(SJR) Shaw Communications Secures Assets

Shaw Communications Inc. (SJR) recently gained full control over the assets of Sun Country Cablevision Ltd. and its affiliated companies Armstrong Cablecom Ltd. and Enderby Cablecom Ltd.

Sun Country started offering its service in 1984. Its services include high-speed internet service, voice and television service to its subscribers. This acquisition will further strengthen Shaw Communication’s service network across Canada and U.S.

Shaw Communications is a diversified communications company that provides broadband cable television services, Internet, digital phone, telecommunications services, Direct-to-home (DTH) satellite services, and satellite distribution services mainly in Canada and the U.S.

Recently, the company declared its third quarter 2011 financial results. Net income in the reported quarter was $209.5 million or 46 cents per share compared with a net income of $163.5 million or 38 cents per share in the prior-year quarter. Adjusted earnings per share (EPS) of 52 cents comfortably beat the Zacks Consensus Estimate of 40 cents per share.

Quarterly total revenue of approximately $1,327.6 million was up 36.1% year over year and was above the Zacks Consensus Estimate of $1,290 million. The year-over-year improvement was primarily attributable to the acquisition of Shaw Media coupled with customer growth and rate increases in the Cable and Satellite segments.

Shaw Communicationsis facing stiff challenges from innovative bundled offerings of Telus Corp.(TU) and the new entrants in the Canadian cable TV market. Although the company has finally decided to launch wireless services in mid 2012, we remain skeptical about its profitability as this sector is already over crowded.

We, thus, maintain our long-term Neutral recommendation for Shaw Communications. Currently, Shaw Communications has a Zacks #4 Rank, implying a short-term Sell rating on the stock.

SHAW COMMS-CL B (SJR): Free Stock Analysis Report

TELUS CORP (TU): Free Stock Analysis Report

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