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U.S. telecom giant AT&T Inc. (T - Analyst Report) has announced a new repurchase program of up to 300 million shares. The buyback represents nearly 6% of the company’s outstanding shares and does not have any expiration date.

The new program is in addition to the three previous buyback programs of 300 million shares each issued in 2010, 2012 and 2013. We believe AT&T’s increased share repurchase activity bears testimony to its commitment to increase shareholder value.

In the fourth quarter of 2013, the company repurchased 54 million shares for $1.9 billion. Total share repurchase in 2013 was 366 million valued at $13 billion. As of Mar 28, 2014, the company repurchased 175 million shares under the current 300 million share authorization program. Since it started buying back shares in 2012, AT&T has repurchased 775 million shares, representing 13% of its outstanding shares.

In Dec 2013, AT&T raised its quarterly dividend by 2.2% to 46 cents per share from 45 cents per share, representing an annualized dividend payment of $1.84. The company paid nearly $10 billion in dividend last year. In the last couple of years, AT&T has been the industry leader in enhancing shareholders’ wealth, with more than $45 billion in total returns through dividends and share repurchases.

The new program was declared on the back of strong fourth-quarter 2013 performance. The company’s top and bottom line recorded annualized growth and surpassed the Zacks Consensus Estimate courtesy of strong growth in U-verse and strategic business along with solid smartphone sales and record low post-paid churn. AT&T exited 2013 with $3.3 billion of cash and cash equivalents and a net debt-to-adjusted EBITDA ratio of 1.73 times.

Continued strength in smartphones and branded computing device sales are fuelling AT&T’s wireless business growth, while wireline continues to benefit from its U-verse and strategic services. Further, the acquisition of Leap Wireless is expected to enhance its prepaid business, thus encouraging us to remain bullish on company’s growth prospect.   

AT&T currently carries a Zacks Rank #2 (Buy). Other stocks worth mentioning within the same sector include Shenandoah Telecommunications Co. (SHEN - Snapshot Report), SK Telecom Co Ltd. (SKM - Analyst Report) and Level 3 Communications Inc. (LVLT - Snapshot Report). Shenandoah and SK Telecom currently have a Zacks Rank #1 (Strong Buy) while Level 3 Communications carries the same Zacks Rank as AT&T.

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