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Shaw Communications, Inc. (NYSE:SJR)

F4Q 2013 Results Earnings Call

October 24, 2013 1:30 PM ET

Executives

Brad Shaw - Chief Executive Officer

Peter Bissonnette - President

Steve Wilson - Chief Financial Officer

Jay Mehr - Senior Vice President, Operations

Paul Robertson - President, Shaw Media

Analysts

Jeff Fan - Scotiabank

Vince Valentini - TD Securities

Glen Campbell - Bank of America

Drew McReynolds - RBC Capital Markets

Tim Casey - BMO Bank

Maher Yaghi - Desjardins

Rob Goff - Euro Pacific

Operator

Welcome to Shaw Communications Fiscal 2013 Fourth Quarter Conference Call. Today's call will be hosted by Mr. Brad Shaw, CEO of Shaw Communications. At this time, all participants are in a listen-only mode. Following the presentation, there will be a question-and-answer session.

Please note -- please also note that an investor slide presentation in relation to the conference call is posted in the Investor Relations section of the Shaw website under Presentations and Meetings. After the presentation we will conduct the question-and-answer session. (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.

Brad Shaw

Thank you, Operator, and thanks to everyone for joining us today to discuss our fourth quarter and full year 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; and Paul Robertson, President of Shaw Media.

Our results this quarter reflect the continuation of our strategic and operational focus on profitable and sustainable initiatives. In F’13 we delivered innovative products and technology for our customers which combined with the delivery of exceptional customer service have held strength in our value proportion.

Overall, in fiscal 2013, we delivered 3% revenue growth and EBITDA increased more than 4%. Free cash flow in F’13 was over $600 million, which represents a 25% increase over this year.

In our Cable division, revenue and EBITDA were up 2% and 5%, respectively, resulting in an annual cable margin in excess of 48%. Our focus on customer profitability, discipline pricing and value-added services drove ARPU growth throughout the year.

Our satellite business delivered 2% revenue growth, EBITDA was tempered due to increase transponder cost relating to the launch of Anik G1. However, the investment in the new satellite strengthened our competitive positioning, making Shaw the HD leader in Canada.

Our media business continues to perform exceptionally well as revenue and EBITDA grew 5% and 6% respectively. We continue to see a slow but steady improvement in the Canadian advertising market and increased subscriber revenues.

A number of items contributed to our performance, notably our continued investment in our network, content, products and services. Broadband is the most important residential service to our customers and Shaw Go Wi-Fi network strongly differentiates our internet product.

Throughout the year, we have significantly expanded our Wi-Fi network and we now have over 20,000 access points from Victoria to Sault Ste. Marie, giving customers access to the internet on the go.

Our Wi-Fi service is included in all of our broadband packages with over 300,000 customers and over 600,000 devices have authenticated and are using our Shaw Go Wi-Fi network. Demand for our Shaw Go Wi-Fi product is clearly having a positive effect as those that have utilized the Wi-Fi service have a much lower propensity to churn.

As data usage by our customers continues to increase exponentially, we believe that Wi-Fi is an important overall component of the overall wireless ecosystem. Our Wi-Fi network is aligned with our broadband strategy and we are confident and excited about the value and flexibility we are creating for our customers with these investments.

Shaw Go Wi-Fi also complements our TV Everywhere initiative as customers expect fast and reliable broadband connections outside of the home so they can still watch or catch up on the episodes of their favorite shows. With Shaw Go, we have laid the foundation for a successful TV Everywhere offering that is becoming important part of our exceptional customer experience.

We launched Shaw Go over a year ago with our flagship product, Shaw Go Movie Central, and have since added a number of compelling content offerings to the portfolio, including our recently launched Global Go app that provides our customers more viewing options. In addition to live streaming, Global Go offers viewers full season of our hit shows, first for any Canadian broadcaster.

We have completed successfully negotiations with the majority of BDUs and are on track to hit our targeted subscription base of over 6 million by year end. Global Go along with rest of our apps are a value-added offering only available to authenticated subscribers. We have an exciting line up of TV Everywhere content plan for the year ahead, which we believe provides significant value to our Shaw Cable and satellite subscription over time.

Global’s new fall schedule is experiencing strong, early season performance, particularly our new program such as the Sleepy Hollow, The Black List and The Millers. Global news continues to hold the number one position in our key western markets and our redesigned news website has delivered an 85% growth in page views.

