U.S. telecom giant,
) has a new repurchase program of up to 300 million shares. The
program comes with no expiry date and is an addition to the two
previous buyback programs of 3 million shares each issued in 2010
and 2012. In addition, the company announced a quarterly
dividend payment of 45 cents per share payable on May 1, to
stockholders of record on Apr 10.
We believe AT&T increased share repurchase program and
regular dividend payments bear testimony to its commitment
towards increasing shareholder value. Last November, AT&T
boosted its dividend by 2.3% to 45 cents ($1.80 per share on an
annualized basis), marking the 29th consecutive dividend
In terms of buybacks, the company bought back 371 million
shares for $12.8 billion as of Dec 31, 2012. Overall, in
2012, the company returned approximately $23 billion to its
shareholders in the form of share repurchase and dividend
We believe these synergies stem from the company's balance sheet
strength as well as business growth arising from the current
momentum in its wireless business. AT&T maintains a solid
balance sheet in the telecom industry with net debt-to-adjusted
EBITDA ratio of 1.58 times at the end of 2012.
Going forward, the company will also focused on improving its
top line by investing in infrastructure development projects.
Continued strength in smartphone and branded computing device
sales are fueling growth in AT&T's business.
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In addition, the company boasts the best Internet speeds in the
industry as it is the only U.S. carrier that provides 4G networks
through both Long Term Evolution (LTE) and High-Speed Packet
Access Plus (HSPA+) technologies. AT&T's LTE network serves
as the benchmark of mobile technology and is the life-blood for
operators across the world.
However, constant access line losses, competitive threats, heavy
) iPhone and high-end
) Android-based smartphones as well as federal regulations could
hold back the company performance over the near term.
AT&T, which operates with major wireless carriers like
Verizon Communication Inc.
) has a Zacks Rank #2 (Buy).