Shaw’s delay on wireless makes sense: industry analyst

Shaw Communications Inc.’s decision to delay investing in wireless this fiscal year seems to have puzzled some financial analysts, but one industry researcher says the move is a prudent one. During Shaw’s second quarter financial and subscriber results conference call earlier this month, the financial analysts peppered the company’s management team with questions regarding its decision to not make any wireless investments this fiscal year, which ends in August. “We have not seen a compelling reason to get in there,” Shaw CEO Jim Shaw told analysts during the April 8 call. “We think that the wireless numbers for all the companies are going to come off the sheet, they’re going to be weak. There’s a lot of problems in wireless, there’s a lot of price competition.” Brahm Eiley, president of Toronto-based Convergence Consulting Group Ltd., says there is really no reason for the western-based communications company to rush into the market and it makes sense for Shaw to stay on the sidelines for the time being while the big new entrants race to get into the market. This type of strategy, he adds, gives Shaw the ability to see what the other new entrants are doing and allows it to tweak its wireless offering if need be. But the biggest opportunity for Shaw doesn’t lie in the non-wireless subscriber camp, says Eiley. Rather, it’s existing wireless subscribers who could be lured to Shaw as part of a bundle. Just as Shaw was successful in taking local telephone customers away from Telus Corp. by bundling it with its Internet and digital TV services, Shaw will be able to leverage a quad-play bundle with wireless. Eiley notes that Shaw has shown itself to be better at competing against Telus than Telus against Shaw. But Telus customers won’t be the only target, Eiley says, pointing to the Rogers Wireless subscribers. Calling them “exposed”, he says, they are prime targets because Rogers doesn’t offer a bundle in western Canada. “So there’s absolutely no reason why Shaw won’t do very well with wireless. It’s not hurting it right now. So it has the luxury to wait,” Eiley tells Report on Wireless. Shaw won’t be on the sidelines for long, though, according to the Convergence Consulting analyst. He predicts Shaw will be offering wireless service in some markets by 2010. Shaw appears to be getting its financial house in order before committing any money to its wireless venture. The company talked about debt and debt covenants coming due next year during its Q2 conference call. A bigger decision for Shaw will likely be its technology choice, which could be another reason why it’s delaying its wireless expansion. Verizon Wireless plans to rollout a 4G network based on Long Term Evolution (LTE) and will have a significant footprint in 2010. AT&T will be testing 4G LTE in 2010 with plans for commercial launch in 2011. According to one blog, Rogers Communications Inc. plans to have an LTE network running in Vancouver by the time the Olympics start next February. However, there won’t be any 4G handsets and the service will be limited to USB modems such as the Rogers Rocket Stick. Bell Canada and Telus have announced plans for an HSPA network, which they say provides a logical upgrade path to LTE.

Shaw’s delay on wireless makes sense: industry analyst

News | April 20, 2009

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