Berliner Tageblatt - Spain's Telefonica shares drop on dividend cut, net loss

The company booked a net loss of 1.08 billion euros ($1.2 billion) between January and September, compared with a profit of 954 million euros during the same period last year, weighed down by losses linked to asset sales in Latin America.

Net profit in the third quarter fell to a lower-than-expected 217 million euros from 493 million euros in the same period last year due to one-off impairment charges on its Telefonica Tech unit, the company said in a statement.

Telefonica said it would cut its dividend by half next year to 15 cents per share as part of a new five-year strategic plan as it seeks to reduce its debt.

The company said it expects to achieve up to 2.3 billion euros in savings in 2028, and 3.0 billion euros by 2030, through "streamlined processes, digital transformation, and the sale of legacy network assets".

Shares in Telefonica fell more than 10 percent on the Madrid stock exchange to 3.83 euros around midday (1100 GMT) as investors digested the details of the new strategic plan and latest results.

"Telefonica's results continue to point to a weak business environment in a highly competitive sector, with limited short-term catalysts for a turnaround," Javier Cabrera, analyst at trading platform XTB, wrote in a note.

"Telefonica's underperformance is not solely a reflection of the company itself, but also of the broader European telecom landscape."

The dividend cut was hurting the company's share price but is a "necessary step" as it will "alleviate a significant financial burden" and free up funds than can be used to grow the business, Cabrera said.

Spanish media have reported the group is considering cutting at least 6,000 jobs as part of its restructuring, but the strategic plan made no mention of staff reductions.

The company has been refocusing its operations on its four key markets -- Brazil, Germany, Spain, and the United Kingdom -- and employs approximately 100,000 people worldwide.

The shake-up marks a pivotal moment for Telefonica, which has been the subject of strategic manoeuvring since Saudi telecoms group STC unexpectedly took a 9.9 percent stake in September 2023.

The Spanish government responded by acquiring a 10 percent stake through state-owned holding company SEPI.

M.Furrer--BTB