UPDATE 2-Deutsche Telekom sticks to dividend plan

Thu Nov 8, 2012 8:45am EST

* Q3 adj EBITDA 4.78 bln euros vs 4.67 bln poll

* Still sees 2012 adj EBITDA at around 18 bln euros

* Keeps 2012 dividend outlook of at least 0.70 eur/shr

* Shares up 0.2 pct, in-line with sector

By Harro Ten Wolde

FRANKFURT, Nov 8 (Reuters) - Deutsche Telekom bucked a trend among Europe's telecoms companies by keeping its dividend plan for 2012 on track after better-than-expected third quarter results.

But Germany's biggest telecoms firm left investors to wait and see whether it would maintain its dividend next year. Peers such as Telefonica, France Telecom, KPN and Telekom Austria have already cut or scrapped dividends.

Dividends are a focus for investors in Europe's telecoms firms, which face falling prices, greater pressure from regulators and a drop in the use of highly profitable text messaging as people use internet applications instead.

Chief Executive Rene Obermann said Deutsche Telekom would present its dividend plan at investor days on Dec. 6-7.

"It's a delicate process, which involves our future investment plans in Europe and in the United States," Obermann told reporters on Thursday.

Financial chief Tim Hoettges pointed to the fact Deutsche Telekom had kept its promise to pay an annual dividend of at least 0.70 euros ($0.89) per share between 2010 and 2012 and said he wanted to keep a solid track record.

But he declined to give further details.

Analysts are positioning for a drop. On average, they expect a 2013 dividend payment of 0.61 euros per share or a 12 percent cut from this year, according to a Reuters poll.

In the past month, analysts have lowered their dividend estimates for next year by an average of 14 percent, according to Thomson Reuters StarMine.

Bonn-based Deutsche Telekom faces four years of costly integration in the United States and the expense of a push for faster networks in Germany.

"We are concerned over free cash flow and dividend risk not only from capex in German fixed but also commercial investments in Germany and the U.S.," said Ulrich Rathe, an analyst at Jefferies.

Deutsche Telekom took a 7.4 billion euro ($9.4 billion) impairment charge for its T-Mobile USA unit, which it plans to merge with smaller rival MetroPCS.

That pushed it to a 6.9 billion euro third-quarter net loss.

Third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA), excluding special items, were down 2.6 percent at 4.78 billion euros ($6.1 billion), but that beat the average forecast of 4.67 billion euros in a Reuters poll.

Deutsche Telekom shares were up 0.2 percent by 1335 GMT, in line with the sector. They are down 4 percent this year compared to 8 percent for the sector.

Its shares trade at a 12-month forward dividend yield of 7.1 percent, down from a current 8.2 percent. That compares to 3.5 percent for KPN, 5.4 for Telefonica and 9.5 percent for France Telecom.

Deutsche Telekom kept its outlook for 2012 EBITDA, excluding special items, to ease to around 18 billion euros from 18.7 billion last year and free cash flow of around 6 billion.

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