Shaw 2013 Annual Report Download - page 46

S
haw
C
ommunications Inc
.
MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
S
August
31
,
2013
Š
D
ur
i
n
g
the current
y
ear, the
C
om
p
an
y
entered
i
nto a number o
f
transact
i
ons as
f
o
ll
o
w
s:
Š
T
he Company entered into agreements with Rogers to sell to Rogers its shares
i
n Mounta
i
n
C
able; and
g
rant to Ro
g
ers an o
p
t
i
on to ac
q
u
i
re
i
ts w
i
reles
s
s
pectrum licenses; and, to purchase from Rogers its 33.3% interest i
n
T
Vtro
p
olis General Partnershi
p
(“TVtro
p
olis”). The sale of Mountain Cable and
the
p
urchase o
f
TVtro
p
ol
i
s closed dur
i
n
g
the
y
ear, a
f
ter the res
p
ect
i
ve
regulatory approvals were received. The potential option exercise for the sale
of the wireless spectrum licenses, subject to Industry Canada approval, is
e
x
p
ected to occur
i
n
fi
scal
201
5.
O
verall,
S
haw ex
p
ects to rece
i
ve ne
t
proceeds of approximately
$
700 million from these transactions.
Š
T
he Company entered into a number of transactions with Corus, a related
p
art
y
sub
j
ect to common vot
i
n
g
control. In a ser
i
es o
f
a
g
reements to o
p
t
i
m
i
ze
i
ts port
f
ol
i
oo
f
spec
i
alty channels,
S
haw agreed to sell to
C
orus
i
ts 4
9%
i
nterest in ABC Spark and 50% interest in its two French-language channels,
H
i
stor
i
a and
S
er
i
es+. In add
i
t
i
on,
C
orus a
g
reed to sell to
S
haw
i
ts
20%
i
nterest
i
n Food Network
C
anada.
S
haw expects to rece
i
ve net proceeds o
f
a
pproximately
$
95 million from these transactions. The ABC Spark and Foo
d
Network
C
anada transact
i
ons closed dur
i
n
g
the
y
ear wh
i
le H
i
stor
i
aan
d
S
er
i
es+ are expected to close
i
n
201
4
.
Š
T
he Company acquired Envision, a company providing leading
telecommun
i
cat
i
on serv
i
ces to
C
al
g
ar
y
bus
i
ness customers,
f
or a
pp
rox
i
matel
y
$
225 million.
Š
T
he Company established a notional fund, the accelerated capital fund, of up t
o
$
500 million with
p
roceeds received, and to be received, from the aformentione
d
strateg
i
c transact
i
ons w
i
th each o
f
Rogers and
C
orus. Accelerated cap
i
tal
i
n
i
t
i
at
i
ves
will be funded through this fund and not cash generated from operations. Key
i
nvestments
i
nclude the com
p
let
i
on o
f
the
C
al
g
ar
y
data centre,
f
urther d
igi
t
i
zat
i
o
n
of
the network and add
i
t
i
onal bandw
i
dth upgrades, development o
f
IP del
i
very o
f
video, expansion of the WiFi network, and additional innovative product offering
s
related to
S
haw
G
o and other a
pp
l
i
cat
i
ons to
p
rov
i
de an enhanced customer
e
xperience. It is expected up to a total of
$
500 million will be invested in fisca
l
2
013, 2014 and 2015 spending approximately
$
110 million,
$
250 million an
d
$
140 million in each of the res
p
ective
y
ears
.
Š
S
haw continues to make a positive contribution in the communities it operates. In
fiscal 2013 the Company responded to the southern Alberta floods with a
$
1
mi
ll
i
on donat
i
on to the Red
C
ross and also su
pp
orted a number o
f
ch
i
ldren’
s
c
harities as title sponsor of the Shaw Charity Classic held in Calgary in August.
Š
D
uring 2013 the Company opened new retail stores as part of its continue
d
i
nvestment
i
nde
fi
n
i
n
g
the customer ex
p
er
i
ence. The new stores showcase all o
f
S
haw’s products and services through a unique technology experience of interactive
d
isplays along with hands on training and technical support
.
Revenue and o
p
eratin
g
ex
p
ense
s
Consolidated revenue of
$
5.14 billion for 2013 improved 2.9% over the prior year whil
e
consolidated operating income before amortization of
$
2.22 billion increased 4.4% over 2012
.
R
evenue
g
rowth
i
n the
C
able d
i
v
i
s
i
on,
p
r
i
mar
i
l
y
dr
i
ven b
y
rate
i
ncreases, was
p
art
i
all
y
reduce
d
by various expense increases including employee related amounts and higher programming
.
4
2