June 5 (Bloomberg) -- Germany's government chose to receive at least part of its dividend from Deutsche Telekom AG in cash this year, rather than shares, reducing money available for the phone company’s efforts to upgrade its network.
Germany’s finance ministry, which holds 17 percent of Deutsche Telekom shares, will take cash and not stock, it said in an e-mailed statement today. The ministry said it couldn’t say which option would be chosen by state-owned lender KfW, which holds an additional 15 percent on behalf of the ministry.
Deutsche Telekom, which operates much of the backbone of Germany’s phone and Internet grid, has budgeted 6 billion euros ($7.8 billion) to upgrade its German fixed-line Internet connections while also joining Vodafone Group Plc and Telefonica Deutschland Holding AG in rolling out the fast long term evolution, or LTE, wireless technology.
The company, heir to Germany’s former federal postal service, was mostly privatized in the 1990s yet Germany’s government has opted not to reduce its stake further as the shares have lost about a third of their value in the last 10 years. The operator had announced it would offer dividends in kind during a strategy presentation in December.
Deutsche Telekom spokesman Andreas Fuchs said the company plans to publish the aggregate outcome of the decision, which stood open to all shareholders, early next week. The company’s network investments are covered even without a cash retention, he said by phone today.