Now that it owns 27.7 per cent of KPN, América Móvil is likely to push for KPN to sharply curtail its strategy of giving generous dividend payments to shareholders. Analysts expect América Móvil to reverse KPN's track record of high shareholder rewards, and instead plough profits back into the company's fixed and mobile networks, according to Reuters.
Bernstein analyst Robin Bienenstock told Reuters that KPN could announce a 50 per cent dividend cut to help fund bids in a forthcoming spectrum auction in the Netherlands, and suggested that América Móvil would not support the sale of KPN's Belgian mobile subsidiary BASE, which the company had been planning to offload prior to América Móvil gaining its stake.
"To sell one of your fastest-growing businesses in order to give cash to investors, doesn't make good financial sense," Bienenstock said, adding that América Móvil CFO Carlos Garcia-Moreno had said that KPN's Belgium business was an attractive asset.
"Under the previous CEO the focus was on buy-backs, shareholder remuneration and cost cutting and less on investments so they probably have some catching up to do," Petercam analyst Stefaan Genoe told Reuters, referring to former KPN chief Ad Scheepbouwer, who CEO Eelco Blok replaced in April 2011.
Earlier this year, KPN said it remained committed to its dividend, which has risen from €0.35 per share in 2004 to €0.85 in 2011, of €0.90 per share proposed for 2012.
If the company does announce a dividend reduction, which could happen later this month when KPN reports second-quarter results, it would follow other European telcos, including Telecom Italia, Telefónica and even América Móvil's other European holding, Telekom Austria, which have already lowered payouts to shareholders.
In other KPN news, the company named Eric Hageman as its permanent CFO. He has been holding the position on an interim basis after former CFO Carla Smits resigned in January.
- see this Reuters article
- see this AP article
América Móvil secures 27.7% stake in KPN, plans long-term partnership
KPN shares tumble after Slim gains 21% stake
KPN weighs 'poison pill' strategy to kill Carlos Slim bid
KPN under spotlight as Carlos Slim raises stake
América Móvil gains European foothold with Telekom Austria stake
Rumour Mill: KPN rejects Telefónica bid for E-Plus