), the second largest U.S. mobile service provider, increased its
share repurchase authorization plan by 300 million additional
shares. The buyback represents nearly 5% of the company's
outstanding shares and does not have any expiration date.
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This increase will be in addition to the 300 million share buyback
plan announced in December 2010. As of June 2012, AT&T
repurchased 143.5 million of shares for $4.6 billion and had 156.5
million shares remaining in its previous buyback authorization.
The move reflects the company's strong commitment to deliver
increased returns to its shareholders through attractive dividends
and share repurchases. AT&T holds the top position in returning
value to shareholders, ahead of its major rivals
Verizon Communications Inc.
Sprint Nextel Corp.
AT&T returned approximately $10 billion to its shareholders in
the first half of the year including dividends and share buybacks.
Last December, AT&T boosted its annual dividend by 2.3% to
$1.76 per share, marking the 28th consecutive year of dividend
hike. The increasing shareholder returns reveal AT&T's solid
financial position, with a healthy balance sheet and growing free
The plan came within a week of the second quarter earnings
announcement. AT&T once again delivered an outstanding
performance in the quarter with double-digit earnings and operating
income growth boosted by a strong wireless segment with record low
churn rates and best-ever margins. The company exited the second
quarter with net debt-to-adjusted EBITDA ratio of 1.42 times, down
from 1.48 times at the end of last quarter.
We are currently maintaining our long-term Neutral recommendation
on AT&T. The stock retains a Zacks #3 (Hold) Rank for the short
term (1-3 months).