Cesky Telecom - the dividend for 2004 may significantly exceed the approved dividend policy

At Wednesday’s conference call to CT’s preliminary FY 2004 results, CFO Juraj Sedivy said the dividend for 2004 may significantly exceed the approved dividend policy of up to 70% of consolidated net income or CZK 12 / share (this, among others, subject to the privatization outcome). CT may use its retained earnings of CZK1.2bn or CZK 4 / share plus dividends received from Eurotel in the value of CZK8bn or CZK 25 / share.

Separately, CT’s CEO, Gabriel Berdar, repeated at a press conference yesterday that the company is also considering the acquisition of another operator. Given CT’s strong free cash flow generation, low debt and limited CAPEX needs, the company may use its cash for either dividend payments or expansion.

The financial consortium CVC/Blackstone/Provident is reportedly in talks to team up with France Telecom/Orange for the privatization of CT. Note that financial investors must form a consortium with telecom operators in order to be allowed into datarooms and to file a final bid.

In other news, the subsidiary Eurotel posted a net profit of CZK 6.6bn last year, down 9% y/y. The decline was caused, among other things, by the higher costs for phone purchases and by taxes. Revenues increased 1% to CZK29.5bn. Note that on Wednesday CT reported a consolidated net profit of CZK 5.6bn and revenues of CZK62.1bn for 2004.