Shaw Communications Inc. will launch its Western Canadian-based wireless service late next year, the company said as it released its second quarter results.
“We are advancing our strategy to offer a competitive wireless offering and are now planning for an initial launch in late 2011,” Jim Shaw, vice-chair and CEO of the Calgary-based cable company, said in a statement Friday. “Accordingly, we are accelerating our wireless capital spend and expect to invest approximately $100 million in fiscal 2010. The investment in this new business will primarily be funded by cash on hand.”
By the time it launches service in the largest cities it has cable operations – Vancouver, Calgary and Edmonton – it could face five competitors: veteran incumbents Rogers Communications Inc., Telus Corp. and BCE Inc.’s Bell Canada, plus startups Wind Mobile (already in Calgary and Edmonton and scheduled to start soon in Vancouver) and Mobilicity (which hopes to open its doors in Toronto by the summer and soon expand to the three major Western Canadian cities.)
Shaw Communication’s move had been telegraphed in January, when Jim Shaw told financial analysts that after spending $190 million buying spectrum in 2008, the company was starting to look at what it would take to build a network.
Left unanswered from Shaw’s press statement is where the company will build. Logically, Shaw will want to have wireless coverage where its cable business is to offer bundles. That includes B.C., Alberta, Winnipeg and parts of northern Ontario. However, it also bought spectrum covering all of Manitoba as well as Newfoundland and Labrador.
It also has foothold in the southern Ontario, where it doesn’t have spectrum, through the purchase late last year of Hamilton, Ont.’s Mountain Cable. That put Shaw into Rogers’ back yard.
The company didn’t return a call for comment.
Iain Grant, managing director of the SeaBoard Group, a Montreal-based telecommunications consultancy, is one analyst who thinks Shaw’s financial muscle and bundling ability gives it great potential in a crowded wireless market. He expects Shaw’s wireless network to be broader and deeper than the networks of Wind and Mobilicity.
For the fiscal year ending Aug. 31, 2009, it had revenue of $3.39 billion and net income of $539 million.
Last year it raised $650 million to build the wireless network. Meanwhile, Shaw is also bidding to take over the television stations of troubled Canwest Global Communications Corp.
For the second quarter of the current fiscal year that ended Feb. 28, it pulled in $929 million, an increase of 11 per cent over the same period last year.
For Telus, Shaw’s entry into wireless is its “worst nightmare,” Grant said. The Vancouver-based telco can go head to head with Shaw on bundling in some parts of Western Canada, he explained, but its Telus TV Internet television service is not as strong as Shaw’s TV offering because Telus has to deal with copper cabling to many homes rather than faster fibre optic. For example, he said, Telus doesn’t have the ability to send multiple HD TV streams to a single residence.