Telefonica cuts dividend as last resort to lowering debt

News General Europe 27 OKT 2016
Telefonica cuts dividend as last resort to lowering debt
Telefonica has cut its proposed full-year dividend as the operator looks to hold on to cash flow for investments and debt maintenance. The company said it will pay a voluntary stock dividend of EUR 0.35 per share in Q4 plus EUR 0.20 in cash in Q2 2017, compared to a previous forecast of EUR 0.75 per share for this year. In 2017, it plans a cash dividend of EUR 0.40 per share, payable in two tranches. 

The decision follows the company's failure to sell O2 UK or list its infrastructure arm Telxius as ways to reduce its debt. At the end of Q3, the company's debt was still over 3x annual EBITDA, at EUR 49.98 billion, down slightly from EUR 52.57 billion in June. 

In the third quarter, revenues remained weak, down 5.9 percent year-on-year to EUR 13.08 billion, while OIBDA fell only 1 percent to EUR 4.18 billion, as negative currency effects eased. On an organic basis, revenue fell only 0.2 percent, and service revenue was up 1.4 percent, a performance similar to Q2. Service revenue growth came largely in Latin America, which rose 5.5 percent, while Brazil revenues were up 2.5 percent, and Spain grew 0.6 percent. 

Net profit showed a strong improvement of 38.5 percent to EUR 983 million, and operating cash flow rose 8.6 percent to EUR 2.14 billion. Capital expenditure increased 5.3 percent to EUR 2.36 billion or 15.5 percent of revenue. 

For the full year, Telefonica forecast revenue up over 4 percent and a stabilising OIBDA margin, excluding the activities in Venezuela and the UK and forex effects. On this basis, revenues in the first nine months of the year rose 3.0 percent and the OIBDA margin improved 0.4 percent points. 

Categories:

General

Companies:

O2,  O2 UK,  Telefonica,  Telxius

Regions:

Europe,  Latin America and the Caribbean

Countries:

Spain

Tags:

Voice services, Financial figures, Internet Access, Financial funding

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