Manitoba Tel bounces back

Article Excerpt

MANITOBA TELECOM SERVICES INC. $27.55 (Toronto symbol MBT; Shares outstanding: 64.7 million; Market cap: $1.8 billion; SI Rating: Average; Dividend yield: 6.2%) fell as low as $24.71 after it cut its quarterly dividend by 34.6% in early August, to $0.425 a share from $0.65. The shares have since recovered. The new annual rate of $1.70 yields 6.2%. 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 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 on new fibre-optic networks over the next five years. That will make Internet downloads much faster, and let the company expand its digital TV service. This investment will also expand Manitoba Telecom’s reach: when it…