Two of Canada's cable companies started the fiscal year with firm revenue growth while gaining customers and raising prices.
"2010 is off to a strong start," Shaw Communication Inc.'s chief executive officer and vice-chairman Jim Shaw said on a conference call yesterday, as his company posted 11-per-cent revenue growth in the first fiscal quarter of 2010 and added sharply to its subscriber base.
The industry should be able to look forward to steady growth this year, analysts said, as their broadband Internet, cable television and landline phone services prove resilient even as the economy struggles to gain traction.
"Not only are the subscriber bases pretty stable, and will continue to generate pretty stable growth, but on top of that I think you'll see price increases come back," said Jeff Fan, a telecom and cable analyst with Scotia Capital Inc.
Shaw reported first-quarter results yesterday, posting a drop in profit to $114.2-million from $123.5-million a year earlier, but said this was mainly related to debt repayments. Excluding non-operating items, earnings for the quarter would have been $180-million, compared with $122-million during the same period last year. Revenue was up to $906-million.
Though Shaw's basic cable service lost some subscribers, Shaw's other services, including Shaw Digital and Internet and digital phone lines, continued to grow, despite some rate increases.
On the call yesterday, Mr. Shaw also confirmed he was in talks to acquire some CanWest Global Communications Corp. assets, though not newspapers. "We will always keep our options open," Mr. Shaw said.
Cable companies should also be able to hike prices, analysts said. Cogeco Cable recorded strong results on Wednesday for its first quarter since implementing new rate increases and fees for high-bandwidth users. It reported 6-per-cent revenue growth to $317.4-million for the first fiscal quarter, while earnings jumped.
Louis Audet, president and chief executive officer of Cogeco, said some Internet customers have complained after being charged for going over the set amount of bandwidth, but Mr. Audet said, "People have tended to upgrade their packages."
But even as Shaw and Cogeco Cable post strong gains, questions remained as to how, and when, cable companies will enter the wireless game, considered crucial for the evolution of the business.
Shaw said only that it plans "initial steps" for 2010, even as competition increases: Wind Mobile launched in Calgary in December; Data & Audio-Visual Enterprises (DAVE) Wireless Inc. said it plans a launch this year; and Quebecor Inc.'s Videotron has also announced plans to launch in 2010.
Mr. Shaw did little to clarify the company's plans for wireless phone services, which does not include a launch this year. "I think we're just taking a careful approach and making sure that if we do anything, we make the right move off the start," he said.
Analysts said they wondered whether the delay might translate into a competitive disadvantage. "To take such a gradual approach, when penetration is increasing every day and other new entrants have launched, is a little bit bewildering to me," said Dvai Ghose, an analyst with Genuity Capital Markets. "The biggest weakness that cable has is not having wireless. And if you don't fill that gap, it will hurt you over time."
Close: $20.66, down 4 cents
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