* To raise 2012/13 dividend to 2.50 euro/shr from 1.50
* Traders see as move to ward off possible Vodafone bid
* Q3 adj EBITDA 220.3 mln euros vs 219 mln expected
* Keeps 2012/13 outlook
* Shares rise 2.5 pct, outperform sector
(Rewrites first paragraph, adds fund manager comment, detail,
By Harro Ten Wolde and Arno Schuetze
FRANKFURT, Feb 20 Kabel Deutschland
is to hike its dividend 67 percent in a move which some traders
and investors saw as a first defensive jab to ward off a
possible 10 billion euros ($13.4 billion) bid from Vodafone
Germany's biggest cable operator said it would raise its
payout to 2.50 euros a share for the year through March from
1.50 euros a year before, after the failure of its 618 million
euros ($825 million) attempt to buy local rival Tele Columbus
left it with surplus cash.
"This seems the first poison pill to avert a Vodafone
takeover," a Frankfurt-based trader said on Wednesday. "The
takeover battle has started."
Kabel Deutschland's success in the German broadband market
has caught the attention of Vodafone, the biggest mobile
operator in Germany, and the UK-based company has hired Goldman
Sachs to advise on its options, a person with direct
knowledge of the matter told Reuters on Tuesday.
Vodafone needs to expand into more profitable areas such as
cable as it faces a squeeze between low-cost mobile challengers
and telecom and cable rivals who are increasingly pushing
discounted, all-included bundles of mobile and other services.
A spokesman for Vodafone declined comment.
The German group said it would pay a total dividend of
around 220 million euros after its shareholders meeting in
October. It also said it would invest an extra 300 million euros
in the next two years in its network.
Some said its plan to spend the cash from the aborted Tele
Columbus deal as quickly as possible could be a means to drive
up its share price and make a bid less attractive for Vodafone.
"This could be the first step in a defence strategy," said
fund manager Andreas Mark at Union Investment, which has 0.11
percent of Kabel Deutschland shares.
RAISE THE BAR
Mark noted that after the dividend hike, Kabel Deutschland
shares would offer a yield of 3.7 percent.
"They have given a clear signal," he said.
The shares currently offer a yield of 2.2 percent, according
to Reuters StarMine data.
Kabel Deutschland shares were 2.5 percent higher at 69.05
euros at 1345 GMT, at the top of a 0.1 percent weaker sector
index. The company has an enterprise value including
debt of around 8 billion euros and some analysts estimate
Vodafone would have to stump up around 10 billion to secuure
"I think they (Kabel Deutschland) have to raise capex
(capital spending) to keep growth going," said Robin
Bienenstock, an analyst at brokerage Sanford C Bernstein. "But
it does also raise the bar for Vodafone and Liberty Global," she
added, referring to its main domestic rival.
Liberty Global's Unity Media brand and Kabel
Deutschland hold about 13 percent of the German broadband market
and have been winning customers with cheaper prices and higher
speeds from Deutsche Telekom, which still has 40
percent of the market.
Kabel Deutschland Chief Financial Officer Andreas Siemen
declined to comment on whether there has been any contact
between the companies regarding a deal.
Asked whether the dividend hike was a defensive move against
a potential offer, a Kabel Deutschland spokeswoman said only
that the increase was facilitated by the company's improving
results and the failure of the Tele Columbus bid.
Kabel Deutschland also on Wednesday posted a 10 percent rise
to 220 million euros in earnings before interest, taxes,
depreciation and amortization (EBITDA), excluding special items,
for the three months ended Dec. 31.
That was at the high end of analyst expectations in a
Reuters poll, which ranged from 217 million to 222 million.
Kabel Deutschland said it still aimws to increase sales in
the current fiscal year by between 7.5 percent and 8.5 percent
and expects yearly adjusted EBITDA of between 855 million and
870 million euros.
($1 = 0.7487 euros)
(Editing by Hans-Juergen Peters and David Holmes)