Good afternoon, ladies and gentlemen. Welcome to Shaw Communications fiscal2008 first quarter conference call. Today’s call will be hosted by Mr. JimShaw, Vice Chair and CEO. (Operator Instructions) Before we begin, managementwould like to remind listeners that the presentation and answers to questionsduring today’s call will include forward-looking statements that are based onassumptions and are subject to risk which are more fully described in documentsfiled with the securities regulators. Listeners should refer to theforward-looking statement language contained in these documents and in thequarterly press release. Mr. Shaw, I will now turn the call over to you.

Thank you, Operator and of course, with me today is PeterBissonnette; Steve Wilson, Chief Financial Officer; Brad Shaw, Senior VicePresident of Operations for Shaw Cable; Michael D'Avella, Senior VicePresident, Planning; Ken Stein, Senior Vice President of Regulatory; and JimCummings, VP of Operations for our satellite division, Star Choice. Thank you for joining us today. We completed our annualmeeting yesterday and early this morning, we released our first quarterresults. As in the past, I will keep my comments brief and leave time forquestions. During the quarter, subscriber growth was one of thestrongest we have had for the digital phone and digital TV. Having added 50,000phone lines, we now have over 435,000 digital phone customers. On Tuesday, welaunched digital phone in Thunder Bay and we plan on offering the service toother parts of Ontario throughout the remainder of this year. We expect theservice to be available to 90% of our customers by the end of fiscal 2008. During the quarter, we continued to migrate our digitalphone customers on to our [Onplex] structure away from our existing Bell deal.Our telephone service continues to evolve and we recently enhanced the productby adding new features that will allow digital phone customers to forward theirvoicemail to a Shaw e-mail address. We strengthened our digital line-up during the quarter byadding NHL Center Ice and Setanta International Sports. Our digital subscriberbase increased by over 5% in Q1 and we now have over 800,000 digital customers.The digital product, especially HD, continues to be embraced by our customersand we believe this trend will continue as we add more digital and HD servicesand sales of HD sets to keep up this robust pace. We now have almost 230,000 HD customers and offer 24 HDservices. We plan on adding another six to 10 channels as more high quality HDprogramming becomes available. We…

(Operator Instructions) The first question comes from BobBek, CIBC World Markets. Please go ahead.

Thanks. The digital phone product obviously quite strong --can you talk a bit about how much of the split was for the Phone Lite? I mean, you’ve had that going for a year and abit now and I’m just wondering what the take-up has been and how much of that,how much of the growth is being driven by that. And related to that, the win-back situation, I am curious tosee what response you are seeing from your competitors in the market relatingto their increased opportunity for win-backs. Obviously the numbers have beenquite strong. Is it that the win-backs are not yet in earnest or they are justnot being effective for the telcos versus your digital phone?

Bob, we don’t break out the differentiation between Lite andour full telephone product.

Anecdotally perhaps?

Well, competitively too, also.

Okay. As far as the win-back goes, I mean, are you seeinggreater pressure at all, given their --

No, we haven’t seen any change in their approach because thewin-back rules have changed, but we would probably expect there’d be morepressure. I mean, we’re certainly putting pressure on our side so we wouldexpect the natural competitive nature of the business would drive up into that,you know, going forward.

You had indicated in the past that the tight labor marketswould perhaps be a constraint on the digital phone growth. I guess it’s stillthe case but you are overcoming that -- is that a fair statement?

I don’t think we’re there yet. I think -- Brad, what wouldyou say?

I think there’s still come challenges that we are dealingwith but we have a good plan in place and --

You know, even though -- you know, I know they say theCalgary market is slowing a little bit, maybe it has but it seems pretty busyhere and boy, it’s hard to find -- it’s pretty tight.

Just one last question for me, I’ll leave it for others atthat point; the net adds were just a touch light for a Q1, generally have beenstronger in the past. Any comment at all as far as that pace on that number?

Are you referring to the basic?

Yeah, the basic -- sorry, the basic net adds. Sorry.

No, we had a pretty active August and so I think we mighthave seen those August customers, but if we look at the overall year over year,including what we saw internally in August, we’re pretty pleased with the basicsubscriber growth.

