Shaw Communications says its new wireless division will launch by the end of next year, after the Calgary-based company irons out some of the details of its highly anticipated foray into the competitive mobile phone market.
The cable television, Internet and phone company said today it will speed up the launch of the wireless rollout with a $100-million investment during this fiscal year.
The announcement came as Shaw reported an 11% decline in its second-quarter profits despite growth in its cable customers, and higher pricing, that drove a double-digit increase in revenue.
Shaw reported net earnings of $138.7 million or 32 cents per share for the quarter ended Feb. 28, down from year-earlier profits of $156.6 million or 36 cents per share.
The company said last year’s earnings got a boost from a $23 million tax recovery, while debt retirement costs and financial instruments have dragged earnings down for the first half of the 2010 fiscal year.
The sag in second-quarter profits came despite an 11% rise in revenues, which benefited from customer growth and acquisitions in the cable division, as well as higher pricing, the company said.
Shaw reported second-quarter revenue of $929.1 million compared to year-earlier levels of $839.1 million.
The telecommunication giant’s plans for wireless services have been the source of speculation among analysts and investors in recent months. The company paid $190 million for the wireless spectrum at a government auction in 2009, and had planned to launch the business early next year. The latest details bump that timeline slightly.
“The investment in this new business will primarily be funded by cash on hand,” chief executive Jim Shaw said in a statement.
Shaw hopes that more of its subscribers will bundle their cable services with mobile phones, which will in turn boost revenue. Telus, which has a dominant presence in Western Canada wireless market, has launched its own television services package in an effort to block Shaw’s attempt to lure more subscribers.
Shaw’s basic cable subscriber count declined in the quarter, dropping by 1,055 customers, while digital customer subscriptions grew by more than 98,000.
“Our financial performance this quarter was solid. We continue to grow in the face of intense competition and a slow economy,” Shaw said. “We have built the foundation for growth with our advanced broadband network, strong customer relationships, and prudent management approach.”
Meanwhile, Shaw and a private equity firm backed by Wall Street investment bank Goldman Sachs face a battle for control of Canwest Global Communications’ broadcast assets.
In February, Shaw made a $95-million offer for 20% of the Canwest operations, which have been restructuring under court protection from creditors. Shaw would get 80% of the voting shares.
Goldman Sachs, which owns 65% of Canwest’s specialty channels, filed court documents last month seeking to thwart the Shaw deal.
