MONTREAL – With BCE being returned to its owners (the thousands of common shareholders), the company today announced plans to "return value" to those shareholders with a reinstated common share dividend and a new normal course issuer bid common share buyback program.
“Bell Canada will also continue its 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,” says today’s press release.
"Our enhanced operational performance in recent months confirms that Bell is competing as a cost-effective and customer-focused communications company. The Bell team has implemented a range of programs to deliver a better customer experience, and we are eager to build on the clear progress we’ve already made," said George Cope, president and CEO of Bell and BCE, in the statement.
"Given this steadily improving business trajectory, we view the dividend and share buyback initiatives announced by BCE today as very attractive to our shareholders now and going forward."
"The BCE board of directors is in full support of the operational and investment strategy and capital market approach implemented by our CEO George Cope and his executive team," added Richard J. Currie, BCE and Bell Canada board chair.
In July 2008, Bell instituted a new strategy and a 100-day plan to enhance its customer service capability, competitiveness and cost efficiency. It’s most noticeable aspect was likely the disappearance of “spokesbeavers” Frank and Gordon, for a fresher marketing thrust and revamped company logo/branding.
(Ed note: Apropos of nothing, the guy who was the voice of Frank, Canadian comic Norm MacDonald, is now the voice of one of AT&T’s Christmas gingerbread men touting AT&T’s GoPhone in the U.S. There’s probably a joke there about telecom and Cancon headed cross-borders, but I can’t think of one…)
With a strict focus on its core business as a communications service provider, Bell is executing on five “strategic imperatives,” says the release. They are: improve customer service; accelerate wireless; leverage wireline momentum; invest in broadband networks and services; and achieve a competitive cost structure.
The company also reminded in the release how it has already announced several “significant operational initiatives supporting its strategic imperatives, including shrinking the executive office and letting go 2,500 in the management ranks.
Those moves bring “all team members closer to the customer, while reducing the number of management positions by 15%,” said the release.
It also launched same day next day service and express install; major investments in its wireless and IP fibre networks, as well as its service infrastructure.
The initiatives will result in savings of approximately $400 million, says the company, an enhanced competitive position and, as evidenced by the progress shown in the company’s third-quarter results, steadily improving operational and financial performance supporting Bell’s future as a public company, and the shareholder value initiatives announced today, reads the release.
“Maintaining a public company capital structure, underpinned by strong investment grade credit metrics, BCE is retaining high levels of financial liquidity to fund its maturing debt obligations given today’s market environment. The company also today announced new initiatives – a reinstated common share dividend and an NCIB program – dedicated to returning value to its shareholders,” continues the release.
As for the dividend, for shareholders of record as of December 23, 2008, a quarterly dividend per share of $0.365 will be paid on January 15, 2009.
And when it comes to the share buy-back, BCE will repurchase up to approximately 5% of outstanding common shares, or about 40 million common shares. The NCIB is subject to approval by the Toronto Stock Exchange.
"A share buyback is the most efficient method of distributing capital to our shareholders, particularly given the current valuation metrics of the company," said Siim Vanaselja, CFO of BCE. "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."
The company will further outline Bell’s goal the strategic imperatives and BCE’s capital structure and shareholder value initiatives, including its dividend payout policy at its annual shareholders meeting on Tuesday February 17, 2009 in Montréal.
Also today, the former prospective purchaser of BCE responded to the company’s demand that a $1.2 billion break up fee over the attempted purchase must be paid.
"It is most unfortunate that BCE is threatening litigation over the failure of a mutual closing condition that the company insisted be included in the original acquisition agreement. It is very clear that neither party has a right to a termination fee in these circumstances. Should BCE commence such baseless litigation, we are confident that it would not succeed,” reads the statement issued by the purchasers, a group of investors led by the Ontario Teachers Pension Plan.
