within hours yesterday when the utility's stock soared more than 25 percent on the Bermuda Stock Exchange.

Telco's board of directors approved a special dividend on Monday which gave shareholders a 7.75 percent 15 year note valued at $15 for every share held, meaning the company will ultimately pay out almost $30 million in dividends.

Yesterday, Telco stock soared $7.75 to $38 on volume of 1,820.

"Telco's stock has been trading at a serious discount to book value -- book value is over $45 -- and this move is trying to rectify that,'' Telco secretary Gary Edwards said yesterday.

Competition in the telecommunications market was not a factor behind the move, he added.

Telco opted for notes because market price does not reflect the underlying value of the shares or earnings or yield, the company said.

The dividend is payable on March 31 to shareholders of record on March 15.

Interest on the notes will be paid quarterly.The notes will become marketable instruments and trade on the BSX.

Telco said the notes are aimed at increasing the return to shareholders but also will encourage shareholders to recognise the value of the shares in a more tangible way and be able to trade them at a more realistic price.

Telco also will pay its regular quarterly dividend of 60 cents a share on April 15, but commencing the quarter ending June 30, 1997, the dividend on common shares will be reduced to 50 cents a share.