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Bouygues Lifts Stake in Phone Unit With $899 Million Injection

Bouygues SA (EN), France’s second-biggest builder, lifted its stake in Bouygues Telecom by almost a percentage point as it injected 678 million euros ($899 million) in its telecommunications unit whose profit has been sapped by increased competition.

Bouygues’s stake in Bouygues Telecom climbed to 90.53 percent from 89.55 percent, a company official said today, confirming a report in newspaper L’Agefi. JC Decaux Holding’s stake in Bouygues Telecom dropped to 9.47 percent from 10.45 percent as it injected 22.2 million euros, the official said.

Bouygues Telecom Chief Financial Officer Eric Haentjens said in November that there would be a capital increase to partly make up for the cost of purchasing two blocks of so- called fourth-generation frequencies for 943 million euros.

Bouygues, the Paris-based building, television and telecommunications company, said in November third-quarter net income dropped 29 percent, led by a decline at its phone unit. To revive earnings, Bouygues Telecom, France’s third-largest mobile-phone operator, has cut jobs, prices and marketing expenditure, and introduced new services to regain customers from Iliad SA (ILD), which started a wireless service in January 2012.

Bouygues rose 0.2 percent to 22.37 euros at 10:46 a.m. in Paris trading.

Dividend Policy

Bouygues Telecom, which accounted for 39 percent of the dividends received by Bouygues SA from 2006 to 2011, had already reduced its dividend paid in 2012 by 50 percent, and will suspend dividend payments this year, Jean-Michel Koster, an analyst at CM-CIC in Paris, said in a research note yesterday. It “seems unreasonable” for Bouygues SA to maintain its 2012 dividend at the same level as 2011, he said.

The official at Bouygues declined to comment on the dividend.

Bouygues’s policy is for a “slight increase or stability in the dividend” over the long term, CFO Philippe Marien said in November. It “is not a policy based mechanically on free cash flow on one year or a payout on one year,” he said. The investment in the 4G licenses and the deterioration of Bouygues Telecom’s cash flow meant 2012 was unusual, he said.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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