Portugal Telecom (PT) is expected to hike its 2004 dividend as much as 40 percent from last year, despite spending heavily to buy business units through a joint venture in Brazil, analysts said on Friday.
Earlier this week, PT said its Brasilcel joint venture with Spain's Telefonica Moviles planned to acquire assets of four Brazilian subsidiaries in a deal worth 420 million euros ($508 million). Brasilcel is the holding company for cellular communications company Vivo.
The news led to some concerns in the market that the acquisitions, estimated to cost PT alone about 170 million euros, would prevent PT from offering a new share buy-back or an extraordinary dividend, analysts said.
However, analysts predicted PT would still be able to offer a 2004 dividend to shareholders of as much as 30 cents to 35 cents, compared with 22 cents last year.
"The eventuality that PT will go after more assets in Brazil, for example (mobile operator) Telemig, makes a new share buy-back less probable, but remuneration to shareholders will continue to grow," said Nuno Vieira, an analyst at Millennium bcp.
"The probability of a new share buy-back is much lower, but PT can strengthen its remuneration to shareholders through a dividend, and ... it can be a substantial increase," said Rui Cesario Pereira, an analyst at Espirito Santo Research.
A dividend of 30 cents would insure a dividend yield of 3.6 percent against 2.6 percent for dividends granted in 2003.
Shares of PT were at 8.45, up 1.56 percent, at 1210 GMT.
PT has a share buy-back program of 10 percent of capital that concludes at the end of the year.
Between acquired assets and equity swaps, PT is assured of between 7 and 8 percent of capital, analysts said.
Last June, PT said it had a total of 6.5 percent of capital.
Brasilcel intends to launch cash tender offers for Tele Sudeste Celular Participacoes, Tele Leste Celular Participacoes and Celular CRT Participacoes.
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