The Calgary-based cable and media giant (TSX:SJR.B) earned $245 million, or 51 cents per share, in the quarter ended Nov. 30 as it saw revenue increase in all three of its major divisions.
That beat the average analyst profit estimate of 49 cents per share, according to Thomson Reuters, and marked an improvement over the $235 million, or 50 cents per share, it booked in the same period a year earlier.
Revenue rose to $1.36 billion from $1.32 billion a year earlier and was in line with analyst estimates.
As of March 28, the monthly dividend will increase by eight per cent to $1.10 annually.
"This increase continues our strong track record of returning capital to shareholders as well as showcasing the confidence that the board and senior management have in the long-term free cash flow profile of our company," CEO Brad Shaw said on a conference call with analysts.
In a research note, Desjardins Securities analyst Maher Yaghi said Shaw met profitability expectations thanks to increases in average revenue per user, a metric known in the industry as ARPU.
"But pressures on subscribers in its core cable business persist," Yaghi wrote. "We continue to believe increased competitive pressures are of concern and continuous ARPU increases will be difficult to implement each year to offset subscriber losses."
Meanwhile RBC Capital Markets analysts Drew McReynolds wrote in his analysis that profit margins at the cable division were weaker than expected and margins at the satellite division continued to erode.
Shaw lost 29,619 basic cable and 9,323 satellite subscribers in the quarter, while adding 2,746 Internet and 1,351 digital phone customers.
The competitive landscape in Western Canada is intense, with a huge overlap between Shaw and Vancouver-based Telus Corp. (TSX:T) in that market, Brad Shaw told reporters following the company's annual general meeting.
The company has been resisting offering customers steep discounts as means of competing with Telus, instead focusing on improving its service offering and investing in technology.
It's a balancing act, the CEO said.
"If we wanted to go out this quarter and get 80,000 revenue generating units, we could certainly do that, but there's a financial impact to that and we're very sensitive to that," he said.
"I think at the end of the day, you never want to lose a customer, but I think in our strategy we're focused on the mid- to long term to where we need to go."
On the analyst call, chief operating officer Jay Mehr said Shaw is actually losing fewer customers to competition from Telus. Many are remaining Shaw customers, but are ditching one or two individual services — like a land line or basic cable — for other options.
"Customers have choices and we're not seeing it in the satellite business and we're not seeing it on the home Internet business," he said, declining to use the term "cord-cutting" to describe the trend.
Shaw's cable division, which includes home phone and Internet service, provided $844 million of revenue in the quarter, up four per cent year over year.
Satellite revenue increased to $218 million from $214 million, and revenue at the media business — which includes the former Canwest specialty TV channels — was up two per cent to $325 million.
In December, Calgary awarded a contract to Shaw to provide free wireless Internet services for city-owned locations such as recreation centres, parks and public transit stations.
Shaw's non-voting Class B shares fell 1.7 per cent, or 43 cents, to $24.88 on the Toronto Stock Exchange on Tuesday.