CALGARY – The battle for workers in Alberta is holding things back a little at Shaw Communications, the company said today.
The company posted nice growth figures in the first quarter of the fiscal year, ended November 30, 2006, but during a conference call with financial analysts CEO Jim Shaw said "a tight labour market" means that the company’s telephone service is primarily sold via word of mouth because it can’t find enough installers in order to "hit the gas" on a mass-market campaign.
In Q1, consolidated service revenue of $671 million for the three month period was an increase of 13.8% over the comparable quarter and total service operating income before amortization of $299.8 million improved by 17.4%. Funds flow from operations increased to $243.9 million for the quarter compared to $197.2 million.
"We are off to a solid start in fiscal 2007," said Shaw. "Both divisions reported strong revenue growth and improved service operating income before amortization over last year. We continued the roll-out of digital phone with the service now available to approximately 2.3 million homes, representing approximately 70% of homes passed. We provide a facilities-based, competitive alternative to the traditional phone companies and offer the services and value our customers are looking for."
Customer gains were posted this quarter across all products. Digital Phone lines increased 38,197 to 250,904 as at November 30, 2006. Internet and Digital subscribers increased by 35,877 to 1,348,639 and 25,331 to 696,887, respectively. Basic subscribers were up 12,664 to 2,213,457 and DTH customers increased 2,426 to 871,634.
Free cash flow(for the quarter was $76.1 million compared to $32.1 million for the same period last year. The growth in free cash flow was primarily related to the increase in service operating income before amortization.
"Shaw’s continued customer growth and improved financial performance results from our focus on the customer, the commitment of our team, the capabilities of our network, and the strength of our product offering. The performance to date sets us on a clear path to meet Shaw’s fiscal 2007 free cash flow guidance of $300-$320 million as announced in October." said the CEO.
Net income of $81.1 million in Q1 ’07 compared to net income of $75.7 million for the same quarter last year.
Cable service revenue for the quarter was $499.2 million, up 15.8% over the same period last year primarily as a result of customer growth and rate increases, says the press release. Service operating income before amortization for the three month period increased 14.6% over the same quarter to $237.8 million driven by the growth in revenue.
Satellite division quarterly service revenue of $171.8 million improved 8.4% over the same period last year primarily due to rate increases and customer growth. Service operating income before amortization for the quarter increased by 29.7% to $62 million. The improvement was largely due to growth in DTH revenues.
"Throughout the remainder of this year we will continue to focus on our key priorities of customer service, the further expansion of the Digital Phone foot print, strengthening our video offering with new programming and HDTV services, and bundling strategies. We also plan to launch a business voice service. Our customer focus continues to differentiate us, strengthen our financial position, and build value for all shareholders," said Shaw.
Shaw now has 2.213 million basic cable subscribers, adding 12,664 in the quarter, 696,900 digital cable customers, an increase of 25,300, 1.35 million Internet customers, a 35,877 increase (but with a growth rate 34% slower than Q1 ’05) and 251,000 VOIP subscribers, having added 38,200 in the quarter, just a 12% growth increase there.