Our specialty audiences have increased 4% on a season-to-date basis and we have 9 of the top 20 specialty channels. Brand awareness plays an increasingly important role in our highly competitive operating environment. A clear and consistent brand message to our customers is an important way to differentiate our services and to create customer awareness and loyalties.

Over this summer, we had a significant presence at two major international professional golf events in Canada. This provides Shaw with a national visibility and branding opportunities, while giving back to our communities more than $1.25 million in charitable donations.

The inaugural Shaw Charity Classic in Calgary was a resounding success, drawing crowds of over 40,000 people during the week. On the golf course, we showcased the strength of our Wi-Fi network as well as the coverage provided by our Global News team.

As we enter fiscal 2014, the operating environment remains competitive. In this context, we are firmly committed to delivering exceptional customer experiences, while focusing on customer profitability and operational efficiencies.

We expect fiscal 2014 consolidated revenue and EBITDA growth in the range of 2% to 4%. This takes into account the impact of the M&A transactions we completed in fiscal 2013. We expect a marginal decline in capital investment, excluding capital investments from accelerated capital fund and a modest increase in cash taxes.

Free cash flow was expected to range from $625 million to $650 million, which provides additional support for the Board’s target of 5% to 10% dividend increase in fiscal F’14 and F’15. We are working to provide customers with a communications ecosystem, characterized by world-leading technology, networks, content, products and services.

As customers demand connectivity and content, Shaw will deliver to them at their home and on the go with the best-in-class wired and Wi-Fi networks. We embrace the opportunity to work with policymakers and all stakeholders, so our industry has the flexibility to compete and make the right investments necessary to continue delivering exceptional customer experiences today and well into the future.

Thanks everyone for joining us today. We would now like to open the phones to answer any questions, operator. Thank you.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from Jeff Fan of Scotiabank. Please go ahead.

Jeff Fan - Scotiabank

Hi. Thanks and good afternoon. Couple of questions. First, maybe we can just identify some of the cost items in the quarter. There were some pressure on costs across various items. Wondering, Steve, if you can just give us a little bit of a color on how we should see some of these cost pressure come off to help you achieve that 2% to 4% growth in EBITDA in 2012 - sorry 2014?

Steve Wilson

Are you referring to cable or satellite or…

Jeff Fan - Scotiabank

More on the cable side.

Steve Wilson

More on the cable side. Okay.

Jeff Fan - Scotiabank

Yeah.

Steve Wilson

In Q4 compared to last year, we did have a small pick up from the LPIF fund, which is about $2 million. We do have higher employee costs last year and that’s just growth in employees. We’ve grown about 300 employees this year and of course, we have our marred increases. We also had a tuck-up for marred as a result -- the results for this year, which were very good. We had about $5 million of additional marketing costs in Q4 this year and a portion of that was related to the Shaw Charity Classic. And then, we have some higher programming amounts that are in the normal course and increased rates as contracts have been renewed.

And then just well as that, there was a net reduction in EBITDA’s results of the divestiture of Hamilton and the purchase of Envision. So, Hamilton was $11 million lower in EBITDA in the quarter and Envision was $6 million higher, so a net $5 million reductions as a result of that.

The other thing in Q4 was that we had the flood costs, which were about $3 million as a one-time non-recurring item and they represent service credits we provided to our customers. It was about a $200,000 revenue impact and the balance was lot of activities that we did in the community to be out and about and servicing our customers locally.

We brought in a lot of technicians from other provinces and we had combination expenses and overtime expenses with that, to ensure that we were in communities, helping customers get back up as quickly as possible. So that’s kind of a rundown of Q4.

Jeff Fan - Scotiabank

Okay. And just looking ahead to next year, you recently put through some price increases. Can you just help us quantify what that impact and how it will flow through next year?

Peter Bissonnette

While, we put through increases starting September 1st of a $1 to $2 on the video side and $5 on Internet.

Jeff Fan - Scotiabank

And do those go -- affect the entire base from the get-go?

Jay Mehr

Jeff, it’s Jay. They do obviously. They don’t affect customers who are on a limited time promotional offer but it does affect me. We’re not going to specifically quantify the dollar value and the rate increase because you really going to put in context with all of the other rate changes that happens throughout the year and packaging that happens in the markets. But the $5 is on every Internet customer and depending on whether you are on personal T.V or basic, that’s the difference of the dollar we want to be.

Jeff Fan - Scotiabank

Okay. All right. Thanks very much.

Jay Mehr

Thanks, Jeff.

