Orange Polska Falls On Concern It May Slash Dividend on LTE

  • Company wins high-speed Internet bands for 3.2 billion zloty
  • Carrier to give more details on needed investments on Oct. 21

Orange Polska SA headed for the lowest close in two weeks as Poland’s biggest phone company secured high-speed mobile Internet frequencies, raising concern the expense of 3.2 billion zloty ($856 million) will force it to cut the dividend.

The shares dropped as much as 2 percent and traded 1.2 percent lower at 7.40 zloty as of 2:16 p.m. in Warsaw, extending this year’s decline to 11 percent. The country’s telecommunications market regulator announced on Monday winners of an LTE spectrum auction, with the unit of France’s Orange SA acquiring two 800 megahertz bands, out of five available in the auction. Other carriers, including P4 sp. z o.o., the operator of Play network, T-Mobile Polska SA and NetNet sp. z o.o., won one such frequency each.

“After the auction Orange Polska’s net debt to Ebitda will rise, and thus there is a high risk of a further dividend cut from already record-low level of 0.5 zloty per share” Pawel Puchalski, an analyst at Bank Zachodni WBK SA in Warsaw, said by phone. “Much will depend on the company’s view of the market in the future.”

Orange is now analyzing the impact of needed investments in the 4G network on its financial situation and will provide more information on Oct. 21, when it also publishes its third-quarter earnings, it said in a regulatory filing on Monday. The new frequencies will allow the country’s former monopoly, whose revenue has shrunk every year since 2007, provide high-speed Internet services in less-populated Polish regions and catch up with its competitors on central Europe’s largest market. Orange Polska will finance the frequencies with loans from its parent, it said.

Other bids

T-Mobile Polska won the 800 megahertz frequency after offering 2.02 billion zloty. P4 offered 1.5 billion zloty and NetNet won the spectrum for 2.05 billion zloty. The auction participants, including Polkomtel sp. z o.o., also bid for less-expensive 2,600 megahertz bands. Total bids for all frequencies in the auction amounted to 9.2 billion zloty.

Now all winners have seven days to ask the telecommunications market regulator to book the frequencies they won. The regulator then starts an administration procedure to reserve the bands that may take “months” rather than “weeks,” Magdalena Gaj, the watchdog’s head, said in Warsaw on Monday.

Cyfrowy Polsat SA, which owns Polkomtel, slumped 5 percent to 24.23 zloty, the steepest decline since Aug. 24.

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