Telefonica SA (TEF), the worst-performing phone operator in the Bloomberg Europe Telecommunication Service Index last year, plans to increase its dividend by 14 percent to lure investors discouraged by Spain’s economic woes with higher payments.
Telefonica, Europe’s second-largest phone company by sales, will raise its dividend for 2011 to 1.60 euros a share from 1.40 euros a share a year earlier, the Madrid-based company said in an e-mailed statement today. The company confirmed its target to pay at least 1.75 euros a share in 2012.
Chairman and Chief Executive Officer Cesar Alierta is betting on high dividends and Latin America’s rapid growth to attract investors and counter the impact of Spain’s austerity measures. Spain has the highest unemployment rate in the euro region. In July, the country’s main rate of value-added tax rose to 18 percent from 16 percent.
The company is scheduled to report fourth-quarter earnings on Feb. 25. In November, the company reported third-quarter earnings that fell short of analyst estimates because of an accelerated decline in domestic wireless revenue.
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