Calgary-based cable company Shaw Communications announced a drop in second-quarter profit to $139-million or 32 cents a share, from $157-million or 37 cents a year earlier, but said it was on track to launch wireless services next year.

The roll out won’t come until later in 2011. Shaw has been battling increased competition from Telus Corp in Western Canada, and is looking for ways to drive more revenue out of maturing internet and home phone markets.

Shaw posted another basic TV subscriber loss of 1,055 customers, with market share almost certainly being stolen by Telus TV.

But as a sign of ongoing financial confidence, Shaw’ Board of Directors has declared monthly dividends of just over seven cents a share on both its Class B (non-voting) and Class A (participating)  shares. Analysts responded with cautious optimism to the news, with Shaw’s share showing modest gains in early morning trading.

“We are advancing our strategy to offer a competitive wireless offering and are now planning for an initial launch in late 2011,” chief executive officer Jim Shaw said in a statement.

The investment and analyst community has been waiting to see what Shaw will do with the $190 million wireless spectrum it picked up at auction in 2008. Given tough competition and a recession, Shaw may have been wise to wait, as new entrants like Globalive’s WIND brand are struggling to gain market share.

“We are accelerating our wireless capital spend and expect to invest approximately $100-million in fiscal 2010’ said Mr. Shaw. “The investment in this new business will primarily be funded by cash on hand.”
Greg MacDonald, an analyst with National Bank Financial, wrote in a research note that the real battle will be on the operational side. The market for HDTV is ramping up, and though it’s expensive to get his technology in play, the pay off could be lucrative: 

“Cost containment may be a bigger part of the picture in the coming quarters as competitive risk from Telus' broadband/(Internet protocol) TV efforts increases,” wrote MacDonald.

In this regard, Shaw’s caution may be just a sign of prudent business management, given that the company does not have billions of dollars in international capital to access, as Globalive does with Egypt-based mobile operator Orascom Telecom, its de facto corporate parent, which is financing that company’s wireless roll-out.

Mr. Shaw emphasized his company’s commitment to HDTV.

"We continue to expand our HD channel line-up with popular and high quality services, offer a wide variety of HD programming on VOD, and provide an easy entry point with HD digital terminal rentals,” he said, adding that "We remain on track to deliver on our financial guidance for the consolidated Cable and Satellite .”