Okay, thanks very much. I’ll leave it there.

Your next question comes from Vince Valentini from TDNewcrest. Please go ahead.

A question on rate increases first; can you talk to us aboutyour thoughts about the cable side for this year, when you might put the rateincreases similar magnitude to last year? Is that what you are thinking? Also,on the Star Choice side, the new fee that you are putting through, can you talkabout the timing of that and what the impact could be on revenues?

Well, let me say, Vince, we just put through the rateincrease in the fourth quarter, which we had a month-and-a-half of that in thefourth quarter and on the cable side, that was $6.5 million per month, so thisnow is a full quarter of that rate increase. On the Star Choice side, we putthrough the rate increase this quarter affecting 50% of our customers, which isequal to $1 million of additional revenue per month. So I think it’s a bitearly to be talking about the next round of rate increases at this point.

Okay, fair enough. Second question is on churn; I noticedyou stopped disclosing it and especially on the Star Choice side, the EBITDAdecline seemed a bit strange, given there wasn’t really a ramp-up in subscriberloading, there’s no real unusual items other than the one $2 million figure youtalked about last year. That doesn’t fully explain the delta. Was there a significantincrease in churn at Star Choice that caused the EBITDA margins to pull back alittle bit?

Well, there was a slight increase in churn in the quarter inStar Choice, which really wasn’t very significant but that would have an impacton the capital side and we know that when we talk about the success-basedcapital there and the increased activations. On the business side, last year’sfirst quarter was actually an exceptional first quarter. It was a 36% marginand at the time, we talked about the fact that we were reducing our bad debtexpense. We had a recovery last year of $2 million in the first quarter that wedidn’t have this year and last year in fact we had lower expenses in someareas, like some of the marketing areas. This year in the first quarter, the activity is basicallynormal. We have the normal salary increases that have come up. Our marketingand sales costs are a little bit higher than they were last year but you know,we’re talking Mondays and Tuesdays here in this business. And then of course,we don’t have that provision for recovery that we had last year, which is about$2 million. So that kind of gives you the flow of where we are at relative tolast year. The 33.7% margin in satellite is very much in the corridorthat we’ve seen over the last two years, between that 33.5% to 36% range, sonothing unusual.

Okay, and last, maybe more for Jim, I notice there is nodividend increase this quarter and it doesn’t look like there was any share buybacks in the past several months. Is it fair to say that you guys may beputting those types of things on hold while you review the wireless file or arethose two things totally unlinked?

I think we are waiting for all the negative analyst reportsto come out and then we can pick up the shares at a cheaper price soshareholders win. But that’s just a joke. But Vince, to be honest, we alwayssaid we were a combination. We re-approved the plan and while we could raise dividendsnow, we wanted to maintain a pretty healthy balance sheet. We are still focusedon investment grade to some degree. So you are going to see a combination of everything and weare going to use market timing and market will to decide how we approach it andI think that down the road, I look forward to dividend increases, maybe alittle share buy-back, maybe some debt pay down. Last I looked, I think we owethe TD Bank a lot of money.

Okay, thanks.

Your next question comes from Rob Goff from Haywood. Pleasego ahead.

Could you describe just how hard are you pushing on thedigital, or is it more of a pull influence we are seeing in the marketplace?And could you talk to the mix of HD versus non-HD digital boxes going up?

Brad, why don’t you do that? But it’s certainly -- you know,I mean, we’re going to -- we’re going to be stronger through this early periodin the Christmas kind of timeframe coming up to it, right?

Yeah, that’s correct and you know, we’ve had a goodChristmas. Rob, I guess some of the key things that we always see is in Q1, wehad the HD DVR boxes continue to come down in price for us so we continue topass on those savings to the consumer, so we are seeing more up-take there. Andwe have a $55 price point for our low-end DCT700 that we’ve also sold throughthe quarter, so between those two things and then continued strong salesthrough retail, we continue to see that momentum going right through the firstquarter and continue to see it now. And on the mix, I would think we are about 80-20 for HDversus standard def, so that’s about the mix we’re looking at.

Thank you. In your release, you mentioned merit compensation-- was that sort of a end of fiscal year bonus for employees, or could youdescribe that?

