Canada's Shaw loses customers, ekes out profit on price hikes

Fri Apr 12, 2013 10:05am EDT
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By Alastair Sharp

TORONTO (Reuters) - Shaw Communications Inc (SJRb.TO: Quote) (SJR.N: Quote) posted a 2 percent rise in second-quarter profit on Friday and said it expects modest revenue growth for the rest of the year, as price increases staved off an overall decline in its customer base.

Shares in Shaw, the dominant cable company in Western Canada, fell 1 percent in early trade.

Shaw lost almost 30,000 cable subscribers in the quarter, a sharp escalation of a secular trend, and added just over 13,000 landline telephone accounts. It added 7,800 net new Internet customers.

"Subscriber trends were very worrying," Canaccord Genuity analyst Dvai Ghose wrote in a note, adding the sharp fall reflects "our concern that Shaw loses significant subscriber share when it pursues conservative pricing due to an inferior cable interface, an aggressive competitor and service issues at Shaw."

The company is facing fierce competition from phone company Telus Corp (T.TO: Quote), which is pushing out an Internet-based television product to win over Shaw's customers.

Shaw said a shortened National Hockey League schedule and fewer pay-per-view events hurt its ability to attract customers. But scaling back on promotional activity and raising prices for its services helped offset that weakness.

Shaw said net income rose to C$182 million, or 38 Canadian cents per share, from C$178 million, or 38 Canadian cents per share, a year earlier. [ID:nCCNnSw0ta] The earnings were in line with analyst expectations, according to Thomson Reuters I/B/E/S.

Revenue at the Calgary-based company rose 2 percent to C$1.25 billion. The company also said it expects consolidated free cash flow of about C$550 million in 2013.   Continued...