Inside Telefonica’s dividend

César Alierta

The company’s  plan is to distribute a €0.75 annual dividend, in two payments in May and November. That has been the strategy of Mr Alierta, who revived the dividend after a previous period focused on the revaluation of the stock. In 2012/13 Telefonica suspended its dividend payment (one of the most uncomfortable decisions for Mr Alierta, a staunch supporter of the value of dividends) to reduce debt.

For the next payment (November 2015) Telefonica will distribute a “scrip dividend” of  €0.35. This will be the last payment using this dividend model, which no longer has the tax advantages it had years ago. In addition to the commitment of €0.75 per year (which means a 5% return on the current stock price) Telefónica  aims to amortise up to 1.5 % of treasury stock. The ultimate goal is none other than improving the share price, which during the two last years has ranged between 10 and 14 euros, a  far cry from that established in the stock option plans signed by the company’s management.

The most important facts listed by Mr Alierta at the general meeting include the recovery of growth and margins in the business in Spain, which accounts for over a quarter of the balance sheet and the trading account. After exiting the UK, Telefonica intends to consolidate its leadership (either first or second place) in Spain, Brazil, Germany and some Latin American countries. The company also wants to make a firm bet on fibre networks and audiovisual content which add value to its offer and turnover.

César Alierta didn’t spare any criticism of Google or Apple:

“They know about everyone’s life… except mine because I have a lousy phone,” he told shareholders.”Anyone who owns a smartphone is not free. I have  not lost my privacy.”

He criticized Google and Apple’s duopoly and claimed that the same rules should apply to all players in the digital ecosystem.

“Same service, same rules,” he said.

For Alierta, the term ‘network neutrality’ has become obsolete and once again he called on the authorities to establish a regulatory framework that encourages investment in new infrastructures.

 Telefónica has intensified its lobbying activity in Brussels, together with other European operators, in order to limit the powers of  new competitors and is confident of obtaining immediate results.

About the Author

Fernando Gonzalez Urbaneja
Over 30 years working in economic journalism. Fernando was founder and chief-editor at El País, general editor at the business daily Cinco Días, and now teaches at Universidad Carlos III. He's been president of the Madrid Press Association and the Spanish Federation of Press Associations. He's also member of the Spanish press complaints commission.

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