Shaw Communications Inc. may have reported higher revenues for the first quarter of 2016, however, the company’s profits for the quarter took a four per cent slide compared to the same period last year.

The telephone, internet and television services company earned $218 million in the three months of the quarter compared to $227 million the year before.

A portion of Shaw Communications Inc’s financial statement annotated in DocumentCloud. (click inside the document to see the entire document and other annotations)

Source: Shaw Communications

But this may not be a problem for the company after all.

“The swing in the income is not very significant,” said Darrell Herauf, an accounting professor at Carleton University. “The net income didn’t reduce by much so I don’t think a shareholder is going to be worried about that decrease in income.”

Herauf added that the company’s celebrated two per cent increase in revenue was consistent with inflation.

Dwayne Winseck, another professor at Carleton University with an expertise in Canada’s telecommunications industry said the reduced revenue could be because Shaw Communications has had to compete more strongly with its business rival, Telus Corporation.

In the reported quarter, Shaw Communications incurred higher costs on income tax and purchase of equipment causing the company’s decline in profits.

There was a $16 million surge in the company’s spending on income tax this quarter compared to the same period in 2015.

“The element of tax that changed there is a complicated one to explain,” Herauf said.

Shaw Communications paid $92 million in income tax in the first quarter of 2016, $2 million more than what they paid in 2015.

“Their income before taxes was a little bit higher this year compared to last year. Therefore, their taxes that they have to pay was a little bit higher this year compared to last year which makes sense. The more that you earn the more that you have to pay,” Herauf said.

But recovery from deferred income tax was the major reason for the company’s lower profits.

This year the company recovered less than half the amount it did in 2015 from deferred income tax. The financial statement says this is as a result of some changes in the provincial tax rates.

Source: Shaw Communications

Shaw Communication’s higher spending of $10 million on equipment in the reported quarter compared to the same period in 2015, was also on the list of expenses that shrunk profits.

In the statement, the company indicated that these increased expenses were partially offset by improved figures from its earnings before taxes and restructuring.

Shareholders with Shaw Communications lost three cents on each unit of share they own. Although a unit of shares generated 43 cents  in the first quarter of 2016, it was a decrease compared to the 46 cents earned in the  comparable period last year.

Stock prices for Shaw Communication over time

Source: TradingView

Herauf said the company’s statement shows that it  is quite stable. Winseck agreed.

“These changes are occurring over too short a period. They are too small to make any huge conclusions,” said Winseck.

He added that the results from Shaw Communications Inc. over a longer period show that it’s quite healthy on the financial side.