O2 Czech Republic Slumps to 12-Year Low on Dividend-Cut Concern

O2 Czech Republic AS tumbled to a 12-year low for a second day as speculation mounted that the country’s biggest telecommunications company will cut dividends.

The stock fell 5.4 percent to 211 koruna by 12:56 p.m. in Prague, the lowest level since October 2002. It has lost 28 percent since the company said on Oct. 14 it may lend 24.8 billion koruna ($1.1 billion) to its majority owner, PPF Arena 2 BV, for seven years. That cut its market capitalization to 66.6 billion koruna.

O2 Czech dropped 6.7 percent yesterday after Chief Financial Officer Tomas Kouril said he can’t estimate future dividends before the company decides on the loan and on a potential spinoff of some assets. The payout might drop to 14 koruna per share or lower in 2015, from this year’s 18 koruna, Josef Nemy, an analyst at Komercni Banka AS in Prague, said by e-mail today.

“The uncertainty about future dividend payments is, in our view, the main reason behind the declines in O2’s share price,” he wrote. “We are concerned that the dividend will drop significantly.”

O2 Czech Republic will decide on the loan requested by PPF Arena, part of PPF Group NV, which is controlled by Czech billionaire Petr Kellner, in “days or weeks,” Kouril said during a conference call with analysts and reporters yesterday. The provider of phone and Internet services would need to raise the money for the loan from “external sources,” it said a month ago.

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