Rob, every year we do our merit increases across the boardfor our employees on September the 1st. So that’s a normal cost increase thatyou see every year. There wasn’t really anything that unusual this year. I meanobviously we have to keep pace with the market and make sure that our salariesare in line with market levels, but nothing extraordinary in terms of thatcompared to prior year.

Thank you very much.

Your next question comes from Dvai Ghose from GenuityCapital Markets. Please go ahead.

A few questions; first of all, on the satellite side, youtalked about some of the reasons why the margins were down year over year, theextraordinary $2 million in the year-ago period. But the satellite marginsnonetheless seem to have peaked at around the mid 30% level, which you have talkedabout in the past. Are there any strategies though, apart from price increases,which you think could boost those margins towards nearer the 40% level?

Well, I’ll start and then I’ll get Jim to come in here. Sowe’re looking at -- one of the issues with satellite is if you want to getextra services, which I mean VOD or pay-per-view or any of those kind of whatI’ll call extra on top services, it’s a little more awkward because in thepast, we’ve been trying to hook you up to the phone line, it downloads up, thenthe satellite downloads back to the box and we control it that way. And so what we are trying to consider right now and we’reworking and Jim can probably explain it better than me, is to come up with someall-in plans, so you would be able to take every service we have and let’s saywe charge you -- I don’t know, let’s pick a number, $200 and everything wouldbe turned on and so we are just working that out with the networks now to makesure that we can figure things out. But that’s kind of what we are talking about.

And just to add to that, the HD growth has been really,really positive and we continue to see our current customers and new customerslove the way its positioned. December was positive for us and we’ve also hadquite a number of additions, not only on the cable side but on the satelliteside of additional HD channels which just add more value and our customers seemto be migrating towards that.

Plus I think we’re also looking at an additional cost onsome of the HD signals so then we can generate a little bit more revenue.

Okay, just one more on satellite and one on cable and thenI’ll leave it to someone else; on the satellite side, on a strategic basis, Imean, there’s been a lot of discussion over the years about combining StarChoice and ExpressVu. Do you think you can get a significant boost on the proforma margins of those two assets if they were combined and would you be interestedin participating in such a move?

Well, there’s no doubt that you could have a big marginincrease, given the fact that ExpressVu doesn’t make a dime, so there’s nodoubt that we can make more than a dime and there’s no doubt that we are not [inaudible]cash. So we are the cash guys and we are margin guys, so there’s no doubt. So if you took ExpressVu’s revenue and equated it to StarChoice’s revenue, I think that would be the pick-up, the minimum pick-up you’dlook for. And listen, I always say the same thing at Shaw -- we’re open to talkabout anything but last I looked, I didn’t know that the Bell guys were forsale.

Fair enough. And then my last question on the cable is if Ilook at your consolidated CapEx guidance, it’s relatively flat to up a fewpercent, 5% year over year this year. If you look at Rogers Cable CapExguidance, it’s up significantly more and they justify it by talking aboutbuilding upgrades, systems upgrades, as well as investing in switch videopresumably MPEG-4 and channel bonding over time. Are these items which have anyimpact in fiscal ’08 or is there going to be a spike in ’09 or is it just a lotsmoother in your case?

We tend to, as you know, we tend to smooth our capital andmanage it -- you know, all of the things you just talked about are things thatwe are working on as well and -- but we tend to manage that -- the way we workthrough all the upgrades, when we do them, we do them when we need the capacity.We don’t do them just to have capacity that’s just sitting there.

Thanks very much.

Can I just add on the satellite side that there’s certainlyopportunities for the margin to increase but last year, people should keep inmind that we did benefit from the fact that we had some of these provisionswhich were not necessary, our bad debt expenses came down. They are at a normallevel now. We won’t have that sort of benefit again. So as I said, that 33% to 35% corridor is probably theexpectation for the year.

Thank you, sir.

Your next question comes from Peter MacDonald, GMPSecurities. Please go ahead. Peter MacDonald -Griffiths, McBurney & Partners: Just a question on the strong loading -- is there anythingin particular that you can point to to account for the strength there, specialpromotions, a change in competition, et cetera? And then related to that, arethere any material operating costs when you increase your growth like that,whether it’s marketing costs or overtime, et cetera? Thanks.

