Shaw 2011 Annual Report Download - page 58

Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2011
ŠDigital Phone lines increased 136,534 to 1,233,041 lines and Internet was up 54,217
to total 1,877,231 as at August 31, 2011. During the year Basic cable subscribers
decreased 50,988.
ŠOn June 30 the Company closed the acquisition of the cable system assets of Sun
Country Cablevision Inc. located in the central interior of British Columbia.
Cable revenue for 2011 of $3.10 billion improved 5.6% over the prior year. The growth was
driven by rate increases and customer growth in Digital Phone and Internet partially offset by
lower Basic subscribers and higher promotional activity.
Operating income before amortization of $1.49 billion increased 6.2% over last year excluding
the prior period one-time CRTC Part II fee recovery of $48.7 million. The improvement was
driven by revenue related growth partially offset by increased employee related costs,
programming, and marketing and sales expenses. The current period was also impacted by the
CRTC decision approving a retroactive rate increase in support structure charges by ILECs and
included the impact of the retroactive increase and ongoing higher costs.
On June 30 the Company closed the acquisition of the cable system assets of Sun Country
Cablevision Inc. located in the central interior of British Columbia adding approximately 6,500
Basic cable customers, including 2,100 Digital subscribers, as well as 4,000 Internet
subscribers. These assets represent a complementary growth opportunity and will provide
synergies with existing operations.
As at August 31, 2011 Shaw had 1,877,231 Internet customers which represents an 82%
penetration of Basic. Shaw recently announced its intent to provide a managed Wi-Fi network
that will extend a customer’s broadband experience beyond their home. Wi-Fi is in virtually all
portable consumer devices and customers are actively seeking Wi-Fi hotspots to reduce data
costs and improve their wireless broadband experience. Shaw, working with Cisco, will become
the first service provider in Canada to deliver secure, reliable wireless broadband in thousands
of locations. During the year the Company also commenced construction of a new data centre in
Calgary that will allow it to stay ahead of the technology curve and be able to handle new
innovations as they come, such as the Wi-Fi network initiative. The data centre will incorporate
energy efficient cooling systems allowing Shaw to reduce the environmental impact. The centre
is planned to be complete in the spring of 2014.
As part of the new Internet offerings, Shaw is undergoing a major network upgrade in converting
the television analog tiers to digital (the DNU). The network upgrade will significantly increase
the Digital customer footprint and provide increased capacity for HD and On Demand
programming. During the year the Company also launched the Shaw Gateway, the new standard
in connected entertainment that combines the delivery of shared PVR, On Demand
entertainment and home networking capability that will allow customers to share pictures and
content from their computer onto their television.
Also during 2011 Shaw launched the Shaw Plan Personalizer enabling customers to customize
their home entertainment service needs and receive everyday value. Customers can start with a
core home entertainment and communications package that includes Extreme Internet,
Personal TV, hardware options and Personal Home Phone Basic and then customize the plan to
how they want it. Shaw is continuing to evolve to meet customers’ needs.
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