Telus increases share buyback program to $1B to boost stock price


In an apparent effort to boost its flagging stock price, Telus Corp. said Monday it plans to buy back a further $500-million of its shares by the end of this year.

[np_storybar title=”Telus CEO Entwistle warns of ‘bloodbath’ if Verizon has advantage in wireless spectrum auction” link=”http://business.financialpost.com/2013/07/18/telus-darren-entwistle-wireless-spectrum-verizon/”%5DThe head of one of Canada’s big three telephone companies warned that the sector faces a “bloodbath” unless rules that could give a U.S. giant preferential treatment in the upcoming spectrum auction are changed in the next two months. Read more.
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That will bring the telecommunications company’s previously announced stock buyback program for 2013 to $1-billion and, if approved and carried out, will see the company repurchase 4.9% of its outstanding common shares.

Telus, along with its wireless-heavy telecom peers Rogers Communications Inc. and BCE Inc., has witnessed a steep decline in its share price since the spring, accelerated on reports last month that Verizon Communications Inc. is considering entering the Canadian mobile market.

The Vancouver-based company’s stock is down about 15% over the past three months. It fell 3.07% or $0.97 on Monday to close at $30.65 on the Toronto Stock Exchange.

“We assume [the share buyback program] is due to current stock price weakness, which has been driven by Verizon’s potential entry into Canada,” Canaccord Genuity head of research Dvai Ghose said in a note Tuesday.

Mr. Ghose added that since Telus enjoys a lower ratio of debt to earnings than its peers, it can afford to repurchase a swath of shares without sacrificing heft on its balance sheet, which it will need heading into the upcoming auction for wireless spectrum.

Telus revealed the amended plans, which are still subject to regulatory approval, late Monday night, stating that the new program will increase the number of shares the company may purchase to 31.9 million from 15 million common shares.

It first announced the program in May and as of June 30, Telus had purchased about 8.4 million shares at an average price of $33.40 per share for a total of $281-million.

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