Operator

Thank you. Your next question comes from Vince Valentini of TD Securities. Please go ahead.

Vince Valentini - TD Securities

Thanks. First, if I can package that rate increase question a different way, but look at your ARPU on a per -- on a PSU basis, it's up about just over 5%, Q4 this year versus Q4 last year. And I believe with each passing quarter you have more the promotional subs from legacy periods last year falling off. Should we, with those new rate increases, should we expect to see a similar sort of pacing continue of about 5% improvement in ARPU each quarter?

Peter Bissonnette

Yeah, I think you have got, as we’re saying we got the $1 to $2 in the video side, on the internet side that would be about a 6% increase from last year, from this fiscal ’13 in total ARPU compared to fiscal 2012. And so that’s before the rate increase, we will see that pick up as well. On digital phones, ARPU is pretty, say at about $30. So, I think that’s a safe assumption, Vince.

Vince Valentini - TD Securities

Okay. Great.

Peter Bissonnette

There will be some grandfathered packages which will come off in the spring of next year and they will go back to the some of the simple bundling plans that we have and so they may get some further pick up from that.

Vince Valentini - TD Securities

Okay. And another question is on the SME business. Can you give us any additional color there on what kind of traction you're getting, how big the revenue's you're getting and what type of growth you're seeing?

Jay Mehr

Yes. It’s Jay again. We sure can. The business is going very well. We’re very pleased with the profits as we talk about in that 20% range year-over-year and very nice and consistent growth in monthly recurring revenues. Envision integration has gone extremely well. We’ve got some great people, great customers and some great fiber that have come along with that transaction. So we’re about the $300 million business in ’13 and we’re going to track that over 20% for our ‘14 and on the page that we’re going.

Steve Wilson

Yes. We should highlight just the gain for investors. On the Envision transaction, we paid 11 times EBITDA which is a very fair price for it. It gave us connectivity, fiber connectivity to 560 buildings locally into industrial parks where we don’t have co-axe built out. We’ve got 46 in the top 100 customers in Calgary as a result of that in connectivity. And so the initial, as Jay said, is going very well. The initial ability to sell through our other services with these existing customers is working very well. We’ve seen some quick results on that so very pleased with that.

Vince Valentini - TD Securities

Okay. So just to clarify, the 20%, Jay, that's an organic growth number not including the Envision acquisition?

Jay Mehr

20% does include Envision but the Envision acquisition is split over two years, right. We had four months in this year and eight months in that.

Vince Valentini - TD Securities

Okay. Thanks.

Operator

Thank you. The next question comes from Glen Campbell of Bank of America. Please go ahead.

Glen Campbell - Bank of America

Yes. Thanks very much. On the cable revenues for the quarter, I mean, they do bounce around normally but there was a sequential drop, if I've got it right, from May 25 in Q3 to 8/18 in Q4. So I'm wondering if there are any one-time influences there other than the service credits you gave related to the floods? And then, starting off fiscal ‘14, can you give us any color on what subscriber loadings have been like so far compared to the year-ago quarter? Thanks.

Steve Wilson

Yes. I think the big difference, Glen, will probably be the divestments which were from Q4, versus Q3, which were $10 million low.

Glen Campbell - Bank of America

Right. Right. Okay

Steve Wilson

So that’s one of the big items. We had some positive pick up from rate increase. And then we had some negative growth compared to Q3 in some of the customer growth areas and promotional discounts for relatively consistent between two quarters.

Glen Campbell - Bank of America

Okay. Then on the subscriber loadings post quarter end?

Steve Wilson

Sorry.

Glen Campbell - Bank of America

So can you give us any color on how subscriber loadings are going in cable after the fiscal year-end as compared to the year-ago quarter?

Jay Mehr

No. Actually, we’ve never wanted to introduce this all sort of early in the -- early in the quarter. So we’ll come back to you with our results for Q1.

Glen Campbell - Bank of America

Fair enough. Maybe I'll try another one then. On the media side, with the framework proceeding, I guess, starting off and the government's, I guess, mandate to move towards pick-and-pay. This looks like a zero sum game between consumers and broadcasters and distributors. Do you see it that way or do you think there's the possibility of a win-win outcome on this?

