Orange Polska Plummets as Carrier Posts First Loss in Two Years

  • Operator sees 2016 Ebitda falling amid push to add new clients
  • Company keeps plan to halve 2015 dividend payout versus 2014

Orange Polska SA declined the most in almost six months as Poland’s biggest phone company turned to a net loss in the fourth quarter and expects its business to shrink this year.

The shares slumped 6.6 percent to 6.11 zloty as of 11:22 a.m. in Warsaw, the most since Aug. 24, valuing the operator at 8 billion zloty ($2 billion). Orange said late Monday it turned to a quarterly loss of 153 billion zloty from a profit of 30 million zloty a year earlier, falling short of the 131.9 million-zloty mean estimate of analysts in a Bloomberg survey. Its earnings before interests, taxes, depreciation and amortization, or Ebitda, will retreat as much as 11 percent this year to as low as 3.15 billion zloty after falling 10 percent in 2015, according to its statement.

The Warsaw-based company, whose sales have shrunk every year since 2007, sees further pressure on its earnings as it readies investments to acquire new clients and expand its network. The planned outlays will help it compete with Deutsche Telekom AG’s Polish unit and Cyfrowy Polsat SA, as well as return to a “growth path” in 2018, Chief Financial Officer Maciej Nowohonski said in a Feb. 15 statement.

“The 2018 plan isn’t rosy for investors as there may be no chance for a dividend growth in future” amid the company’s intention to keep up investments while cash flow won’t grow, according to Andrzej Kubacki, an analyst at ING Bank Slaski SA in Warsaw. “Planned Ebitda is also below market expectations,” Kubacki, who has a hold recommendation on the former Polish phone monopoly, said by phone.

The Polish unit of Orange SA reiterated it would pay 0.25 zloty a share as dividend from last year’s profit, compared with 0.5 zloty apiece returned to investors a year earlier.

It will spend 2.2 billion zloty through 2018 in its fiber network coverage alone, it said in a statement. In October it also said it saw “incremental” investments to build the 4G network and roll out services at 220 million zloty through 2017. Earlier this month, Orange paid 3.2 billion zloty for 4G frequencies, crucial for providing high-speed Internet services in less-populated Polish regions and catching up with its competitors in central Europe’s largest market.

Before it's here, it's on the Bloomberg Terminal.