3 Min Read
TORONTO (Reuters) - Shaw Communications Inc's (SJRb.TO) third-quarter profit more than tripled, boosted by its purchase of Wind Mobile and sale of media assets, but earnings from ongoing operations disappointed and its shares fell on Friday.
The Calgary-based company surprisingly lost retail internet customers, and continued to shed cable television customers. It launched an aggressively priced top-tier internet promotion, suggesting pricing pressures out west may heat up.
Company President Jay Mehr said "nobody is happy" with the internet loss, with Shaw reliant on high-speed internet and wireless to fuel growth.
"We're going to choose to behave differently in the marketplace going forward," Mehr told analysts on a conference call.
Shaw has, via two recent billion-dollar-plus deals, sharpened its focus on selling access to broadband data, whether delivered via cable or wireless connections.
It sold its media assets to sister company Corus Entertainment Inc (CJRb.TO) for C$2.65 billion ($2.05 billion), using the cash proceeds to fund its C$1.6 billion purchase of Wind, the country's fourth largest wireless company.
Wind had a 22 percent operating margin on revenue of C$132 million in the quarter. Shaw said it would spend C$250 million to upgrade Wind's network in fiscal 2017.
"The growth that we are seeing is part of our 'walk before we run' strategy," Alek Krstajic, who runs the wireless unit, said on the analyst call.
Shaw's revenue grew about 13 percent to C$1.28 billion. Excluding Wind, it would have risen 1.4 percent.
Shaw's earnings from continuing operations were 11 Canadian cents a share. Analysts had on average expected Shaw to earn 35 Canadian cents a share on revenue of C$1.293 billion, according to Thomson Reuters I/B/E/S.
Its shares fell 1.7 percent to C$24.75 in midday trade.
The new wireless unit had more than 1 million subscribers, including almost 640,000 postpaid customers, Shaw said.
Its average wireless customer paid a monthly bill of C$36.30. The company aims to get that above C$40.
Shaw has a long way to go to compete with the scale of the three big national wireless players - Shaw's Western rival Telus Corp (T.TO), Rogers Communications Inc (RCIb.TO) and BCE Inc's (BCE.TO) Bell Mobility - each of which has several times the number of subscribers.
Shaw lost more than 27,000 retail cable television customers and shed 8,760 consumer internet accounts.
The company's net income rose to C$704 million, or C$1.44 per share, from C$209 million, or 42 Canadian cents per share, a year earlier.
($1 = 1.2944 Canadian dollars)
Additional reporting by Amrutha Gayathri in Bengaluru; Editing by Don Sebastian and Jonathan Oatis