The Successful Investor Hotline – Friday, August 6, 2010

Article Excerpt

MANITOBA TELECOM SERVICES INC., $24.98, Toronto symbol MBT, fell 9% on Friday after the company cut its quarterly dividend by 34.6%, to $0.425 a share from $0.65. The new annual rate of $1.70 yields 6.8%. The company is the main provider of telephone services in Manitoba. Its Allstream subsidiary sells telephone, Internet and other communication services to businesses across Canada. The slow economy has cut business spending on new communication systems. That has hurt Allstream’s earnings. As well, Manitoba Telecom’s consumer businesses continue to face strong competition from cable companies. The dividend cut will free up cash for new investments that will help spur the company’s long-term growth. For example, it plans to spend $125 million over the next five years on new fibre-optic networks. That will make Internet downloads much faster, and let the company expand its digital TV service. This investment also expands Manitoba Telecom’s reach: when it finishes building these new networks, 65% of Manitoba households will have access to…

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