Telefónica says it will increase its shareholder dividend by 21.7%, despite delivering dramatically lower earnings forecasts for 2010.
The Spanish-based telco, the world’s third largest by customer numbers, will propose a shareholder dividend of €1.40 per share for 2010, compared to the current €1.15.
But in its three-year forecast Telefónica slashed its outlook for next year, compared to estimates it had made two years ago. The company now expects earnings per share of around €2.10, versus the earlier estimate of €2.35.
Revenue is now expected to grow by just 1%-4% over the next three years, compared to the earlier estimate of 5%-8% CAGR for the period between 2007 and 2010.
Telefónica has also predicted that ebitda will grow at a CAGR just 2-4% from 2008-2012.
Company chairman César Alierta on Friday reassured investors that Spain's telecom market is likely to recover by 2011, adding that the company will see stronger growth once that occurs, the Wall Street Journal said
Telefónica's Q2 profit fell 6.1% year-on-year to €1.93 billion.