As the fight for television and Internet market share continues in Western Canada, investors will be watching Shaw Communications Inc.'s earnings report Thursday for signs it is fending off its biggest rival Telus Corp.
On top of slowing the rate of cable subscriber declines, Calgary-based Shaw has been trying to prove that offering a large network of WiFi hot spots free to its customers will help reduce churn and attract subscribers to its Internet business.
"The focus will continue to be around basic cable subscriber losses to Telus and to what extent those are being offset by Internet and telephony net additions," RBC Dominion Securities Inc. analyst Drew McReynolds said in an e-mail. "Second-quarter basic cable subscriber losses were less than expected, so it will be interesting to see if that trend continued into Q3."
Shaw announced plans to cut 400 jobs in April as it consolidated several business units into divisions focused on retail and enterprise customers, respectively, and combined IT functions into one group. Mr. McReynolds said he will look for a sense of the savings generated by those moves.
Shaw's cable business has faced significant competitive pressure in recent years from Vancouver-based Telus's Internet protocol television (IPTV) product Optik TV.
In the second quarter Shaw lost 21,000 television subscribers, but that was down from a net 30,000 losses in the second quarter of 2013.
It added 13,000 Internet customers, up from a net 8,000 new subscribers in the same period the year before.
Greg MacDonald, head of research at Macquarie Capital Markets Canada Ltd., said in a research note Friday that subscriber results have outstripped expectations but revenue and earnings before interest, taxes, depreciation, and amortization have been soft.
Shaw's media division also faces headwinds "due to the structural shift in viewership patterns from traditional TV to Internet," he added.
Canada's broadcast regulator is reviewing the television system with a view to "unbundling" channels, which could seriously affect Shaw's holdings of specialty channels.
Industry players are due to make submissions in the proceeding on Wednesday.
Consensus expectations call for Shaw to report quarterly sales of $1.359-billion and adjusted earnings per share of 49 cents on adjusted profit of $226.25-million, according to data compiled by Bloomberg.