Telefonica Falls on Dividend Halt, Pay Cut as Crisis Deepens

Telefonica SA reached a nine-low low in Madrid trading after suspending its dividends, cutting a revenue forecast and slashing compensation for top executives including Chief Executive Officer Cesar Alierta in his most drastic response to Spain’s debt crisis.

Europe’s biggest phone company scrapped a 1.5 euro-a-share dividend for 2012 and will resume half of the payout toward the end of next year, the Madrid-based company said yesterday, citing an “extremely challenging” economic environment. The move will save Telefonica an estimated 10.2 billion euros ($12.4 billion). Top managers’ total compensation will be slashed by 30 percent, and board members agreed to take a 20 percent pay cut.