Portugal Telecom to Meet Three-Year Dividend Plan, CEO Says

Portugal Telecom SGPS SA, Portugal’s biggest telecommunications company, is confident it will generate enough cash flow to deliver on a three-year dividend plan, Chief Executive Officer Zeinal Bava said.

Portugal Telecom said on June 27 it would pay an annual dividend of 32.5 euro cents a share for the years 2012 to 2014. The company, which paid 65 cents a share in dividends on last year’s earnings, announced a 200 million-euro ($255 million) share buyback program for the three-year period on the same day.

“The board of Portugal Telecom remains absolutely confident that we will be able to generate cash flow to pay that dividend,” Bava said yesterday in an interview at a conference in Barcelona organized by Morgan Stanley.

The former state monopoly is betting on its Brazilian unit to counter falling sales in Portugal, which is entering its third year of recession after seeking a bailout in 2011. Portugal Telecom bought a stake in Brazilian operator Telemar Norte Leste SA, now known as Oi SA, in March 2011.

“We will continue to invest in the transformation of our business, not just in Portugal, but also in Brazil,” said Bava.

Oi, Brazil’s fourth-largest mobile operator by market share, reaffirmed its net income forecast for the year yesterday and reported a higher-than-expected third-quarter profit. Portugal Telecom’s third-quarter operating revenue, excluding sales from its Brazilian assets, fell 5.4 percent to 770 million euros, it said Nov. 8.

Portugal Telecom fell 0.1 percent to 3.73 euros as of 9:21 a.m. in Lisbon, its fifth straight day of declines.

Bava declined to comment on whether Portugal Telecom was looking to sell its stake in Macau service operator Companhia de Telecomunicacoes de Macau, S.A.R.L. “We never comment on mergers and acquisitions,” he said.

Citic Pacific Ltd., controlled by China’s biggest state-owned investment company, said on Oct. 17 it’s in talks to buy Cable & Wireless Communications Plc’s stake in Companhia de Telecomunicacoes de Macau. Portugal Telecom owns a 28 percent stake in CTM, according to its website.

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