BCE Inc. is reinstating its dividend at 36.5 cents per share quarterly.
The parent company of Bell Canada also said Friday it will buy back as much as 5% of its common stock, about 40 million shares.
Canada’s largest telecommunications company said Thursday it would be restoring the dividend and buying back stock following the collapse of its $52-billion deal to be taken over by an investor group led by the Ontario Teachers’ Pension Plan.
“A share buyback is the most efficient method of distributing capital to our shareholders, particularly given the current valuation metrics of the company,” stated chief financial officer Siim Vanaselja.
“The share buyback will be accretive to earnings per share and cash flow. Our improving operational progress provides the company with confidence in our ability to return value to shareholders now and into the future.”
BCE’s statement said Bell Canada will “move forward as a re-energized company with a clear goal—to be recognized by customers as Canada’s leading communications company—and the customer-focused strategy and structure required to achieve it.”
Chief executive George Cope cited a “steadily improving business trajectory.”
Since replacing Michael Sabia as CEO in July, Cope has culled Bell’s management ranks by 15% in a cost-cutting plan aimed at saving $400 million a year, while going ahead with large investments in wireless and fibre-optic networks and other infrastructure.
Cope also has overseen a “bold new brand” which included the termination of TV-commercial spokesbeavers Frank and Gordon.
In releasing details today, BCE said the first new dividend payment will be made Jan. 15 to shareholders of record on Dec. 23. BCE also scheduled what is likely to be a highly entertaining annual meeting of shareholders on Feb. 17 in Montreal.
The dividend yields 6.95% at Friday morning’s share price of $21.02, down $1.01 on the TSX session.
That price is down from $38.35 just before it became apparent on Nov. 26 that Teachers’ cash bid of $42.75 a share would not proceed.
Meanwhile, BCE said Friday, it “is retaining high levels of financial liquidity to fund its maturing debt obligations given today’s market environment.”
Repurchases of BCE notes and Bell debentures due next year and in 2010, which were part of the privatization move, have been terminated.