I didn’t understand the question.

Could you -- the first part of the question, I think, couldyou go through that again for us? Peter MacDonald -Griffiths, McBurney & Partners: Is there anything that happened for you in the quarter thathelped your growth in subscriber loading? Were there any special promotions ordid you see a change in competition or anything along those lines?

No, I think from the fourth quarter, we continued on withthe promotional activity and of course, you know, we’re -- the discount sits onthe premise equipment and that’s where we sit versus on the customer and on theproduct line, so nothing unusual but continuing to make sure that the offersmeet the expectations we have.

But would it be fair to say, Brad, that that’s a continuing-- you know, this is something that we’ve been doing for quite a while and wedidn’t do anything extra or anything different really than kind of what we donow and there might have been, you know, maybe we put a red ribbon on a percentor -- but other than that, we pretty well were -- (Multiple Speakers)

No, no, no, we were pretty well status quo.

And that promotional activity, of course, reflects in thesuccess based capital spend. It doesn’t reflect in the EBITDA, so you see itthere. Peter MacDonald -Griffiths, McBurney & Partners: Okay, and then there are no -- when we look at the growth inthese type of services, there’s nothing that shows up in OpEx at all, when youdo have better growth year over year?

Well, outside of the normal cost of the growth in thebusiness, which we talk about. Other than that, there is nothing unusual. Peter MacDonald -Griffiths, McBurney & Partners: Okay, thanks. And then just a question on the normal courseissuer bid, when I look at the amount of free cash flow you have in thedividends, et cetera, it looks like there is about $100 million or so availablefor buy-backs. Are you strapped to that number for your buy-backs or would youconsider going to a larger number if the opportunity existed?

I think we’ve been pretty consistent and I think if Ireflected the views of the board that they would say that you could probablyuse any portion of free cash flow if you thought it was right, but they are notreally as strong on us using our banking, our debt facilities, to buy backshares. So I don’t think that Steve and I would be able to get that onethrough. Peter MacDonald -Griffiths, McBurney & Partners: Okay. Thank you.

Your next question comes from Jeffrey Fan from UBSSecurities. Please go ahead.

Thanks very much. I wanted to ask you guys a question on thebasic sub side and when we step back a little bit, take a look at the homespassed growth. It looks like that trend has now slowed a little bit for thelast couple of quarters, from sort of mid single digit, 4%, 5% growth down toabout low single or 2% or so. Just wondering what you guys are seeing there,whether it’s driven by maybe a slowing growth in constructions or whether it’stiming or whether there’s any new competition coming from Telus expanding incertain markets that maybe we’re not seeing here?

Yeah, go ahead, Brad.

I think on the slower growth, I think with new construction,it’s ebb and flow. You know, a couple of quarters will be on, it will be movinga little higher or a little more activity, I should say, and then a littleless. So it is a little slower for the quarter but we are starting to seethings pick up again and I think you are going to continue to see it get hotand then get cold and kind of move around a bit from that type of homes passed.

And I think on the Telus side, certainly their major focusis on Vancouver, which is close to their headquarters, so that’s prettynatural. And we are probably seeing a few subs try them, a variation ofdifferent things there but I don’t -- I think the market here is still fairlyhot. We were driving through Calgary, we went to the Consumer Electronics Show,we were driving through Calgary, I’ll bet you there was -- we got back just theother night and I think they’ve got to be 30 cranes up and towers being builteverywhere. So while it’s slower, it’s just kind of peak and valley.

The other observation though is with the kind of basic growthwe are seeing contrasted against the Internet, the digital, and the phone, youare seeing our existing customers bundling up and growing more products intotheir -- you know, into the services that they take from Shaw. So for us, wesee that as a very, very positive thing.

Okay, great. Thanks.

Your next question comes from Glen Campbell from MerrillLynch. Please go ahead.

Thanks very much. You might have covered this at the beginning.I was having trouble hearing the recording but you were moving off the contractwith Bell and you mentioned that you did that during the quarter. Can you giveus a sense of how much of the savings you would ultimately like to achievethere are reflected in the first quarter? Are you halfway through, less, more?Can you give us a bit of a sense?

