TPSA Jumps to 8-Month High on Dividend Prospects: Warsaw Mover

Telekomunikacja Polska SA surged to an eight-month high on speculation Poland’s biggest phone company may boost its dividend after reporting a profit that beat analysts’ estimates.

TPSA, as the unit of France’s Orange SA is known, jumped 5.5 percent to 9.28 zloty at the close in Warsaw, climbing to the highest level since Feb. 11. The benchmark WIG30 Index fell 0.2 percent today.

The Warsaw-based operator raised its goal for 2013 organic cash flow 25 percent to at least 1 billion zloty ($327 million) after posting third-quarter net income of 239 million zloty. The mean estimate in a Bloomberg survey of nine analysts was for a profit of 120 million zloty.

The new cash-flow target “suggests a possible upside” to the current dividend of 0.5 zloty a share, Przemyslaw Sawala-Uryasz, an analyst at UniCredit SpA in Warsaw, said in a note today. The new guidance translates into a dividend of 0.76 zloty a share providing a safety buffer of more than 50 percent to the current dividend, he said.

The shares have plunged 24 percent this year, making TPSA the third-worst performing stock in Warsaw’s WIG30 Index, as falling mobile phone rates, rising competition and economic slowdown hurt earnings and prompted management to reduce the 2012 dividend 67 percent to 0.5 zloty a share.

TPSA management is “absolutely determined to generate stable cash flows, necessary to finance investments and remunerate shareholders,” Chief Executive Officer Bruno Duthoit said in TPSA’s statement.

The company will announce its dividend plan in February, Duthoit said during a conference call with analysts today.

“The fact that management sees protection of dividends as important reduces one of our key concerns, but this does not mean that dividend hikes are imminent,” Dalibor Vavruska, an analyst at Citigroup Inc. in London, said in a note today.

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