mmO2 announces first dividend payout
Mobile phone group mmO2 cheered investors today with news that it intends to pay a maiden dividend next year.
Directors said the move reflected the transformation of its operational and financial performance since its split from British Telecom three years ago.
This progress was underlined today by a 23% jump in revenues to £3.29bn (€4.7bn) during the six months to September 30, which was ahead of market expectations.
In the UK, turnover was up 23% at £2.04bn (€2.91bn) in spite of a cut in termination rates – the price that mobile firms charge each other and landline operators for putting calls through to their customers.
With more higher-spending business customers attracted to the business, mmO2 today raised its guidance for UK revenues.
Growth in UK turnover over the full year was now expected to be between 12% to 15% – better than the company’s previous guidance of between 9% and 12%.
The upgrade came after mmO2 added 15% more customers to its businesses in the UK, Germany and Ireland during the six months to give it a total base of 22 million users.
Underlying earnings in the six months to September 30 also beat market forecasts, rising to £851m (€1.2bn) from a mark of £621m (€887m) last year. Net debt was slashed by nearly a third to £236m (€337m).
Chairman David Arculus said mmO2 had not expected to reward investors with dividends so soon, but the business had traded ahead of expectations over the past three years.
He said: “The group has delivered earnings growth and positive cash-flow, and we believe strongly that shareholders should benefit directly from this.”
Analysts expect mmO2 to pay between 1p and 2.54p a share for the full year, which would represent a windfall for around 800,000 small shareholders who were awarded stock because they held BT shares at the time of the demerger.
However, the company must first seek court approval for a corporate reorganisation to create reserves that can be used to fund the dividends.
