June 29, 2011 / 1:19 PM / 6 years ago

UPDATE 3-Shaw profit up 28 percent; mum on wireless plans

* Q3 EPS C$0.45 on revenue of C$1.28 bln

* Street expected EPS C$0.42 on revenue of C$1.27 bln

* Spent C$22 mln on wireless in qtr, silent on launch plans

* Shares rise 1.1 percent in early trade (Adds analysts’ comments, share move)

By Alastair Sharp

TORONTO, June 29 (Reuters) - Shaw Communications (SJRb.TO) reported a 28 percent jump in quarterly profit on Wednesday as it reaped the benefits of cost cuts, the introduction of faster broadband Internet and higher prices for cable television.

Shaw said it expects 2011 core operating earnings growth to moderate from a rate of around 7.5 percent last year due to competitive pressures and higher programming costs, but that still suggests a hefty uptick in the current quarter. Its shares gained 1.7 percent in early trade.

Desjardins analyst Maher Yaghi said that while the company’s results and outlook looked good, investors would likely want Shaw to show more proof it can handle the pressure being put on its cable division.

“A resurgent competitor in the marketplace is simply making life more difficult” for Shaw, he said, referring to telecom rival Telus (T.TO), which launched an Internet-protocol television product called Optik last year that competes in Shaw’s home market in Western Canada.

UBS analyst Phillip Huang noted Shaw is ceding cable market share while reporting strong revenues.

Calgary-based Shaw had net income of C$203 million ($209 million), or 45 Canadian cents a share, on revenue of C$1.28 billion in the three months to May 31.

Analysts had, on average, expected Shaw to earn 42 Canadian cents a share on revenue of C$1.27 billion, according to Thomson Reuters I/B/E/S.

Shaw had a profit of 37 Canadian cents a share in the year-before quarter on revenue of C$943.6 million.

SILENT ON WIRELESS

The company said it spent C$22 million in the quarter on building its wireless network, but did not detail when the service might launch.

Shaw has delayed its entry into the booming Canadian wireless market, the fourth leg of any bundling offer for television, landline phone and Internet services.

The company bought wireless spectrum in a 2008 government auction, but has been sluggish to enter the market compared with other buyers such as new entrants Mobilicity and Wind Mobile, which are already present in most major Canadian cities.

However, Shaw and Quebecor’s (QBRa.TO) Videotron unit, which launched a wireless service in Quebec in September, are seen as more formidable threats to the wireless dominance of the three big players -- BCE’s (BCE.TO) Bell Canada unit, Rogers Communications (RCIb.TO) and Telus -- because of their bundling opportunities.

The big three, which account for around 95 percent of Canada’s wireless market, are moving ahead with high-speed upgrades to their existing networks.

Shaw’s cable sales rose 5 percent, bolstered by the lapsing of promotions offered last year to offset Telus’ Optik launch.

The company increased prices for cable and Internet on April 1, which helped revenue but hurt subscriber growth.

Shaw lost 13,577 basic cable subscribers in the quarter, leaving it with 2.30 million, while digital customers rose by 19,202 to 1.77 million. Internet customers rose by 11,165 to 1.86 million and digital phone lines were up by 31,404 to 1.21 million.

Analysts had expected the company to lose around 12,000 basic cable customers and to add some 41,000 more lucrative digital cable users. The company was expected to add some 14,500 Internet accounts and 36,000 telephone lines, according to five analysts polled by Reuters.

Shaw said it was on track to record free cash flow for the fiscal year of around C$600 million.

Its shares were up 1.7 percent at C$21.62 on the Toronto Stock Exchange on Wednesday morning. The stock had been down some 3 percent this year before the results.

$1=$0.97 Canadian Reporting by Alastair Sharp; editing by Peter Galloway

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