DBRS Upgrades Shaw Communications Inc. to BBB (low) and Pfd-3 (low) with Stable Trends

DBRS has today upgraded the Senior Notes rating of Shaw Communications Inc. (Shaw or the Company) and the Senior Unsecured Debentures rating of Videon CableSystems Inc. to BBB (low) from BB (high). DBRS has also upgraded Shaw’s Canadian Originated Preferred Securities (COPrS) to Pfd-3 (low) from Pfd-4, reflecting a less significant amount of COPrS in the capital structure. The trends on all the ratings are Stable.

DBRS changed the trends on the ratings to Positive on February 22, 2005, and confirmed the ratings and trends on October 27, 2005, and on November 13, 2006 (see separate press releases).

The upgrade reflects Shaw’s strong cable franchise, which has demonstrated good EBITDA and subscriber growth to date, led by its core cable and Internet segments and strong subscriber growth from its cable telephony service. As such, EBITDA has improved to roughly $1 billion for the 12 months ended November 30, 2006, and the Company now maintains well over 2.2 million basic cable subscribers and more than 1.35 million Internet subscribers.

Additionally, the Company’s financial risk profile has improved to date; however, DBRS notes Shaw’s use of free cash flow has largely been directed toward dividend payments rather than debt reduction. Nevertheless, the Company has executed well and should continue to grow into its current rating category comfortably based on DBRS’s expectations of future profitability and EBITDA growth.

DBRS expects Shaw to continue to demonstrate strong EBITDA growth in fiscal 2007, which should continue to help improve key credit metrics going forward. As such, DBRS expects gross debt-to-EBITDA to improve to approximately 3.0 times (x) and cash flow-to-debt to exceed 0.20x by the end of fiscal 2007.

DBRS also notes continued improvement and growth within the Canadian cable industry has benefited by a “triple-play” offering that has increased emphasis and uptake of bundled services, which continues to be a key driver for EBITDA growth and improved profitability. In addition, DBRS notes, to date, competition for Shaw in its markets has been rational and largely based on quality of service rather than aggressive pricing and promotional activity.

Note:
All figures are in Canadian dollars unless otherwise noted.