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TELUS to Split Stock

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Telus Corporation (TU - Free Report) recently announced a stock split of two for one. The company’s shareholders are expected to receive their additional shares on Apr 16, for each share they hold on the record date of Apr 15, 2013.  Post split, Telus shares will commence trading on TSX and NYSE from Apr 17.

Telus’ stock split remains concurrent with its shareholder friendly initiatives that aim at improving their interest while adding liquidity in share trading. Under these initiatives, the company has taken several measures.

These include exchanging 151 million non-voting shares with common shares in a 1:1 ratio on Feb 4, 2013, and adhering to a dividend growth model of 10% per annum from 2011–2013. In addition, the company also intends to provide updates on dividend growth for the period 2014–2016 at its shareholder meeting on May 9.

Such initiates lead us to believe that Telus is focused on maximizing shareholder value by increasing returns. This can be attributed to the company’s business momentum that supports the top and bottom lines, thereby enhancing its market value.  

Telus continues to benefit from its leading wireless subscriber base, increased penetration of smartphones, improving churn (customer switch), accelerating wireless data services and spreading wireline fiber optic networks. Based on these tailwinds, the company has registered increasing average revenue per unit in 2012.

As a result, the company expects earnings to improve on better revenues and operating profits as well as lower financing costs in the near term. In addition, Telus expects free cash flow growth to improve on reduced cash taxes and employer pension contributions, despite continued investments for the expansion of both wireline and wireless services.

However, accelerated access line erosion in the wireline segment, a weak Canadian economy, competitive threats and reduced roaming charges keep us wary on the stock.

Telus Corporation – which operates within the Canadian telecom industry along with Rogers Communications Inc. ( (RCI - Free Report) and BCE Inc. ( (BCE - Free Report) – currently carries a Zacks Rank #4 (Sell).

Other Stocks

France Telecom , with a Zacks Rank #2 (Buy), is another stock in this sector that is worth considering.

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