June 26, 2009 / 12:43 PM / in 8 years

UPDATE 2-Shaw Communications quarterly earnings rise

* Third-quarter EPS C$0.31 vs C$0.30

* Service revenue up 8.7 pct, driven by subscriber growth

* Shares rise 1 percent to C$19.74 (Adds details on results, analyst comments, background)

By Euan Rocha

TORONTO, June 26 (Reuters) - Shaw Communications Inc SJRb.TO SJR.N posted higher third-quarter earnings on Friday, driven primarily by strong subscriber growth, the cable and telecom company.

Net income for the quarter, ended May 31, was C$132 million, or 31 Canadian cents a share, compared with a profit of C$128 million, or 30 Canadian cents per share, a year ago.

Basic cable subscribers increased by 9,622 to 2.28 million, while digital customers were up 110,810 to 1.19 million. The company also saw subscriber growth among Internet and digital phone line and direct-to-home customers during the quarter.

“With digital penetration at 52 percent, we see digital TV as Shaw’s growth driver for the next two years. We expect Shaw to continue to expand its VOD (video on demand) library and achieve 80 percent digital penetration by 2011,” UBS analyst Phillip Huang said in a note to clients.

Huang also believes Shaw continues to take broadband and telephone market share from rival Telus Corp T.TO through bundling its services.

Service revenue rose 8.7 percent to C$861.4 million.

The Calgary, Alberta-based company said it remains on track to achieve its financial outlook for the year, including generating free cash flow of at least C$500 million.

Free cash flow for the quarter and year-to-date periods amounted to C$154 million and C$406 million, respectively, Shaw said in a press release.

To allow timely access to capital markets, Shaw filed a prospectus with securities regulators in Canada and the United States on March 11. The prospectus allows for the issue of up to an aggregate C$2.5 billion of debt and equity securities over a 25-month period.

Pursuant to filing the prospectus, Shaw closed a $600 million offering of 6.50 percent senior notes due in June 2014. The net proceeds are being used for debt repayment, working capital and general corporate purposes.

As of May 31, Shaw held C$365.0 million in cash and short-term securities and it had access to about C$1 billion of available credit facilities.

Shares of the company rose 19 cents to C$19.74 Friday morning on the Toronto Stock Exchange. (Reporting by Euan Rocha)

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