In tandem with its Q2 report, Telefonica (TEF -0.2%) announces it's cancelling plans (.pdf) to...

In tandem with its Q2 report, Telefonica (TEF -0.2%) announces it's cancelling plans (.pdf) to issue €1.50/share in dividend payments in 2012, and a similar amount in 2013. The Spanish/Latin American carrier expects to make €0.375/share payments in Q4 2013 and Q2 2014. A look at the Q2 report helps explain the move: While Latin revenue rose 7% Y/Y, European revenue fell 6.1%. Spanish revenue declined 13%, as macro conditions and subsidy cuts lead to subscriber losses.

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Comments (6)
  • Veritas1010
    , contributor
    Comments (3406) | Send Message
    The free-fall begins, TEF to $5.00.
    25 Jul 2012, 04:44 PM Reply Like
  • Destin
    , contributor
    Comments (731) | Send Message
    Classic example of a dividend trap. Panic selling (at least I considered it that at the time) in this case saved me a bundle. I thought I was one of the last men standing but damn if it isn't down another 40% since I ran. One day fairly soon TEF is going to be an incredible buying opportunity but clearly there is more pain to come. Management was clearly in complete denial when they started playing games with scrip dividends only to pull out the hatchet a few months later.
    26 Jul 2012, 02:21 AM Reply Like
  • JB8000
    , contributor
    Comments (3) | Send Message
    It's a well run company; they're doing exactly the right thing. Cut expenses, preserve free cash flow, and safely ride out the Eurozone turbulence. Then resume dividend payments and share repurchases next year when things settle down. Makes sense.
    25 Jul 2012, 08:44 PM Reply Like
  • mitrado
    , contributor
    Comments (2033) | Send Message
    Sure... They should have cut it, but not completely. Without the dividend, the stock will get crushed. What are they thinking? No one in their perfect mind will want to buy TEF now. What for? To see it go down to 3 or 4€ a share!? Insane... :-/
    25 Jul 2012, 08:48 PM Reply Like
  • dreadlordnaf
    , contributor
    Comments (476) | Send Message
    You realize most stocks normally yield zero percent div and people buy them all the time....


    Agree with other posters its bittersweet. I wouldve liked to retain getting my div but am glad that management is making decisions based on long term financial health.
    26 Jul 2012, 11:21 AM Reply Like
  • Veritas1010
    , contributor
    Comments (3406) | Send Message
    Not when you examine the numbers. Their capex and roll-over debt is still to great. I think they are headed for extinction.
    26 Jul 2012, 02:44 PM Reply Like
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