Manitoba Telecom Services Inc. cut its quarterly dividend by about a third Friday and scaled back its financial projections this year after reporting lower net earnings and revenues for its latest quarter.
The Winnipeg company said its board had decided to reduce the dividend for the third quarter to 42.5 cents from 65 cents a share paid in the second quarter.
In its financial report, Manitoba Tel said its net profits fell to $28.2-million or 44 cents a share for the three months ended June 30 from $30.1-million or 47 cents a year ago.
Three-month revenue dropped to $443-million from $452.8-million.
Meanwhile, the company revised its 2010 revenue and earnings projections downward. It now expects revenues of $1.74-billion to $1.78-billion for the year, down from earlier estimates of between $1.79-billion to $1.88-billion.
As well earnings per share should range between $1.80 and $2.15, down from $2 to $2.50 a share expected earlier this year.
The company said it is feeling the impact of the economic downturn on the operations of its Allstream unit, which sells telecom services across the country to companies. As well, aggressive price competition from Manitoba Tel's main cable competitor in Manitoba is also squeezing profit margins.
"The change to the dividend reflects the company's current outlook and provides important funds for reinvestment in the company's highly profitable Manitoba operations," CEO Pierre Blouin said in a release.
"The board took great care to set the new dividend rate at a level that it believes is fully sustainable based on today's revised financial outlook and importantly leaves room for potential increases when major strategic investments are completed and/or business conditions improve. For now, MTS Allstream will continue to pay a very attractive dividend that is more in line with our peers, while significantly strengthening the company's long-term strategic advantages in Manitoba."
In another development, Manitoba Tel also announced plans for a $125-million multiyear investment in fibre-to-the-home network in Manitoba, its core residential market.
By the end of 2015, the company expects to provide fibre-to-the-home to close to 120,000 homes in many Manitoba communities, including areas of Winnipeg.
Manitoba Tel said the investment will enable the company to provide customers with access to the most advanced high-speed Internet and television services.
Meanwhile, the company also plans to invest surplus cash flows to fund the next phase of its integrated billing plan to consolidate its remaining TV, Internet and wireline customers.
Companies & investments Mentioned In This Article (1)
MBT-T 31.81 -0.04