European operator dividends hit by spectrum auctions, LTE - Mobile World Live

European operator dividends hit by spectrum auctions, LTE

18 NOV 2013

European operators (excluding Telefonica) are forecast to cut dividend payouts in 2013 by 16 per cent, according to a survey by Markit, the financial research firm.

Total dividends for 2013 are forecast to hit €14 billion.

Including the Spanish operator changes the picture into a 12 per cent growth for the sector this year. Telefonica is resuming payments to shareholders after a one-year break where it focused on debt reduction.

Among the factors putting a squeeze on cashflow across the sector are the cost of spectrum auctions, LTE deployments, regulatory pressure and changing customer behaviour.

Overall, Markit said 12 of the 19 companies in the sector will have reduced or suspended payments either in 2013 or 2012.

The report also picks out BT’s successful £1 billion bid for the exclusive broadcast rights to the UEFA’s Champions League and Europa League football games as an example of how competition is growing.

Mobile operators face a threat of increased cost for content, which is central to 4G strategy. Vodafone in the UK, for example, has majored on sports and music, via agreements with BSkyB and Spotify in its 4G packages.

BT also plans to launch its own mobile service, having acquired spectrum in an auction.

In addition, M&A action has had an impact too as the most indebted firms have put a focus on consolidation to boost their balance sheets.

The forecast €14 billion in dividends for 2013 is also well off the peak of €22.2 billion in payments for 2011, said Markit.

However, there is slightly better news on the horizon with 2014 payments predicted to rise a little, to €14.9 billion. By 2015, Markit said all 19 companies in the sector will have resumed payments with the two laggards – KPN and OTE – having finally caught up with their peers.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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