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By David Berman

Shaw Communications Inc. (NYSE:SJR) stands out among its peers in Canada’s telecommunications sector for its lagging share price. While most of its peers have seen decent gains this year – Telus Corp. (NYSE:TU) and Cogeco Inc. (OTC:CGECF) are up 13% each, BCE Inc. (NYSE:BCE) is up 4.4% and Rogers Communications Inc. (NYSE:RCI) is up 3.5% – Shaw shares have tumbled nearly 10%.

It is unlikely to make up this lost ground after it reports its quarterly results on Friday morning, before markets open. Why? According to Maher Yaghi, an analyst at Desjardins Securities, Shaw has two things going against it in the near term: It has limited wireless exposure and it faces uncertainties related to its takeover of CanWest’s broadcasting assets.

With growth in cable and telecom rapidly converging, pure-play cable companies lacking a wireless option will be at a disadvantage in the future, given that wireless will continue to be the engine of growth in the sector,” he said in a note.

Shaw has invested $190 million in wireless spectrum in Western Canada, but the money hasn’t been backed up with a detailed plan. As a result, the market is giving little value to these wireless assets.

As for the CanWest acquisition, Mr. Yaghi explains: “With growth in cable and telecom rapidly converging, pure-play cable companies lacking a wireless option will be at a disadvantage in the future, given that wireless will continue to be the engine of growth in the sector.”

He has a “hold” recommendation on Shaw, with a 12-month price target of $22.70.

Source: The Trouble With Shaw Communications