“We are already seeing this,” Chief Financial Officer Jose Pedro Pereira da Costa said in a phone interview. “Angola will predictably have better earnings and domestically we shouldn’t expect anything much different than last year.” Total revenue, which didn’t include Angola, dropped 2 percent in 2011.
The Portuguese government is freezing public-sector wages and cutting pensions and tax benefits in return for a bailout from the European Union and International Monetary Fund. The government predicts the economy will shrink 3 percent this year.
Zon’s first-quarter sales were little changed from a year earlier at 214.2 million euros ($277 million), the Lisbon-based company said yesterday. Sales of pay-TV, broadband and telephone services declined 1.9 percent. The Angola unit contributed 6.4 million euros to total revenue as Zon started consolidating 30 percent of the venture in the quarter.
The company plans to maintain a “relatively conservative level of debt” and wants to use an increase in free cash flow to reduce net debt more this year than it did last year, Pereira da Costa said. Zon reduced its net financial debt by 2.1 million euros last year to 637.5 million euros, according to the company’s annual report.
The executive declined to comment on the use of funds for future dividends. Zon will pay 16 euro cents a share to investors on 2011 earnings, matching the previous year’s dividend and exceeding net income.
Zon fell 2.7 percent to 2.54 euros at 10:55 a.m. in Lisbon, paring the stock’s advance to 9.4 percent this year.
Shareholder Isabel dos Santos, daughter of Angolan President Jose Eduardo dos Santos, announced May 8 she had increased her stake in Zon to 14.9 percent, becoming the biggest investor.
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