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Shaw Communication’s profit dropped in the third quarter.

Shaw Communications

As its mainstay cable business faces declining subscriber numbers and its media unit grapples with the steady erosion of advertising dollars, Shaw Communications Inc. continues to point to a strategy based on near-ubiquitous Internet access for its customers as a bright spot.

The Calgary-based company reported another quarter of encouraging broadband Internet sign-ups and a slower rate of losses on the television side Thursday, attributing that in part to its expanding network of WiFi hotspots across Western Canada.

Though Shaw abandoned plans to launch a cellular business in 2012, its executives say it still wants to be its customers' "primary network" by providing easy access to free WiFi outside the home, a move it copied at least in part from the playbook of U.S. cable giant Comcast Corp.

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Bradley Shaw, chief executive officer of the family-controlled company, said Shaw now has more than 40,000 WiFi hotspots across Western Canada - up from 35,000 last quarter - and more than one million devices registered on the network with about 25 per cent of its broadband Internet customers using the service.

"The primary benefit of the WiFi service is increasing the value proposition of our products," Mr. Shaw said on a conference call with investors Thursday, noting recent surveys the company has conducted have revealed an increased likelihood for customers to recommend Shaw's Internet service and that churn rates have improved.

Shaw posted better numbers at its cable division than many had projected, shedding just 12,075 basic cable television subscribers versus the 26,578 it lost in the same period last year. The company noted that was partly due to a net increase of about 6,000 business customers. It also added more Internet customers than expected at about 12,399 compared with a net gain of 4,157 in the third quarter of 2013.

Shaw's total third-quarter revenue of $1.34-billion fell slightly short of analyst expectations, up 1 per cent compared with 2013, but less than the $1.36-billion analysts had expected.

Sales at Shaw's cable division increased 2 per cent in the quarter to $845-million, but revenue at its satellite business grew by just 0.9 per cent to $220-million and sales at its media unit were down 2 per cent to $301-million.

Net income was $228-million or $0.47 a share, down 8.8 per cent from $250-million in the same period last year. The company said that was largely due to a gain of $49-million it recorded in the third quarter of 2013 on the sale of some of its specialty channels.

Greg MacDonald, head of research for Macquarie Capital Markets Canada Ltd., said the subscriber numbers were positive but added he doesn't see that as a catalyst for Shaw's stock price just yet. Its shares were completely flat on the day, closing at $26.35 on the Toronto Stock Exchange.

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"The revenue miss suggests cable pricing power remains muted," Mr. MacDonald said. "In addition, both the satellite and media divisions look like they are entering a period of revenue stagnation with weak ad trends causing a year-over-year decline in media revenue."

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About the Author
Telecom Reporter

Christine Dobby covers the Canadian telecom industry for The Globe and Mail. Before joining the Globe in May 2014 she reported for the Financial Post for three years, most recently writing about telecom and media. She has also reported for the Toronto Star and New Brunswick Telegraph-Journal. More


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