UPDATE 1-Telefonica Czech plans fresh share buyback, smaller payout

Wed Feb 27, 2013 7:01am EST

* Buyback seen completed by year-end

* Plans shareholder return of CZK 30/share (Adds background, analyst)

PRAGUE Feb 27 (Reuters) - Telefonica Czech Republic is planning to restart a share buyback programme but will give shareholders a 25 percent lower remuneration than last year as profits drop, the company said on Wednesday.

The Czech unit of Spain's Telefonica has been facing slowing earnings on a gradual decline of fixed-line business and prices for mobile services, but has low debt and strong cash flow.

The firm said it would buy back up to 2 percent of its stock. It completed a previous buyback in November last year.

The company said it would also remunerate shareholders through a 20 crown per share dividend for 2012, and would also return another 10 crowns via an accounting measure based on the difference between the par value of its shares and their price at issuance.

The company carried out similar measures last year when it paid a 27 crown dividend and another 13 crowns per share which came from a reduction in the firm's registered capital.

Analysts at bank J&T said in a note the dividend could be a disappointment to some investors, which could lead to some selling pressure on the stock. "But this pressure should not be strong given the gross dividend yield of around 10 percent," they added.

The telecom company also said on Wednesday fourth-quarter net profit fell to 1.77 billion crowns from 2.87 billion the year before, hit by falling fixed-line and mobile revenue but in line with expectations.

The year-on-year comparison was skewed by a 709 million crown gain from deferred tax booked in the fourth quarter last year.

Revenue fell 4.7 percent to 12.78 billion, just above the average estimate of 12.70 billion in a Reuters poll.

The company said it expected a small drop in OIBDA margin in 2013 and capital expenditure of below 6 billion crowns.

Its shares rose 0.3 percent to 317 crowns by late morning, in line with the PX index.

The group said it planned to complete the new buyback by the end of 2013, depending on market conditions. (Reporting by Jason Hovet and Jana Mlcochova; Editing by David Holmes)