Buckeye Partners’ (NYSE: BPL) first quarter earnings results had all the hallmarks of a company careening towards another distribution cut. Then Australian private infrastructure fund IFM came along with a $41.50 per unit all-cash takeover offer. That’s given long-suffering unitholders their best opportunity to cash out since early 2018.
Management’s rationale is identical to that of other telecoms cutting the past couple years. It needs more cash to tackle a wall of pending debt maturities, even as capital spending needs pick up for next generation 5-G wireless and competition pressures 4-G revenues.
Until last month, Consolidated Communications (NSDQ: CNSL) was an anomaly in the wireline telecom business: The only company in the sector that had not cut its dividend at least once, dating back to the July 2005 initial public offering.
But starting this summer, Consolidated will pay no dividend, using the savings to pay off debt. I highlight the details in the April 29 Income Insights “Comcast’s Big Gains are its Smaller Rivals’ Pain".
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