Despite the continued strong push by many of its rivals, Shaw Communications Inc. (SJR) appears to be again pushing off its plans to enter the Canadian wireless market.
The company, which currently plays in the cable television, high-speed Internet and home telephone markets, said during the reporting of its second fiscal quarter results that it was again slowing its move into the wireless space.
“With the rapid development of wireless technology, including long-term evolution options, and the dynamics within the wireless industry evolving at a swift pace, we are currently evaluating technology and strategic alternatives with respect to our wireless initiatives,” said Shaw CEO Brad Shaw. “We plan to slow our wireless build activities as we carefully consider all options in advance of the launch of a wireless service. We continue to focus heavily on the strength of our core business and intend to make important investments in new technology platforms, digital reclamation and broadband capacity in order to ensure we maintain our technological leadership. We are building Shaw for the future and are closely monitoring the business and regulatory environment. We are flexible and will continue to meet challenges and seize opportunities in this dynamic environment.”
During a question and answer session, the company seemed to hint that the delay on deploying a wireless network was somewhat related to network technologies. Shaw noted earlier this year that it planned on pushing back its move into the wireless space by about three months until at least early 2012 citing a desire to ensure “an exceptional customer experience.” At that time Shaw said the company was continuing to work on deploying its core network assets in support of its planned HSPA-based offering. In addition, Shaw was looking at migrating that network to LTE as well as possibly participating in the upcoming auction of 700 MHz spectrum licenses.
However, with LTE networks coming on board fairly rapidly and Shaw’s plans to target heavy data users, the company seems to be now waiting for a possible LTE deployment.
Shaw said it planned on spending more than $200 million this year on its wireless build. However, the company is currently limited to 20 megahertz of spectrum that it acquired during Canada’s AWS spectrum auction, an amount the company said would just be enough to support a robust LTE network. That would leave precious little for a HSPA-based network unless the company is able to secure additional spectrum assets in the upcoming 700 MHz spectrum auction.
In addition to the spectrum concerns, Shaw said that its wireless plans will be targeted on data services that an LTE network would be ideal in supporting and that it was not planning on competing against many of the new Canadian operators targeting the lower end of the space.
Telus Mobility recently noted that it plans to speed up its LTE deployment plans with network roll outs beginning early next year. Telus is seen as the main rival to Shaw as both are based out of western Canada.
Beyond its wireless plans, Shaw noted that it has eliminated 550 jobs, including 150 management level positions in an attempt to reduce expenses. Those cuts cost in excess of $31 million, though Shaw said it expects the cuts, along with other cost reductions, should produce more than $52 million in annual savings.
“The competitive environment has moderated revenue growth this year in our core business and presented an increased level of risk to our forecast,” said Shaw. “The recent initiatives undertaken to drive efficiencies through focused cost containment and reductions currently have us on track to achieve our financial guidance including consolidated fiscal 2011 free cash flow of approximately $600 million. We plan to continue to make adjustments in our business as necessary to meet the changing circumstances.”
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