Zon Generating Enough Cash Flow to Pay Investors Dividends

Zon Multimedia SGPS SA, Portugal’s biggest cable-television provider, is generating enough free cash flow to continue to pay dividends to investors, Chief Financial Officer Jose Pedro Pereira da Costa said.

Zon is currently “very comfortable” in paying the same level of dividends as it reduces debt, Costa said in a phone interview. He said it’s premature to speak about the company’s future dividend policy.

Zon paid a 16 cent dividend this year, the same as last year. Second-quarter net income advanced 5 percent from a year earlier to 9.7 million euros ($11.9 million), the Lisbon-based company said in a regulatory filing yesterday. Revenue rose 1.4 percent to 214.4 million euros.

Zon’s free cash flow was 49.9 million euros in the first six months of the year compared with a negative figure of 17.2 million euros. The company plans to end the year with 100 million euros of free cash flow, Costa said.

Zon fell 2.4 percent to 2.027 euros at 10:15 a.m. in Lisbon, giving the company a market value of 627 million euros.

Zon, whose biggest shareholder is Angolan investor Isabel dos Santos with a 28.8 percent stake, plans to continue to focus on Angola for growth as Portugal’s economy remains mired in a recession for a second straight year. Angola’s economy is forecast to expand 6.8 percent this year, according to the International Monetary Fund.

“Our level of growth there is very strong,” said Costa. Zon holds a stake of 30 percent in Angolan cable-television provider ZAP, which generated 24.2 million euros in revenue in the second quarter.

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