No, we -- Glen, we continue to experience savings in thatbusiness as we bring customers on to our own system. We’ve experienced some ofthose over the last year. The margins in that business are running at the levelthat we expected, which we’ve talked about before, around that 40% leveloverall. And the cost savings that we expect in the year are all sort of builtinto the guidance that we’ve given at this point.

And I think Glen, to be fair to is that we have some comingoff where we are starting to take ownership of the customer totally and wecontinue to add some to them also while we, because the business is growing sofast, so it’s kind of a pull and a shove back and forth. So it’s really hardfor us to identify exactly the savings but knowing full well that we continueto be able to increase the margins overall as we move forward.

Okay, thanks. And I had a follow-up question on Internet --I mean, your Internet subs were really good this quarter and you’ve got veryhigh penetration levels. So I’m wondering, as you look across your market, areyou starting to see some of the more mature markets where the growth rates areslowing down? I mean, I’m guessing you’d maybe be seeing that in Fort McMurraybut are you seeing it in some of the big urban centers as well?

What is our penetration in Fort McMurray, Peter or Brad?

It’s close to 80%.

Eighty percent.

We would be pleased to continue to achieve those numbers inall of our systems and that’s what we --

I mean, to be fair, last year it was 70 so we were able totake it up 10 points, so we are not seeing a lot of resistance on the Internetside and we are expanding our product line. Brad launched Power Boost and it’sbeen phenomenal. We’ve only had it launched one month.

And Docsis 3 is presumably coming in the next 12 months orso?

It would be before that.

Yeah, so as soon as Docsis 3 is available, we’re going to --

We’ll deploy.

We’ll deploy it.

And then we’ll add in 100-megabit service and go from thereand we were looking at some integrated tutors, or digital boxes, Peter,Michael, right? Add [inaudible], add the PVR, add MPEG-4, add all that stuffand we are very, very close.

Okay. Thanks very much.

Your next question comes from John Henderson, ScotiaCapital. Please go ahead.

Thanks. A question on -- I guess I’ll start with Part Twofees and I guess you took out $4 million from this quarter, not accruing forthem. Should we expect that those may be replaced by some other fee, alternatefee mechanism?

Well, that will be pending the results of the federal courtcase, right? The CRTC has suspended payments and we are going to have to waitto see what happens there, or Parliament acts in some other way. But I guessthat’s up to you guys to assess. What we’ve said is that it’s about $2 millionper month that we would have been paying in Part Two fees and we are notaccruing going forward now based on the guidance from the CRTC, and so you canmake your own call in terms of whether or not you feel there’s a replacementfee coming there or not.

Was there not a recovery of fees there from --

Well, that’s also something that’s in process as well. Butwe’ve booked no recovery thought. The accrual that we had for last year is inplace. We booked an accrual for October up until the point that the CRTC -- orsorry, for September up until the point that the CRTC guidance came out and wereversed on a vet, so that’s not in the results. We just won’t be accruing whatwe would normally have paid going forward.

Got it. In Star Choice, I don’t want to harp on a deadhorse, but I thought there were some costs for HD upgrades and that may haveinvolved some [dish array] pointing. Is that a factor in the quarter?

No, it was completed last year.

That was a factor in Q4 CapEx.

Okay, got it. And on small medium business, I just wonderedif any subscriber additions might have made it into the quarter there ofmeaningful note and that might be included in the phone sub adds?

The numbers are all in the phone adds at this point but it’sstill early days in that business. (Multiple Speakers)

You know, it’s taken us a little bit longer to get the thingfired up, probably more than we would have liked. We are seeing huge gains.We’ve been visiting with Cox and we’re going down to see Comcast here. Peterand I have already been down to see Comcast. We’re sending a team down andlooking at their small and medium business strategies to get ours lined up.We’re signing up customers, probably not at the rate we would like yet but weare just -- you know, we’ve got to get everything in line before we drop theball.

Got it. Okay, and just one last one for Steve; the tax ratesort of declined in January. How much should we expect there for you guys andwould that show up in the next quarter?

