June 30, 2010 / 1:15 PM / 7 years ago

UPDATE 3-Shaw eyes dividend rise as profit defies Telus move

* Adds cable TV subscribers, against expectations

* CEO says its dividend is “conservative”

* Starts building wireless telephone network (Adds comments from conference call; stock close)

VANCOUVER June 30 (Reuters) - Shaw Communications Inc (SJRb.TO) posted a 20 percent jump in quarterly earnings on Wednesday, surprising the market by adding cable television subscribers even as it faced tougher competition.

Chief Executive and Vice Chairman Jim Shaw hinted that the Canadian cable TV, Internet and telephone company could raise its dividend, although not before its wireless plans were “consolidated” and its purchase of a unit of Canwest Global Communications Corp CGS.V completed.

“Right now (our dividend) is looking fairly conservative,” Shaw, son of company founder J.R. Shaw, said on a conference call to discuss third-quarter results.

“Certainly we are not looking at a down model. Either a growth model or a hold model. We’re a dividend growth company. We decided that a few years ago,” he said.

Shaw’s board approved a 5 percent dividend hike in January.

The Calgary-based company, whose business is focused in Western Canada, spent C$9 million in the quarter on starting to build a wireless telephone business, which it plans to launch late next year.

It still plans to spend C$100 million on the build-up this financial year, meaning some C$90 million in spending in the fourth quarter. This week Shaw chose Nokia Siemens Networks [NOKI.UL] to help it set up the network.

During the quarter, Shaw funded C$743 million of its C$2 billion purchase of bankrupt Canwest’s TV business with cash and expects the deal to close in fiscal 2011. The acquisition will allow it to add a national network and specialty channels such as Food Network Canada and National Geographic to its stable of media holdings.

BETTER-THAN-EXPECTED SHOWING VS TELUS

Shaw added 2,322 basic cable-TV subscribers in the quarter ended May 31, bringing its total base to 2.3 million. The market had expected it to lose customers as it has done in the past two quarters as rival Telus Corp (T.TO) aggressively markets its Internet TV offering.

“The positive cable additions provide a level of comfort in view of Telus’s IPTV push, while the decent Internet and strong cable telephony additions reinforce our view that Shaw remains well positioned for growth in cable,” Desjardins analyst Maher Yaghi said.

Overall, Shaw’s net income rose to C$158 million, or 37 Canadian cents a share. That was ahead of the 33.9 Canadian cents that analysts, on average, had expected, according to Thomson Reuters I/B/E/S. The result compares with net income of C$132 million, or 31 Canadian cents, in the same period last year.

Revenue increased 10 percent to C$944 million, in line with market expectations of C$949 million.

Shaw added customers in all parts of its business. Internet customers increased by 25,661 to 1.8 million, digital telephone lines rose by 66,123 -- their biggest quarterly increase yet -- to 1.04 million and digital TV customers rose by 87,092 to 1.6 million.

Shaw’s shares closed 4 Canadian cents higher at C$19.17 on the Toronto Stock Exchange on Wednesday.

$1=$1.06 Canadian Reporting by Nicole Mordant; additional reporting by Arnika Thakur in Bangalore; editing by Peter Galloway

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