(Reuters) - Cost cuts and lower taxes enabled Canada’s Shaw Communications Inc (SJRb.TO) to post a 22 percent rise in quarterly profit on Thursday despite flat revenue and a further loss of cable customers to fierce competition from phone company Telus Corp.
Shaw, a Calgary-based cable and media company whose shares were slightly lower on Thursday morning, said it still expects moderate revenue growth in its cable and satellite segments for the fiscal year.
“The company continues to lose cable customers and face margin pressure in its battle with Telus,” Desjardins analyst Maher Yaghi wrote in a note to investors. “We prefer to stay on the sidelines until better subscriber trends emerge.”
Shaw lost 21,515 basic cable subscribers in the quarter, while adding only 246 more valuable digital cable customers.
The dominant cable company in Western Canada, Shaw competes with a resurgent telecom rival in Telus (T.TO), which is pushing out an Internet-based television product to win over Shaw’s customers.
Shaw had reacted with a string of discounts, but is now easing back on promotions to retain its pricing power.
Shaw’s digital phone line customers increased by 29,142 in the quarter but the company did not add any net new Internet customers despite introducing higher-speed offerings.
RBC Capital Markets analyst Drew McReynolds said that the growth in Shaw’s telephone lines will further pressure Telus’s declining landline telephone business, but that the cable slip likely indicates ongoing momentum for Telus’s Optik TV product.
Shaw’s net income from continuing operations rose to C$248 million ($241.7 million), or 53 Canadian cents a share, in its fiscal third quarter ended May 31, from C$203 million, or 45 Canadian cents a share, a year earlier.
Analysts on average expected Shaw to earn 44 Canadian cents a share, according to Thomson Reuters I/B/E/S.
McReynolds said the beat on earnings was mostly due to a lower tax rate in the quarter.
Overall revenue was flat at C$1.28 billion, below analysts’ expectations of C$1.31 billion. Revenue from its cable segment rose 1.1 percent to C$794 million.
Shaw’s media division, created after the company bought the broadcasting assets of bankrupt media company Canwest in 2010, posted 5 percent decline in revenue.
Shares in the company, controlled by the Shaw family, were down 0.3 percent at C$19.09 late on Thursday morning on the Toronto Stock Exchange. They have fallen almost 8 percent over the last three months.
Reporting by Alastair Sharp in Toronto and Maneesha Tiwari in Bangalore; Editing by Peter Galloway