Telekomunikacja Polska Stock Plunges as Dividend Is Cut

Telekomunikacja Polska SA, Poland’s largest phone company, cut its dividend proposal for the second time in four months after fourth-quarter profit and revenue slumped, driving the stock to a record 33 percent drop.

Telekomunikacja Polska, controlled by France Telecom SA, plans a dividend of 0.50 zloty a share, compared with 1 zloty announced in October and the 1.50 zloty paid on 2011 profit. Net income fell 86 percent to 51 million zloty ($16.4 million) from 358 million zloty a year earlier, the Warsaw-based company said in a filing today. Profit missed the 166.8 million-zloty average of nine analyst estimates compiled by Bloomberg.

“The Polish telecommunications market is going through the moment of the most severe changes in its history,” Chief Executive Officer Maciej Witucki told reporters by phone today. “Even though we are increasing market share, the market’s shrinking and revenue growth isn’t possible.”

Revenue at TPSA, as the company is known, has fallen since 2007 as competition increased and the country’s phone regulator forced operators to cut prices. The watchdog is lowering the rates that mobile phone operators charge each other for calls to their networks, while competition from wireless providers is eroding fixed-line revenue. TPSA expects a “deep” decline in sales this year, it said today.

Shares Slump

Its shares plunged 3.82 zloty to 7.82 zloty, the steepest intraday drop and the lowest price since the company’s listing in Warsaw in 1998, and closed 28 percent lower at 8.39 zloty. France Telecom lost 0.9 percent to close at 7.809 euros in Paris, the lowest since October 2002. Netia SA, TPSA’s biggest publicly traded competitor in Poland, slumped 13 percent to 3.91 zloty, closing at the lowest level since October 2009.

“The guidance for the telecommunications market in 2013 will scare investors, the dividend outlook is miserable, the strategy does not really bring any optimism for the future, while the 2013 cash-flow guidance is shockingly low,” Piotr Janik, a Warsaw-based analyst at KBC Securities, said in a note.

The Polish company’s dividend plans won’t affect France Telecom’s investor-payout strategy, the Paris-based phone operator said today.

2011 Gain

Fourth-quarter sales at TPSA declined 6.4 percent to 3.48 billion zloty as revenue from mobile-phone services fell 6.3 percent to 1.82 billion zloty. In the year-earlier period, Telekomunikacja booked a 260 million-zloty tax refund after it ended a decade-long legal dispute with GN Store Nord A/S. Full-year net income fell 55 percent to 855 million zloty from 1.92 billion zloty.

TPSA will cut investments to below 2 billion zloty this year and plans to limit the spending to 12 percent to 13 percent of annual sales, the company said. The operator started the disposal of its Internet portal Wirtualna Polska and plans to merge fixed-line and mobile-phone operations to cut costs.

Further reductions of expenses will come from cutting 1,700 jobs in 2013 and more in subsequent years, Witucki said.

The disposal of the fixed-line business would be “complicated” and “wouldn’t be my first choice,” the CEO told analysts today. At the same time, TPSA is considering all options for selling units or setting up partnerships, he said.

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