BELL ALIANT INC. $26.76 - Toronto symbol BA

BELL ALIANT INC. $26.76 (Toronto symbol BA; Shares outstanding: 227.8 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 7.1%; www.aliant.ca) sells phone and Internet services to 2.5 million customers in Atlantic Canada and rural Ontario and Quebec. It also provides wireless services through an alliance with BCE, which owns 45% of Bell Aliant. The company continues to replace copper wires with fibre optic cable. That’s attracting more highspeed Internet and digital TV customers. Strong demand for these services is also helping offset lower revenue from traditional phone services, which still supply 52% of the company’s revenue. Bell Aliant’s high-speed fibre optic systems now reach 725,000 homes, up from 650,000 at the start of this year. By the end of 2013, it plans to expand its network to 800,000 homes. In the three months ended June 30, 2013, Bell Aliant’s revenue rose 0.6%, to $691.8 million from $687.7 million a year ago. Before one-time items, earnings fell 4.9%, to $0.39 a share from $0.41. The company expects to spend $525 million to $575 million on capital upgrades this year. Even after these costs, it will have free cash flow of $500 million to $560 million. That should let it keep paying quarterly dividends of $0.475 a share, for a 7.1% annualized yield. Bell Aliant is a buy.

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