Chile’s second-largest mobile operator, Empresa Nacional de Telecomunicaciones SA, fell to a six-month low after agreeing to a $400 million Peruvian acquisition that will result in a dividend cut.
The company known as Entel retreated 3.2 percent to 9,489.4 pesos at the close in Santiago, the lowest since Sept. 14. The benchmark Ipsa index fell 1.3 percent.
Entel, based in Santiago, agreed to buy Nextel Peru, a unit of Reston, Virginia-based NII Holdings Inc., according to a regulatory filing yesterday. Entel said it will pay for the acquisition partly by reducing its dividend payout to 50 percent of profit. The payout ratio was previously 80 percent, according to Banco Santander SA.
“While in the long run the acquisition might create value, the short run is likely to be challenging,” Santander analyst Nicolas Khaliliyeh said in an e-mailed note today. “We expect a slightly negative market reaction.”
NII shares surged 21 percent in New York to $5.52.
Nextel Peru’s profit margins are lower than Entel’s, and improving them will be a “major challenge,” Santiago-based brokerage IM Trust SA said in an e-mailed note today.