O2 Czech Profit Surges 25% as Spinoff Boosts Dividend Chances

O2 Czech Republic AS’s second quarter profit increased 25 percent, boosting chances the phone company may pay dividends after a spinoff of infrastructure assets.

The Prague-based operator, 85 percent owned by Czech billionaire Petr Kellner’s PPF Group NV, posted net income of 1.26 billion koruna ($51 million) in the April-June period, according to an e-mailed statement on Wednesday. It was the first earnings report after the business partition two months ago.

Shares surged as the results backed the company’s expectations that moving its mobile and fixed networks to a separate company, Cetin AS, will ease regulatory hurdles and boost profitability.

“We regard the results as positive because higher net income implies likelihood of higher dividends,” Petr Bartek, an analyst at Prague-based Ceska Sporitelna AS, said in an e-mailed report to clients. He now expects the company to pay out all of its profit to shareholders.

Outlook for the payout improved after PPF on May 31 scrapped a plan to take a loan from O2 Czech and said it would instead borrow 32.2 billion koruna from Cetin.

The stock jumped 3.1 percent to 145 koruna as of 12:37 p.m. in Prague, extending gains to 49 percent this month and to 157 percent since the asset split on June 1. The price is the highest since September 2009 on a closing basis when adjusted for the spinoff, valuing the company at 45.8 billion koruna.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE