Deutsche Telekom expects steady dividend hikes

FRANKFURT:DeutscheTelekom will keep to its promise of hiking dividends in 2018 and the years thereafter, its chief financial officer Thomas Dannenfeldt told German daily Boersen-Zeitung.

“I am very confident that we will be able to stick to our promises, in particular with respect to the planned increase of our free cash flow by about 10 per cent and the according dividend policy”, he was quoted as saying.

“I see no reason to deviate from (our planning) in 2018,” he said, adding that investors should expect continuous growth of capital expenditure, sales, earnings and dividends.

Deutsche Telekom has said in the past that it expects a 12 per cent increase in 2017 free cash flow - the money available for dividend payments - with a corresponding dividend hike.

While Germany’s largest telecoms provider is benefiting from a strong US business and a rebound of its European operations it will also get a boost from US tax cuts. “Our earnings after minorities will rise by a relevant three-digit million euro amount annually”, Dannenfeldt said.

The company scrapped plans to merge T-Mobile US with Sprint in November, but Deutsche Telekom was “not dogmatic about the subject”, he added.

“If someone were to come now and offered, say, US$120 a share, all cash, then we would have to think about it,” he said.

T-Mobile’s shares closed at US$63.71 on Friday, compared to an all-time high of US$68.40 reached in May.

With respect to its operations in the Netherlands, where Deutsche Telekom acquired a business from Sweden’s Tele2 in December, a stock market flotation of the combined business is possible, Dannenfeldt told the paper.

“But first, we need a nod for our deal from Brussels (...) Then we need to integrate the business, and that will take one to 1.5 years.”