CALGARY – Shaw Communications’ basic cable subscribers increased by 3,289, digital and Internet customers grew by 20,875 and 27,873, respectively, digital phone lines were up by 51,128, and Star Choice customers increased by 5,337 in the third quarter of fiscal 2007, ended May 31st.
That means the company, as of May 31, has 2,228,898 basic subs, 747,431 digital cable customers, 1,421,899 high speed Internet customers, 877,899 DTH subscribers and 343,753 VOIP customers.
Consolidated service revenue improved 12.1% and 12.7%, for the three and nine month periods over the comparable periods last year to $702.2 million and $2.06 billion, respectively. Total service operating income before amortization of $310.7 million and $913.6 million increased by 11.2% and 13.8% respectively, over the same periods. Funds flow from operations increased to $259.5 million for the quarter and $755.8 million for the year-to-date compared to $221.1 million and $626.6 million in the same periods last year, says the company’s press release this morning.
Net income of $91.7 million or $0.42 per share for the third quarter was down significantly compared to $126.4 million or $0.58 per share for the same quarter last year. Net income for the first nine months of the year was $252.5 million or $1.17 per share compared to $247.9 million and $1.14 per share last year. However, says the release, the current and comparable three and nine month periods included non-operating items that included a gain on the sale of a portfolio investment in the third quarter of 2006 as well as tax recoveries related to reductions in enacted income tax rates in each the first and third quarters of last year. Excluding the non-operating items, net income for the three and nine month periods ended May 31, 2007 would have been $86.2 million and $246.2 million compared to net income of $63.9 million and $152.1 million in the comparable periods.
During the quarter Shaw’s voice over Internet protocol footprint was expanded in British Columbia, with launches in Abbotsford, Chilliwack, Whalley, Port Coquitlam, and the surrounding areas of Kelowna and Penticton. The company had 343,753 digital phone lines at the end of May and the service is now available to almost 80% of its homes passed.
"In just over two years since our first launch, penetration of digital phone lines now stands at 20% of basic customers who have the service available to them," said company CEO Jim Shaw, in the release. "Its strength, the growth of other products and continued pricing power have contributed to increase Shaw’s overall consolidated revenues and service operating income before amortization by almost 25% over the last two years."
Cable service revenue increased 14.3% for the quarter to $526.9 million and 14.8% on a year to date basis to $1.54 billion. The improvement was primarily driven by customer growth and rate increases. Service operating income before amortization improved 12.5% to $247.2 million for the quarter and 13.8% to $729.1 million for the nine month period.
Satellite division service revenue increased 5.9% and 6.7% to $175.4 million and $518.5 million, respectively, for the three and nine month periods over the same periods last year primarily due to rate increases and customer growth. Service operating income before amortization for the three and nine month periods improved 6.3% to $63.6 million and 13.8% to $184.5 million, respectively, largely due to growth in DTH revenues, reads the release.
"As a result of our performance for the first nine months of the year, free cash flow remains on track to exceed $310 million, which is in line with our guidance and plan to accelerate certain capital spending in the final quarter of fiscal 2007 in order to continue to meet customer demand and our high standards for service delivery. In fiscal 2008 we will continue to invest to ensure our network will support and maintain our leading broadband business, grow telephony products and provide next generation services for our customers. We will also continue a number of multi-year projects currently underway related to facilities expansion and a new customer management and billing system. Our preliminary view for fiscal 2008 calls for capital investment to range from $640 – $670 million. Consistent with previous years, we plan to provide specific guidance on service operating income before amortization and free cash flow when we release our 2007 year-end results," added Shaw.
The company also announced this morning an 18% increase in its annual dividend paid to shareholders to $1.32 per year.
