Stock Buybacks

All of the big broadband providers brag to the public about how much they spend on their networks. Even at the local level, it’s rare to ask a big broadband provider to a local government meeting where they don’t open the conversation by reminding local politicians how much money they have spent in a given town or county. The story is often just the opposite when problems with networks are pointed out, and communities ask the broadband providers to beef up networks and improve service. That’s when we hear that money for capital spending is tight, but a broadband provider will make upgrades a priority in the future.  What’s never heard in conversation about capital spending is how much big broadband providers spend to buy back shares of their own stock. This is a practice where big broadband providers (and many other large corporations) use profits to purchase and retire stock. The transaction reduces the number of shares of outstanding stock and consequently nudges up the announced earnings per share. The first time I encountered the practice, I was flabbergasted. This makes me wonder if corporations that are engaging in stock buybacks should be allowed to get federal grants. For example, should we have allowed a company like Charter to get $1.2 billion in Rural Digital Opportunity Fund funding in 2020 at a time when the company was spending $11 billion to buy back its own stock? Did Charter really need a federal subsidy, or does grant funding just allow a company to even further increase stock buybacks? I don’t have an answer for that other than it just doesn’t feel right.