October 23, 2009 / 1:31 PM / 9 years ago

UPDATE 4-Shaw profit dips, says still exploring wireless

* Net income C$124 mln vs year-earlier C$132.4 mln

* Revenue up 8 pct at C$873 mln

* Says it’s now the biggest cable company in Canada

* CEO says still cautiously exploring wireless plans (Adds CEO comments, details)

By Wojtek Dabrowski

TORONTO, Oct 23 (Reuters) - Shaw Communications Inc (SJRb.TO) posted a lower quarterly profit on Friday compared with year-earlier results that were lifted by a one-time gain and said it continues to explore the possibility of entering the wireless business.

Shaw also announced that its acquisition of privately held Mountain Cablevision Ltd in Hamilton, Ontario, has received regulatory approval. It said the acquisition makes it the largest cable company in Canada.

The Calgary, Alberta-based cable and telecom company said it earned C$124 million ($118.1 million), or 29 Canadian cents a share, in the three months ended Aug. 31. That was down from a net profit of C$132.4 million, or 31 Canadian cents a share, a year earlier.

Operating income before amortization rose 7 percent to C$395 million. Revenue was up 8 percent to C$873 million from C$805.7 million.

Basic cable subscribers increased by 6,374 to 2.29 million, while digital customers rose by 110,501 to 1.3 million. Internet customers, including pending installations, rose by 27,376 to 1.68 million.

With the Mountain Cablevision deal, Shaw adds about 135 employees, 41,000 cable customers, 29,000 Internet subscribers and 30,000 digital phone lines, it said.

The deal was first announced in July and Chief Executive Jim Shaw told analysts on Friday the purchase price was just over C$300 million.

The company said its preliminary forecast for 2010 sees operating income before amortization growing by 14 percent or more and free cash flow comparable to 2009. It plans to continue its rate of capital investment.


Shaw bid on wireless spectrum in an auction of airwaves held by the federal government last summer, spending a total of about C$189.5 million.

Entering this area could prove lucrative for Shaw as it has for rival Rogers Communications Inc (RCIb.TO), but it would also put the company in fierce competition with established carriers.

“We continue to believe management is committed to entering the wireless business,” UBS Investment Research analyst Phillip Huang wrote in a note to clients on Friday.

“While we believe entering wireless would support Shaw’s long-term growth and makes strategic sense, it would also elevate the company’s risk profile.”

The company has yet to announce any concrete wireless plans and Jim Shaw reiterated on Friday that it’s still exploring the possibilities.

“We don’t really have a total plan right now but I can tell you we’re really interested in expanding into that area on a really cautious basis,” he told analysts.

“We’ll be very, very cautious here ... to make sure that we don’t lose any shareholder money.”

Shaw’s shares dipped 35 Canadian cents to C$20.22 on the Toronto Stock Exchange on Friday.

$1=$1.05 Canadian Additional reporting by Susan Taylor; editing by Rob Wilson and Peter Galloway

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