areas than it was in the last call.

Dvaipayan Ghose - Canaccord Genuity, Research Division

Okay, fair enough. Now on the -- to go back to the Rogers spectrum sale. You justified the accelerated CapEx by saying that the $500 million over 3 years will be funded through asset sales. But if we exclude the $300 million, given that the minister's comments seem to be fairly clear about who's allowed to own new entrant spectrum and who's not, i.e. incumbents. Perhaps you can sell it to Verizon or another third party. But if you look at all the other M&A announcements year-to-date, including the acquisition of ENMAX Envision and the $50 million in option proceeds, you have a net total about $261 million, which is only about half the $500 million. So are you prepared to fund the rest through leverage, if required? I just want confirm that, rather than slow down the accelerated CapEx?

Bradley S. Shaw

Well, first of all, I don't think we want to hypothetical in terms of the spectrum and what will happen to the spectrum. There's a number of things there that still need to work out, and so not we're not going to address that as a hypothetical situation at this point. What I will say is that you need to recall that we've got $400 million of proceeds from the sale of Hamilton, and we'll have $95 million of net proceeds from the asset swap, of course, that will come in the fall. So there's $500 million right there alone. And our debt leverage for the last 12 months is 2.2x, so we have the flexibility to go back and refinance or debt finance some of those acquisitions that we did as well.

Dvaipayan Ghose - Canaccord Genuity, Research Division

No, that's fair. My only point was there's also $225 million going to ENMAX and $59 million to RCI for TVtropolis, right?

Bradley S. Shaw

Yes.

Dvaipayan Ghose - Canaccord Genuity, Research Division

But -- no, that's fair. Now my last point is on the dividend itself. Now I understand you take it as a percentage of core free cash flow as apart from the accelerated CapEx because if you include the accelerated CapEx [indiscernible] growth in either the Satellite or the Cable division [indiscernible] from $100 million to $250 million [indiscernible] plus dividend payout. I just wanted to confirm if that's the case.

Bradley S. Shaw

Well, we don't include the accelerated CapEx because you have to remember that, that's cash on hand that we've received. So we're returning a portion of that cash to shareholders through dividends and looking at the base CapEx as the basis for how we look at the percentage of dividend payout ratio.

Dvaipayan Ghose - Canaccord Genuity, Research Division

Fair enough. And last question, if I can leave with this. Presumably, in order to sustain longer-term dividend growth, you have to see a turnaround in PSU growth or decline as we've seen today? Or do you think you can continue to enjoy EBITDA cash flow and dividend growth longer term just through price increases and the ARPU increases even if the base continues more [ph] modestly by 1%, 1.5% a year?

Bradley S. Shaw

Yes. And again, I would say that one of the things we talked about last time is that we've got 6.2 million RGUs in total, and our objective is not to lose more than 1% of that or 62,000 customers. We won't be 62,000 RGUs, and we will not be near that this year. So we're seeing a very small erosion in the base at the same time that we're generating good profitability and provided -- and that's what we said, in terms of the dividend, is provided that favorable market conditions continue, we would like to see ourselves at that 10% rate. But of course, there's a number of things that we'll need to take in consideration. We didn't want to set an expectation absolutely of 10%, but that's where our head is at. And as we see from the announcement this week in Verizon, things can change rapidly in the industry. And so we will take all that into account.

Operator

We'll move to our next question from Maher Yaghi of Desjardins.

Maher Yaghi - Desjardins Securities Inc., Research Division

I wanted just to go back on the margins on the Cable side, which were very strong. And I wanted to ask you about -- in MD&A, you talk about that in the fourth quarter, you plan to offer contracts and equipment offers versus just being aggressive on providing equipments to customers as you did in the year-to-date. Can you talk a little bit about what do you mean by planned offers, contracts in the fourth quarter? What does that entail in terms of promotional activity?

Jay Mehr

It's Jay. Our research is clear: Our customers want choice. And later this summer, we'll be offering a choice of customers that subscribe with Shaw, either without a service agreement or with a service agreement. And really, Canadians have been preconditioned having the choice of offers that include hardware. So our service agreements, which we're launching later this summer, is as much about disciplined acquisition as it is about retention. It's going to be our first-ever structured hardware deal including -- included model, and it really allows us in a consumer friendly way to continue our step-by-step approach to move away from promotional activity and towards value for money.

Maher Yaghi - Desjardins Securities Inc., Research Division

So that's a way to control your ARPU and just put the cost on the equipment side, move towards that model as much as you can versus on the promotional side on the service contract.

Jay Mehr

Yes, I think that's right. If you look at the continuation of our strategic plan, 1 of the 4 key areas of focus is customer profitability. And what you've seen throughout the year is a step-by-step continuation of that approach. And this is the next logical step in terms of creating a disciplined acquisition strategy, along with the opportunity to up sell to some of our existing customers.

Maher Yaghi - Desjardins Securities Inc., Research Division

And so do you see this as a way for you to potentially continue to grow your margins? Or is it on a consolidated basis? Or is it meant to offset maybe the margin decline on -- or the EBITDA losses on customers who are not taking your Cable service anymore? When I look at it, it seems like marginally it should contribute to consolidated EBITDA, that strategy. I'm just wondering if -- on the whole, when I look at it, do you expect margins to grow as you implement these new plans?

Jay Mehr

I think there's a number of moving pieces in there. I agree with you that this move is on its own, supportive of margins and profitability. I think if you look at the overall business, we really are seeing margin levels flat kind of in the range that they're in now is sort of our perspective today.

Maher Yaghi - Desjardins Securities Inc., Research Division

Okay, great. And not to hit the same topic, but I was just wondering, when you look at your capital allocation, I mean we -- let's assume -- and as Brad said, we don't want to talk about hypotheticals here, assuming that you'll get the cash, but is there a way to potentially get more for that spectrum? Is there an option for you to -- if the deal somehow does not go through, potentially there are other buyers in the marketplace if other players come to market. Is there a way for Shaw to change course and sell it to somebody else, the spectrum?

Bradley S. Shaw

Well, first of all, it's our spectrum, and we've got a hard agreement with Rogers, which gives them the right to buy that spectrum. And beyond that, we're not considering any alternatives today.

Maher Yaghi - Desjardins Securities Inc., Research Division

But do you have a way out of that contract? Is it the option for them to buy the spectrum or is it -- I mean, if they have to file for approval, if they -- can you change the contract before they file for approval to change the spectrum ownership?

Bradley S. Shaw

No, it's an irrevocable option that Rogers has. And ultimately, the minister will decide on the transfer of the spectrum license.

Operator

There are no further questions at this time from the phone lines. Please continue.

Bradley S. Shaw

Thank you, operator. We'll see you next time, everyone. Thank you.

Jay Mehr

Have a good long weekend.

Bradley S. Shaw

Have a good long weekend. All right. Bye-bye.

Operator

Thank you. Ladies and gentlemen, this does conclude your conference call for today. We thank you for your participation. You may now disconnect your lines, and have a great day.

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