July 28 (Bloomberg) -- AT&T Inc., the biggest U.S. telephone company, said its board authorized a repurchase of as much as $11.1 billion in stock, doubling a buyback program the company announced in December 2010.
The effort will include as many as 300 million shares, or about 5 percent of the stock outstanding, Dallas-based AT&T said yesterday in a statement. The 2010 buyback plan also amounted to as many as 300 million.
“This action allows us to continue returning cash to our shareholders through dividends and buybacks while maintaining a strong balance sheet and investing in the future of our business,” Randall Stephenson, the company’s chairman and chief executive officer, said in the statement.
AT&T is increasing its shareholder rewards after posting a net income gain of 8.7 percent last quarter. The company added 320,000 monthly contract customers in the period -- a smaller number than a year earlier. While the decline hurt sales growth, it meant AT&T doled out fewer dollars in mobile-phone subsidies to customers, boosting profit.
AT&T climbed as much as 1.7 percent in extended trading yesterday after the announcement. The shares, up 23 percent this year, rose 2.3 percent to $37.14 during regular trading.
Under the previous repurchase agreement, AT&T has bought back 143.5 million shares through June 30, the company said. That amounted to $4.6 billion. Including dividends, AT&T said it has returned almost $10 billion to investors in the first half.
The rewards have contributed to a shrinking cash pile at AT&T this year. Cash and equivalents fell to $2.15 billion at the end of last quarter, down from $3.19 billion at the end of 2011. Even so, the company has been cutting back on capital spending and trying to jettison slower-growth businesses.
Second-quarter capital spending fell 15 percent to $4.48 billion from a year earlier. In May, AT&T completed the sale of its Yellow Pages directory unit to Cerberus Capital Management LP for $950 million.
Chief Financial Officer John Stephens said on a conference call this week that capital spending would “tick up” again in the second half of the year.
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