SaskTel Reports 2016/17 Net Income of $134.8 Million

Released on July 18, 2017

• Wireless revenues increased by $24.7 million (5.0 per cent) from 2015-16.  A large portion of this increase relates to the renegotiation of a wholesale contract with other carriers.
• Wireless retail revenues continued to grow which was a result of strong ARPU growth and a modest increase in accesses.  Year-over-year, smartphone penetration has increased by 3.0 per cent which has contributed to increased ARPU.  ARPU growth is attributable to customers migrating to price plans that offer more data and features.
• SaskTel is adapting to the changing wireless environment and has launched share MORE plans in 2016-17 to offer customers the ability to share data among all their devices and to choose the amount of data that suits their needs.

• maxTV™, Internet, and data services revenue increased by $11.0 million (3.4 per cent).  In 2016-17, more customers are selecting faster Internet speeds to meet their increasing data demands.
• SaskTel is meeting these demands by expanding the footprint of its fibre-based service, infiNET. SaskTel rolled out its DSL service to thirteen new communities and upgraded speeds in 38 communities, which has contributed to both ARPU and access growth.
• infiNET connections have increased 35.3 per cent, which had a positive impact on ARPU.

• Local access and enhanced services declined by $16.8 million (7.3 per cent) from 2015-16.  This decline is due to a 6.4 per cent reduction in network accesses (2015-16 – 7.4 per cent).  Customers continue to replace their existing wireline services with a wireless alternative, a trend that SaskTel expects to continue.

• Long distance revenues have decreased $4.6 million (9.9 per cent) from 2015-16.  The decrease is primarily due to loss of customers to substitute services such as social media, wireless and VoIP, as well as customers moving to less expensive bundle plans.

• Equipment revenues have decreased $9.0 million (13.0 per cent) from 2015-16.  SaskTel continues to offer its customers consulting, design, training, and implementation services to ensure the right solution for their business.  Equipment sales have declined and are reflective of the current market conditions.  These declines are partially offset by increased revenues from wireless devices.

• Advertising services revenue decreased to $37.1 million in 2016-17, from $40.0 million in 2015-16, a decrease of $2.9 million (7.3 per cent).  These results continue to exceed the traditional directory industry, which has experienced significant financial pressures and ongoing revenue declines since its peak in 2008.  SaskTel’s strategy is to maintain its industry-leading print directory revenue retention through its Mysask411 Solutions (bundling of print and digital products) and ability to prove total leads and return on investment (ROI) to its customers while continuing to diversify with ongoing product and service development.

• Security monitoring revenues increased $1.7 million to $24.5 million in 2016-17, due to customer growth and increased use of value-added features.  SaskTel continues to actively seek out business growth both organically through existing customers and externally through customer account acquisitions.

• Software and consulting service revenues increased to $7.9 million in 2016-17, up $0.5 million from 2015-16, primarily due to higher software-related professional services abroad and increased maintenance and support fees, offset by lower software-related professional services and enhancement revenues.

• Other services revenues increased to $32.6 million in 2016-17, up $7.8 million (31.5 per cent) from 2015-16.  SaskTel seeks out opportunities to replace declining legacy service revenues by growing its managed and emerging services portfolio.  In 2016-17, this portfolio saw growth in new services including Integrated Business Communications, data centre service offerings and professional services.

• SaskTel invested an additional $316.1 million in capital expenditures during 2016-17 (2015-16 – $328.7 million) to improve our customers’ experience today and create opportunities to provide additional network enhancements and capabilities in the future.  Of the $316.1 million, $259.3 million (2015-16 – $258.1 million) was spent on property, plant and equipment, including; FTTP, wireless networks (4G, LTE, and Wi-Fi), and Access Demand, while the remaining $56.8 million (2015-16 – $70.6 million) was spent on intangible assets such as customer support systems.

• Fibre to the Premises (2016-17 - $54.9 million) The Fibre to the Premises program is a twelve year program to upgrade broadband facilities and bring infiNET, SaskTel’s new Fibre Optic Network, right to our customers’ doors in Saskatchewan’s nine major centres: Saskatoon, Regina, Moose Jaw, Prince Albert, Weyburn, Estevan, Swift Current, Yorkton and North Battleford.
• 4G, LTE, and Wi-Fi (2016-17 - $47.4 million) The 4G, LTE, and Wi-Fi wireless networks require ongoing investment as customers abandon older wireless technologies.  SaskTel’s wireless LTE network is the largest LTE network in Saskatchewan and now covers 99 per cent of residents in the province.  SaskTel select WI-FI provides more than 4,200 access points in more than 2,000 locations spread across 23 communities in Saskatchewan, making it the largest Wi-Fi network available in the province.
• Access Demand (2016-17 – $35.4 million) The Access Demand program is an on-going program to add infrastructure to new neighbourhoods and increase capacity in existing neighbourhoods so that customers may access all the services that SaskTel has to offer.
• Tier III Data Centres (2016-17 – $27.1 million) Tier III data centres are outfitted with cutting-edge technology to deliver services with the security, availability and assurance that business customers demand from their technology partners.  SaskTel added two Tier III data centres to its portfolio during 2016-17.  SaskTel currently has a total of 51,000 square feet in eight different data centre locations with four locations in Regina, three in Saskatoon, and one east of Regina. 
• Other Network Improvements (2016-17 – $70.5 million) SaskTel has invested in other areas of its network to increase capacity and modernize key components so that it can meet the needs of Saskatchewan residents and businesses and continue to support the growing economy.  These improvements include: capacity improvements to our wireline and wireless networks; improvements to our rural transport infrastructure to accommodate rural growth of fixed and mobile voice, video and data services; and expansion of northern fibre facilities which will bring high speed bandwidth services to northern residents and businesses.