Brad Shaw

Well, Glen its Brad here. I think couple of things. I think one is giving a clear understanding of what the government and the commissioner are willing to look at here from the point of view of pick and pay and what that looks like, I think for us we wanted to make sure it’s a not disruptive to the consumer. It’s very important that we’ve always looked at choice on the consumer side and work to do that but unfortunately overtime agreement and contracts in ways product was offered that has been bundled. And I think it’s an opportunity for us to really work with all of the because you know there is a lot of competing interest and a lot of different players have a big stake in the broadcasting industry and it’s our goal to work with all players in finding the right level and the right solution, and how we get there. It’s just we hope at the end of the day there is a clear process for that.

Glen Campbell - Bank of America

Okay. Thanks very much.

Operator

Thank you. The next question comes from Drew McReynolds of RBC Capital Markets. Please go ahead.

Drew McReynolds - RBC Capital Markets

Yeah. Thanks very much. Three quick ones from me. Just first on, excuse me, first on the satellite segment, just maybe comment on the -- that a very minor subscriber erosion, is it in part due to IPTV cannibalization and just wonder what the outlook would be with respect to bringing on the new satellite capability?

And then on the media side just wondering if you can provide some commentary on just how the markets tracking in Q1 which is obviously the seasonally strong quarter for television and if I can get some color on the conventional versus specialty ad dynamic, that would be great? Thank you.

Brad Shaw

Yeah. Certainly. In terms of satellite. It’s Jay, again. In terms of satellite subscribers, we were pleased with our subscriber numbers of satellite and pleased with where revenue came in the quarter, obviously we had some expenses that we need to grow into in terms of Anik G1 and we have some marketing expenses related to the launch of the new satellite.

The, for sure, the competitive environment is accelerating greatly largely east to west with Atlantic Canada being the most intense competition that we have seen in a while. We are fortunate that our customers skew very heavily rural and we differentiate on an exceptional customer experience for that base. So we are only so exposed but there is no question that Eastern Canadian competition is heating up.

Paul Robertson

Drew, it’s Paul Robertson here. Just commenting on the market dynamic on the -- on media side. We -- I would say that the fall is shaping up the first quarter if you like, shaping up to be pretty much like the recent trend we’ve seen and pretty much as we have seen last year.

In terms of the conventional television business, it will probably get a little bit of a boost because of the return of hockey. If you remember a year ago we were in a hockey a delay situation that came on stream later on, so the first quarter didn’t really achieved any hockey revenue, I don’t think. So we will see a little bit of a bounce back here. So that will help conventional.

Specialties maintaining the same kind of pattern we expect which is kind of in the low to mid-single digits and we expect to take fully part in that. So, that’s pretty much down.

Drew McReynolds - RBC Capital Markets

Okay. Now that’s helpful. Paul, maybe just a final one, just on your internet initiatives, obviously your kind of bolstering your competitive position in the marketplace with offerings like Wi-Fi, et cetera. Just wondering if you can look at your basic cable sub-losses and how much you can attribute that to kind of cord cutting out there in the market maybe provide some kind of commentary around that trend? Thanks.

Paul Robertson

Well, I mean, I think, it’s clear if you look at our numbers that we have -- we are losing less customers and we are losing video customers and certainly we are growing our internet standalone base.

And I think as you have seen with some of the moves that have been made on pricing and other things, we are gaining some very profitable customers even in the internet-only space.

And so I think you will see some of that going forward with -- I think there is opportunity for us and as a broadband company we continue to drive internet and look for new models to monetize on the internet space.

Drew McReynolds - RBC Capital Markets

Thank you very much.

Operator

Thank you. Your next question comes from Tim Casey, BMO Bank. Please go ahead.

Tim Casey - BMO Bank

Thanks. Can you talk a little about CapEx. You said a moderate decline before the accelerated capital program, if we strip all that down what are we really talking about here, I mean you spent $867 last year, are you still guiding for something in the neighborhood of $150 for the accelerated capital program?

Brad Shaw

No. For this year our guidance on accelerated capital is $250 million.

Tim Casey - BMO Bank

Oh! Pardon me. Okay. So that’s unchanged if I recall, right.

Brad Shaw

So where you will see cable come in this year, it’s about $750 million in base CapEx and that’s the sort of as we’ve said that’s where we see the continuing number to be excluding accelerated capital fund. And in there, we have got some large projects including $60 million for Shaw core and we have been able to fit into that number beyond the $18 million that we spent last year, that’s before the insurance recoveries.

So, we are doing a good job of managing within our means from a base CapEx point of view and then we have got the $225 million for next year, which is probably our data center and with upgrades and continuing to explore IPTV and of course, one of the big projects for us is a new billing system in our core transformation.

