Shaw Communications to Outperform - Analyst Blog
January 03 2013 - 8:15AM
Zacks
We reaffirm our Outperform
recommendation on Shaw Communications Inc. (SJR),
primarily based on the company’s improving EBITDA margin and free
cash flow due to the discontinuation of promotional
activities. The company’s fourth quarter results topped the
Zacks Consensus Estimates. The loss of basic video and digital TV
subscribers were more than offset by huge gain of high-speed
Internet and cable telephony subscribers. Management has provided a
rosy financial outlook for the ensuing fiscal 2013.
In the fourth quarter of fiscal
2012, Shaw Communications performed impressively with respect to
net customer additions on several fronts. DTH customer base was
910,023, representing a quarterly net addition of 1,155 customers.
Digital phone lines were 1,363,744, reflecting a year-over-year net
addition of 24,185. High-speed Internet customer base stood at
1,912,230, reflecting quarterly net addition of 6,062 customers.
Furthermore, Digital TV penetration rate is now 86.4% of basic
cable TV.
Quarterly EBITDA increased 4% year
over year. However, whenever the company tried to reduce its
promotional activities it lost a large amount of pricier
subscribers. On the other hand, higher promotional activities are
impairing the company's bottom line and free cash flow. It seems
management has finally found out an appropriate trade-off between
these two situations. Management has forecasted that the company’s
revenue and EBITDA will further improve in fiscal 2013 whereas free
cash flow will remain same with that of the previous year.
Shaw Communications has launched -
“Shaw Go” - an innovative TV Everywhere service, which is available
only on Apple Inc. (AAPL) developed iPad 2 and
iPhone 5. Initially, this service will only offer the company’s
Movie Central applications. However, in the near future, the
company will also offer streaming live TV, on-demand content and
several family-focused programs through Shaw Go.
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