O2 Czech to Start Share Buyback This Week as Profit Jumps 45%

  • Repurchases may have `short-term' positive impact: Komercni
  • Shares gain as much as 2.8 percent on Tuesday as dividend set

O2 Czech Republic AS will begin buying back its own shares this week, making good on a plan that’s helped to boost the telecommunications company’s market value by almost 350 percent in the past eight months.

The country’s biggest phone and Internet provider will purchase a maximum of 130,745 equities per day starting on Jan. 28 under a previously announced five-year buyback program, according to a statement on Tuesday. O2 Czech will also pay a dividend of 16 koruna per share (64 cents) after its profit jumped 45 percent last year.

“The start of the buyback should have a short-term positive impact on O2 Czech share price, depending on the purchased volumes,” said Josef Nemy, an analyst at Komercni Banka AS in Prague. Earnings were “slightly above expectations” and the proposed payout represents “an attractive 6.2% yield,” he said in an e-mailed comment.

O2 Czech, where billionaire Petr Kellner’s PPF Group NV owns almost 85 percent, pledged last year to lavish investors with cash by paying out its full profits through dividends and use borrowed money to buy back its own shares. The company’s 2015 profit rebounded from an 11-year low after a spinoff of its network infrastructure last June eased regulatory hurdles and allowed the company to grow its business.

Shares Advance

O2 Czech rose as much as 2.8 percent on Tuesday before paring gains to trade up 1.1 percent at 254.8 koruna as of 12:30 p.m. in Prague. That takes O2 Czech’s rally since the asset spinoff less than eight months ago to 349 percent and compares with a 1.7 percent drop for the Stoxx 600 Telecommunications Index.

Net income at the company, which evolved from the former Czech national telephone monopoly, rose to 5.1 billion koruna last year from a pro-forma 2014 figure of 3.5 billion koruna even as revenue remained unchanged at 37.5 billion koruna, O2 Czech said.

O2 Czech was previously owned by Telefonica SA which has licensed its O2 brand name to the company for continued use.

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