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Shaw hopes to show decline in subscriber losses

Calgary-based Shaw, which reports its results Wednesday, and Telus have been locked in a heated rivalry since mid-2010.

Todd Korol/REUTERS

Shaw Communications Inc.'s strategy to fend off competition from Telus Corp. will come under scrutiny when the cable company releases its fiscal first-quarter results.

Calgary-based Shaw is scheduled to report those financial results on Wednesday, just hours before its annual general meeting of shareholders. Although analysts predict that Shaw lost more cable and Internet subscribers during its September-to-November quarter, they will be looking for signs that those losses have moderated from year-earlier levels.

Shaw and Telus have been locked in a heated rivalry since mid-2010 when the Vancouver-based telco launched its Optik TV and Internet product. Since that time, Telus has eroded Shaw's market share in Alberta and British Columbia through the use of various incentives, including a bundle strategy that offers consumers discounts for buying more than one product. In addition to home telephone, television and Internet service, Telus also offers wireless – the one product that Shaw does not offer.

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Although both companies continued to offer promotions during the three months ended Nov. 30, 2012, they were less aggressive than in the year-earlier period. Dvai Ghose, an analyst with Canaccord Genuity, suggests more rational pricing could boost Shaw's first-quarter results, including some improvement in EBITDA (earnings before interest, taxes, depreciation and amortization).

"However, with no wireless exposure, an inferior cable user interface, a maturing Internet and telephony base and continued loss of TV and broadband share to Telus, it is not clear what will drive future growth," Mr. Ghose wrote in a recent research note to clients. "Shaw also has no ability to attack Telus in its all-important wireless segment."

Shaw did make a number of strategic moves during its fall quarter. It expanded its WiFi network and launched its Shaw Go service, which provides access to TV shows on mobile devices for its cable and satellite customers. It also kicked off a major advertising campaign to revamp its corporate branding. In December, the company disclosed key changes to its executive pension plan that will control costs by capping future payouts.

Shaw is expected to earn adjusted earnings per share of 0.456 cents during its fiscal first-quarter, according to a consensus forecast provided by Bloomberg. There are also expectations that Shaw will announce a dividend increase in conjunction with its earnings release.

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