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Calgary-based Shaw Communications is a cable company, right? Well, sort of. That is, most of its actual operations involve its traditional cable business in one way or another. But Shaw has also become something of a technology holding company as well -- the latest evidence of which is its investment in shares of Vancouver-based fibre-optic play 360Networks -- and therein lies both the risk and the potential reward for investors.

On Monday, Shaw said it has signed a deal with 360Networks, formerly known as Worldwide Fiber, that will see the Calgary company acquire $100-million (U.S.) worth of 360Networks' stock. Shaw has also agreed to buy $250-million (Canadian) worth of capacity on 360Networks' expanding fibre network, which will allow Shaw to expand its own @Home high-speed cable-access Internet service into new markets even faster.

This is the second fibre-related deal that Shaw has done in the past few months: In December, the company agreed to sell its own fibre-optic division, known as Shaw Fiberlink, to Vancouver-based telecom company GT Group Telecom. So why sell your own fibre network to another company, only to turn around and buy fibre capacity from a company like 360Networks? For one thing, it leaves the cost of actually running the network to GT Group and 360Networks, while Shaw still gets access to the fibre capacity.

For another thing, both deals give Shaw a potential upside that running its own fibre business doesn't have -- an equity investment. In the case of GT Group, Shaw more or less merged Fiberlink with the telecom company, and in return got $760-million in cash and stock, giving it a 28-per-cent stake in the telecom provider. GT Group went public a week ago at $20.40 a share and closed yesterday at $28.85, giving the company a total value of $4-billion -- meaning Shaw's stake is worth more than $1.15-billion.

That's only a theoretical value, obviously, and Shaw's stake in GT Group and its other holdings could easily plummet in value -- but the company will still have the services those companies have agreed to provide, making the equity return the icing on the cake. And there could be quite a bit more icing in the case of 360Networks, which is expected to launch a public offering in the next few months aimed at raising $800-million.

360Networks has gained a considerable following since it was spun off from Western Canadian construction conglomerate Ledcor Industries, in part because the formerly unknown company managed to hire Microsoft's chief financial officer, Greg Maffei, to be CEO. The company has built a North American fibre network, and is busy linking that to similar networks in Europe to create a global telecom network -- in effect becoming a Canadian version of the U.S. competitive telecom company Global Crossing.

Shares of Global Crossing have had their ups and downs since it went public in the fall of 1998, dropping as low as $20 (U.S.) last fall from a high of $60 early last year, but they have recovered to close recently at $49.68, giving the company a market value of about $40-billion. The company has reportedly been in takeover talks with giant Deutsche Telekom, which recently tried and failed to buy two other carriers, US West and Qwest.

In addition to its stake in GT Group and 360Networks, Shaw's holdings as of the first quarter include: 5.7 million shares of U.S.-based cable Internet company Excite@Home; three million shares of cable modem maker Terayon Systems; 495,000 shares of telecom equipment company Motorola; 1.4 million shares of Liberty Digital, which itself holds stakes in a number of Internet entertainment companies; and 1.9 million shares of Liberate Technologies, which is developing an Internet content platform.

At the moment, those holdings are worth about $1.2-billion (not counting the investment in 360Networks), or about $1.8-billion (Canadian), and the addition of the GT Group stake means the value of Shaw's investments is currently more than $2.5-billion. The stake in 360Networks could add another substantial amount to that figure, depending on how the IPO is received -- although Shaw has said that it plans to finance the investment in the Vancouver-based company by selling off some of its other technology holdings.

Of course, any or all of Shaw's investments could drop in value, if the selloff that has been taking place in tech stocks continues. That's a risk that comes with investing in technology companies, and it's one that investors should be well aware of when they look at Shaw -- because in buying it, they are getting a lot more than just a cable company.

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SHAW COMMUNICATIONS INC.

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