You mean the recently enacted changes?

Yeah.

That will show up in the next quarter.

And it’s basically just in line with those enacted changes?

Yeah.

Okay. Thanks a lot.

Your next question comes from David Lambert from Canaccord.Please go ahead.

Thank you. Just on CapEx, you mentioned that your phonerollout is almost completed and other than going to Docsis 3 in the next 12months, excluding wireless, there doesn’t seem to be that much in terms of anincrease in CapEx here, or CapEx projects. So I was wondering if you can giveus a sense of where you stand on that, and then a follow-up on the dividend.When you are thinking about the dividend, we’re looking at sort of 14%, 15%free cash flow growth here. It would be safe to assume that you are looking at14% to 15% increase in dividend along with the free cash flow growth?

Well, I guess -- you know what, a cable system is everevolving and I know Peter and Brad, of course, even on the satellite side we’vetalked about doing a lot of integration. We’ve got a lot of operating units.We’re at 9,000 employees. I would assume in the next couple of years we’ll beat 10, and so we have to make sure we have enough fiber capacity. We’re movingto a new super head-end strategy where we are going to try and have like -- Idon’t know, how many, Peter, five? Five head-ends for all Shaw cable systemsand we are going to focus on that. We’ve got the data center now. We’re getting so manyInternet customers that we can add 100 racks. I mean, we’ve got stuff coming atus like crazy so I wouldn’t assume the CapEx would be any different on theshorter term, you know, like in the next year or two we are probably going tomaintain the level that we are at, maintain the customer growth but if thatgrowth stops, Shaw CapEx will haul back. And we still have a lot of Shaw's, notall, Calgary and Vancouver and Edmonton, we have a lot of -- you know,Saskatoon and Prince Albert and Moose Jaw and Thunder Bay and all those things. And plus we also have the telephone launches that are alljust coming together up to 100% -- so you know, we’ve got -- you know, thenwe’ll have to deploy Docsis 3, so on the content side, I would caution not tosay we are going to drop it to the bottom, all the money is going to flow tothe top at this time. Now, that might not be the management group’s view herenext year but for now, we’re pretty solid on we need to spend the money. We’retrying to harvest as best we can and we will not spend anything extra. That’sthe key with us. We do not spend extra if we don’t have to, so I think that’s agood way to look at it on a go-forward.

All right, just about the dividend philosophy.

Well, you know, listen, I don’t -- you know, I can onlyreflect the views that I am given by the board and I can tell you that wereview it every quarter and this is probably the first quarter we haven’traised it for -- yeah, for a long time. But I think we just decided to hold abit. We’re pretty happy also to pay down a little debt, you know, we have noproblem with that. So there is no real -- like, I can’t come up and say to youthere is a number. There is no number. There is a discussion. Steve and I take direction and weimplement it so I don’t really -- I can’t really say it’s going to be X or it’sgoing to be Y. We’ll come in with a bit of a recommendation. We probably alwaysusually, if you think about our history, tend to like to look at the first andsecond quarters to get a really good feel of where we are in the market andthen we judge ourselves accordingly.

But we felt -- as Jim said, there’s no payout ratio but wefelt that the focus on dividends has been very beneficial for us because it’sopened up a whole new group of investors who are looking at us and investing inus for the first time. There’s a significant portion now of our investor base thatare income oriented investors. As we said in the call there, we are now number11 or number 12 out of the TSX 60 at yield with the growth prospects that, youknow, 15% growth last year in EBITDA, 10% to 12% in our guidance for this year.That provides we think a unique investment characteristic. We’ve increased the dividend to get up to these levels andto be a leader in the industry in that regard, I think something in the are ofseven out of the last 11 quarters I think the dividend has gone up and therecertainly is room for it to go up further but there’s no, as Jim said, there’sno specified target. It’s all assessed as we go, looking at the business andthe business prospects.

Great. Thank you very much.

Tim Casey, from BMO, go ahead.

Question’s been asked. Thank you.

There are no further questions. Please continue.

Thank you very much. Thanks, guys, for coming.

Ladies and gentlemen, this concludes the conference call fortoday. Thank you very much for your participation and have a nice day.