Bloomberg News

Telecom Italia Advances as Lower Dividend Payout Reduces Debt: Milan Mover

February 24, 2012

Telecom Italia SpA TIM mobile unit logos are seen in Rome. Photographer: Alessandra Benedetti/Bloomberg

Telecom Italia SpA TIM mobile unit logos are seen in Rome. Photographer: Alessandra Benedetti/Bloomberg

Telecom Italia SpA (TIT) rose the most in more than three months in Milan after forecasting a bigger-than- expected reduction of debt as it cut its dividend payout.

The shares rose as much as 7 percent, the most since Nov. 11, and were up 5.7 percent to 85.85 cents at 10:26 a.m. in Milan. The stock has risen 3.1 percent this year, boosting the company’s market value to 15.7 billion euros ($21 billion).

Italy’s biggest phone company proposed dividends of about 900 million euros ($1.2 billion) for 2011, down from 1.2 billion euros in 2010, “in light of the recent worsening of the macroeconomic climate and the goal to maintain the credit rating,” the Milan-based company said in a statement. The company had previously forecast annual dividend growth of 15 percent through 2013.

“The dividend cut had already been digested by the market,” Banca Akros analyst Andrea Devita, who has a “hold” recommendation on the stock, wrote in a note today.

The company forecast stable earnings and revenue this year and a “steady and persistent deleveraging to reduce the group’s financial indebtedness,” it said in a separate statement. The company forecast adjusted net debt will fall from 30.4 billion euros in 2011 to 27.5 billion euros this year. That’s better than an analyst average estimate for net debt of 29.7 billion euros of 21 analysts in a Bloomberg survey.

Organic revenue rose 2.7 percent last year, better than the company’s own target of broadly stable sales. “The main driver of the outperformance was Brazil,” Espirito Santo Investment Bank wrote in a note today.

To contact the reporter on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net.

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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