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Shaw says goodbye to wireless

Also: Why First Asset Management's John Stephenson sees good things ahead for Canadian heavy crude producers

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Jan 16, 2013

by Max Fawcett

It’s official: Shaw Communications (TSE:SJR) won’t be launching its own wireless network. On Monday, the Calgary company announced that it would be selling the wireless spectrum licenses it bought in 2008 to Rogers Communications for approximately $700 million. As the Calgary Herald’s Amanda Stephenson writes in a story today, analysts like Canaccord Genuity’s Dvai Ghose think the move could prove to be both a short-term win and a long-term loss. “By selling its spectrum licenses – as well as its Hamilton-based cable operation, Mountain Cable – to Rogers for a total of $700 million, Shaw is able to speed up planned investments in other parts of its operation, including network digitization, bandwidth upgrades, expansion of the Shaw Wi-Fi network, and additional product development relating to Shaw Go and other mobile applications,” she writes. “[But] internet delivery is becoming increasingly mobile, and more and more people are opting out of home phones and traditional cable in favour of smartphones and streaming video. While Shaw is working to make more of its content available across multiple devices through its ‘TV Everywhere’ strategy, Ghose said the company ultimately misses an opportunity if it can’t sell the airtime and devices themselves.”

Meanwhile, First Asset Management senior vice-president and portfolio manager John Stephenson was on BNN’s Market Call Tonight yesterday, and he had some interesting comments on a few Alberta-based companies. His main thesis for the next 12 months is that the spreads between heavy and light crudes, which have blown out to as much as $45 a barrel of late, will narrow appreciably in 2013. Why? Because, he says, the main reasons for the widening spread, from the hold-up on approving new pipeline projects to the shutdown of BP’s Whiting refinery and Hurricane Sandy, are all freak incidents or unexpected occurrences. “I think one of the great themes for 2013 will be the reduction in the heavy-light spreads from their current levels,” he said. And while he likes Canadian Natural Resources (TSE:CNQ) and Suncor (TSE:SU), his favourite play on that theme – and one of his top picks on the evening – was Baytex Energy (TSE:BTE). He likes its production growth profile and its management team, both of which he described as “phenomenal,” and says investors who saw the stock drop 25 per cent over the last year should remain patient. “I believe you’re going to get all of that 25 per cent back, and then some.”

He also likes Veresen (TSE:VSN), the former Fort Chicago Energy Partners LP that converted into a Canadian corporation in late 2010. “It’s the cheapest energy infrastructure play out there. Yes, it has less growth, and yes, it’s not well managed as some of the others, but at this level it’s cheap, and I don’t think there’s a risk of a dividend cut, which is one of the fears at this level.”

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