We are downgrading our recommendation on
Shaw Communications Inc.
) to Underperform, ahead of the release of its third quarter-fiscal
2012 financial results. The company continues to lose basic cable
TV customers, reflecting that management is yet to make a
turnaround. Since the company already abandoned its wireless
venture, it is very crucial for Shaw Communications to execute
video offerings properly in order to sustain its future
growth. Furthermore, the Media segment is facing continued
softness of the Canadian advertisement market.
Apart from video segment, the company markedly improved its
customer base for other offerings in the previous quarter. However,
this impressive performance is related to massive spending for
aggressive promotional activities, resulting in sheer fall of
EBITDA margin and free cash flow. Consequently, the company reduced
its previous outlook for fiscal 2012.
Shaw Communications offers triple-play cable TV and satellite
TV, Internet, and wireline phone services, whereas its main
) offers Cable TV, Internet, wireline, and wireless services. Telus
shares a national wireless network with Bell Canada, a division
). Its popular Optik TV, offering IPTV services, is quickly eroding
Shaw's market share. In addition, Shaw Communications will now lack
a major competitive weapon, which is the wireless
Shaw Communications decided to put aside its much-hyped plan to
enter into the wireless market of Canada. Instead, the company will
now build a cheaper Wi-Fi network, which will enable offloading
3G/4G wireless data traffic across a short distance from landline
Internet access points. We believe the decision of Shaw
Communication to abandon its wireless venture will significantly
reduce the company's competitive strength in a highly lucrative
Canadian telecom market.
BCE INC (BCE): Free Stock Analysis Report
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TELUS CORP (TU): Free Stock Analysis Report
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