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Shaw Communications Inc Class B SJR

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Morningstar’s Analysis

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CRTC Mandates Mobile Wholesaling, a Decision it had Foreshadowed; Canadian Telecom FVEs Unchanged

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

The Canadian Radio-television and Telecommunications Commission, or CRTC, announced its long-awaited decision on mandated mobile virtual network operator, or MVNO, pricing on April 15, and it was in line with the preliminary view the commission put forth in 2019 when it took up the issue. The big 3 Canadian wireless providers, along with Sasktel, will be required to wholesale network capacity to new competitors for seven years. Given the CRTC’s prior statement, we expected this outcome and are not changing our view or fair value estimates for Rogers, BCE, or Telus. As part of the CRTC’s decision, it is also requiring the big 3 plus Sasktel to offer low-cost plans to certain groups. This component is the more likely one to influence our forecasts, but with few details and our existing assumption that Canadian wireless pricing will remain under pressure, we don’t expect a material impact from this provision either.

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Company Profile

Business Description

Shaw Communications is a Canadian cable company that is one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. In fiscal 2020, more than 75% of Shaw's total revenue resulted from this wireline business. Shaw is also now a national wireless service provider after acquiring Wind Mobile in 2016. Shaw has upgraded its wireless network, undertaken an aggressive pricing strategy, and significantly enhanced its spectrum holdings. As a smaller carrier, Shaw has favored bidding status in spectrum auctions, giving it a further boost in enhancing its wireless network. At the 2019 auction, Shaw added significant amounts of 600 MHz spectrum to the 700 MHz spectrum it is currently deploying.

Contact
630 - 3rd Avenue S.W., Suite 900
Calgary, AB, T2P 4L4, Canada
T +1 403 750-4534
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Feb 28, 2021
Fiscal Year End Aug 31, 2021
Stock Type
Employees 9,500

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