Tim Casey - BMO Bank

And just briefly see, what’s the outlook for cash taxes next year, you are fully cash taxable?

Brad Shaw

We are fully cash taxable now, Tim. The outlook for next year and that’s why we have mentioned that. So this year we had about $300 million of cash taxes. Next year, it’s again little complicated to explain in range, but we expect that to go up about $55 million to $70 million.

And there are two reasons for that. One is higher profitability because 2013 profitability was higher than 2012 and we were off of that. And the second reason is we were able to utilize some media capital loss forward which we have exhausted now. So, that’s the bulk of what we will see in additional taxes.

Tim Casey - BMO Capital Markets

Thank you.

Operator

Thank you. The next question comes from Maher Yaghi of Desjardins. Please go ahead.

Maher Yaghi - Desjardins

Yes. Thank you for taking my question. And I am just calling regarding your internet offerings. When I compare the internet offerings that you guys have in cities like Calgary and Vancouver, and compared to the speeds of upload and download with other companies -- other cable companies in Canada. It seems your upload speed continued to much lower, is there a particular reason why that is the case and are you spending some of the capital accelerated program here to increase those uploads speeds and why is that happening?

Brad Shaw

Sure, Maher. The -- so for sure, a portion of the accelerated capital is around bandwidth upgrades and bandwidth upgrades in booth. A number of things that impact both upload and download speed and perhaps upload a little bit more than download with some instances.

Well, we understand the feature set comparison like they are doing on the website. We are pretty proud of the internet product that we offer, the feedback we get from all of our market research suggest we are in a great space in the internet space and we are contemplating speed changes in the short-term for upload or download speeds. So even though maybe look that way from a specification point of view, certainly all of our market research indicates we are up, we are delivering a great internet product.

Maher Yaghi - Desjardins

So, do you mean like you have the capability to switch on and increase those upload speeds at will right now or you need additional investments?

Brad Shaw

We are not contemplating changing our speed. We could…

Maher Yaghi - Desjardins

No. I am just trying to understand why -- what would it -- what it means when I look at these specification? Does it mean that the network is a little bit more congested on your side and that’s why you’re delivering a lower upload speed than other cable companies in Canada or do you need to spend more money that more than basically because you have under invested maybe in the network compared to let say Vidéotron, I am trying to understand a little bit of the concept here?

Peter Bissonnette

Maher, it is Peter Bissonnette. We have the capabilities for our DNU to assign more spectrum you will to both the up and the download -- downstream traffic. What we are offering right now is a well balanced very fast, very robust, wherever there is congestion we can deal with it on a hub-by-hub basis. And so to the extent that our customers are being well served by the speeds that we’re currently offering them.

There is no need to further invest but we know we have long-term opportunities whether it’s DOCSIS 3.0 to DOCSIS 3.1 to even put more funds, if you will, into the services that we offer our customer than those that are available to us, whether it also going in the future and some of the things that we’re doing on IPTV which is a part of our accelerated capital. they also give us that means to do that. But right now, our customers are being well served by the speed that we give them both up and down.

Maher Yaghi - Desjardins

Thank you.

Operator

Thank you. Your next question comes from Rob Goff of Euro Pacific. Please go ahead.

Rob Goff - Euro Pacific

Thank you very much for taking my question. My question will be on the Internet side, if you could discuss the growth of the Internet online subscribers, would that be primarily into the discrete marketplace, would they be new to Shaw?

Jay Mehr

Mostly, we certainly are doing very well in the internet space in the marketplace. We have a fair amount of our student activity. Actually this year, probably the majority of our student activity that came in by August 31, and clearly our student based SKUs more heavily through Internet only. And then I think some of the flexibility in pricing and packaging that we provide to our customers that previously may be penalized customers and force them into sort of double and triple play bundles. Some of that has gone away, so customers are just naturally finding their way to the product set that makes sense for them.

Rob Goff - Euro Pacific

And if I could touch to telephony for the moment, are you running at against Wireless Local Loop to a greater or lesser extent on the telephony side?

Brad Shaw

Wireless Local Loop, we are running that.

Rob Goff - Euro Pacific

Yes. In terms of the momentum on the telephony ads, do you find you’re competing more with the Wireless Local Loop?

Jay Mehr

Not in a meaningful way, our sense of where the home phone business is going is I think seen that our growth has become more modest in this quarter. And I think that likely will be directional going forward. There is a number of factors there. I mean we shift share with our primary, competitor often on price and it has -- the marketplace has become more disciplined. It has just been (inaudible) that going on in the marketplace. And clearly the home phone bucket isn’t getting bigger. So its -- I think if you look at the -- I think we’re going to see growth in phone -- more modest growth like you saw in the quarter.

