Shaw Communications Inc. posted a lower profit in its latest quarter as revenue also fell slightly ahead of its planned multibillion-dollar takeover by one of Canada’s largest telecommunications companies.
The Calgary-based cable, internet and wireless company posted net income of $196 million in the second quarter, down 9.7% from $217 million in the same period a year ago.
Shaw absorbed a drop of 58,100 subscribers in its wireline business, where lower video, satellite and phone subscriptions more than offset a “modest gain” in consumer Internet, the company said Wednesday. Year-over-year, wireline, which accounts for more than three-quarters of total revenue, fell more than 1% to $1.04 billion, while adjusted earnings fell nearly 6% to $509 million.
However, the wireless business saw its adjusted profit rise 27% year-over-year to $123 million last quarter amid subscriber growth. The wireless segment operates in Ontario, Alberta and British Columbia, covering approximately half of Canada’s population of 38 million.
Shaw’s earnings last quarter were 39 cents per share, compared to 43 cents per share in the same period of 2021.
Revenue for the three months ended Feb. 28 was $1.36 billion, down 2% from $1.39 billion a year ago.
Shaw Executive Chairman and CEO Brad Shaw said the company has reached a critical milestone regarding its potential acquisition by Rogers. The two telecoms still aim to close the deal in the first half of this year, he said in a statement.
For the second consecutive quarter, the company held no conference calls to discuss financial results with analysts.
“It is not an atypical practice for a company that is about to close an M&A transaction or in the middle of an M&A transaction to avoid or not hold a typical conference call with its shareholders. said JR Laffin, co-head of capital markets and public M&A at law firm Strikeman Elliott.
He noted that analyst calls are not required by law.
“All the information is generally available in the documents anyway,” he added, although avoiding calls could also mark “a level of caution that both parties generally like to exercise.”
Last month, the Canadian Radio-television and Telecommunications Commission approved Rogers’ purchase of broadcasting services from Shaw and established a series of conditions that Shaw must meet.
The broadcast regulator’s approval marked one of many hurdles Rogers must navigate as it tries to complete the $26 billion deal it signed in March 2021 that will set it back. would acquire 16 western Canadian-based cable services, a national satellite television service and other broadcast services. and television services.
The Competition Bureau and Innovation, Science and Economic Development Canada are also reviewing the deal.
Early last month, a parliamentary committee said Rogers’ bid should not go ahead, but if it did, the government should make its conditions attached to the approval “fully enforceable”. .
In a report on the proposed merger tabled March 4, the House of Commons Industry and Technology Committee recommended that the affordability and accessibility interests of Canadians take precedence over all other considerations when of the regulatory review process.
The non-binding report says the government should stress the importance of Freedom Mobile, Shaw’s wireless service provider, as the fourth-largest wireless service provider competing with the big three of Rogers, Bell and Telus.
RBC Capital Markets analyst Drew McReynolds says Rogers will likely have to divest some or all of Shaw’s wireless assets, which will reinvigorate the competitive landscape.
“That said, we believe that under most recourse scenarios, such a reshuffle should still be manageable for national wireless carriers, reflecting 5G leadership and a continued ability to compete with a new fourth wireless carrier in Ontario, in Alberta and British Columbia via increased wireline wireless bundling, improved base management, and/or greater tactical use of flanker/discount brands,” McReynolds said in a statement on Sunday.
This report from The Canadian Press was first published on April 13, 2022.
Companies in this story: (TSX: SJR.B, TSX: RCI.B)
Christopher Reynolds, The Canadian Press