UPDATE 2-Shares in Poland's TPSA hit 9-yr low as outlook slashed

Wed Oct 17, 2012 5:50am EDT

* Telecoms operator sees 2012 revenue down 4-5 percent

* France Telecom unit to propose dividend of 1 zloty/share

* Cuts free cash flow target to 1.5-1.6 bln zlotys

* To spend 400 mln zlotys meant for buyback on frequencies (Rewrites throughout, adds fund manager, shares)

By Pawel Bernat and Chris Borowski

WARSAW, Oct 17 (Reuters) - Poland's top telecoms group TPSA slashed its outlook for this year because of intense competition from other mobile operators and an economic slowdown, dragging its shares to lows unseen in more than nine years.

Shares in TPSA shed more than a fifth of their value on Wednesday after the Polish unit of France Telecom warned its revenue would shrink by 4-5 percent in 2012, against earlier expectations of no more than 3 percent.

Investors have considered TPSA a defensive stock with a steady dividend, but the company announced a one-third cut in the dividend to 1 zloty per share and said it would stop a share buyback programme to use the remaining 400 million zlotys ($127.4 million) for new mobile network frequencies.

By 0948 GMT the stock was down 19.3 percent to 13.07 zlotys.

"The question is whether 1 zloty per share will be a steady payout level," said Adam Gawlik, fund manager at PZU Asset Management.

"Perhaps the company will still be seen as a safe haven, but at a different share price level with a steady dividend yield."

The former state monopolist has seen revenue fall steadily because of its shrinking fixed line business and regulator-driven cuts in mobile rates, combined with intensifying competition from other operators.

TPSA, which rebranded itself as Orange Polska earlier this year, said it was forced to match unlimited calling and texting plans offered by aggressive competitors, weighing on revenue.

"The group faced a rapid increase in the number of mobile unlimited voice and SMS customers, predominately in the enterprise segment," TPSA said in a statement.

The deteriorating economic outlook has also increased the number of uncollected accounts and pressure on TPSA to pay its bills more quickly, it said.

Because of this, TPSA will fail to meet its target of net free cash flow of at least 2 billion zlotys this year, instead expecting 1.5-1.6 billion zlotys.

Releasing its third-quarter results a week ahead of schedule, the company said its revenue in the July-September period fell 5.5 percent, while its bottom line fell 18.6 percent on an adjusted basis to 307 million zlotys. ($1 = 3.1390 Polish zlotys) (Additional reporting by Maciej Onoszko; Editing by Robin Pomeroy)

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