Rob Goff - Euro Pacific

Great. Thank you very much.

Operator

Thank you. The next question is a follow-up from Jeff Fan of Scotiabank. Please go ahead.

Jeff Fan - Scotiabank

Thanks for taking the follow-up. So very quickly, Bradley, this morning talked a little bit about the cable business saying that their Internet gross profit dollar is now exceeding their television gross profit, just wondering if Steve, you can shed some light on how you guys look on that front with respect to gross profit for those two services. And also maybe comment on the gross profit dollar per sub on TV whether given the rising programming costs, you guys are seeing, enough price increases to hold that relatively stable?

Steve Wilson

Yes. They’re all profitable businesses for us and that’s one of the reason that we’ve taken a few and looking at total RGUs as opposed to looking at individual products. So as we said before, we do expect to lose video customers that’s natural here as a results of competition and core shaving and other alternatives for them.

But when we look at it, our main being focus has been on broadband company. Broadband still has very incremental margins because you’re running it down a fixed cost pipe. And so we’re very pleased to see the shift to broadband and certainly there is a big difference in profitability there. So we would take a broadband customer any day over a video customer.

Jeff Fan - Scotiabank

Have you seen that cross over though from a gross profit perspective in terms of TV and Internet?

Steve Wilson

Well, Internet we have a higher gross profit.

Jeff Fan - Scotiabank

Right. But overall for your business?

Steve Wilson

Overall, we’re probably close.

Jeff Fan - Scotiabank

Okay. And then on the individual subscriber on television, content cost is going up but you guys are obviously raising rate as well from a gross profit perspective on TV sub. Are you guys able to hold that relatively stable, given those few changes?

Steve Wilson

Yes. I mean one of that the great things about vertical integration is that we all have -- we all have some stick in the game here. And it helped us to be able to negotiate between each other, their rates and that’s being helpful. We don’t -- if you looked at the future, I mean where the future really lies is on broadband and the profitability to broadband.

We’re still going to see adjacent slower growth in film, but the growth will come from business to that segment. It won’t be a residential product as much. So while we may see some core cutting on the residential side, we’ve got the business side which is doing very well on phone.

Jeff Fan - Scotiabank

Okay. And just a quick follow-up on the Wi-Fi, do you guys give some stats on subscribers that are using Wi-Fi. I am wondering it’s too early or whether you can share with us the churn profile of those subscribers that used the Wi-Fi versus those that don’t and can you also share some data on how much they’re using in terms of gigabytes or megabyte consumed?

Brad Shaw

I guess, there are all pointing at me to be the Wi-Fi guy, so just like I have the information. I think a couple of numbers on that, one is I think we are seeing about half the churn rate once a customer hooked up to Wi-Fi and so we’re very pleased with that and that continuous.

And from a data point of view we certainly believe we’re starting to become part of the ecosystem on the wireless side, I think there is approximately 600 to 650 meg per customer on the usage basis per month.

Jeff Fan - Scotiabank

Okay.

Jay Mehr

And in terms of network strain on that that’s a very small number in the overall scheme of things.

Jeff Fan - Scotiabank

Okay.

Brad Shaw

Yeah.

Jeff Fan - Scotiabank

That’s great. Thanks very much.

Operator

Thank you. We have one more question from Glen Campbell. Please go ahead.

Glen Campbell - Bank of America

Yeah. Thanks very much for filling me in. On the satellite side we’ve seen OpEx rise sequentially this quarter and also the last quarter? You mentioned the higher transponder cost? How much one-time expense would you say is in there related to marketing or other things in that satellite number? Thanks.

Brad Shaw

Marketing would be a couple of million dollars and we need to look at that as we balance there year here. We need to make sure the Shaw Direct has a profile in the market and that’s part of the way that we are going to monetize all the additional channels that we have.

Glen Campbell - Bank of America

Okay. Great. Any one time items on the media side in expenses?

Brad Shaw

No. Nothing on the media side.

Glen Campbell - Bank of America

Okay. Super. Thanks very much.

Brad Shaw

Thank you, Operator.

Operator

Thank you.

Brad Shaw

Thanks everyone. See you next time.

Operator

Ladies and gentlemen, this does conclude the conference call for today. You now disconnect your line and have a great day.

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