FRANKFURT, March 16 Telecoms operator Telefonica Deutschland is looking into a possible bond issue to finance its debt more cheaply following its spin-off from Spanish parent Telefonica last year, its finance chief told a German newspaper.
Rachel Empey said a bond was "a possibility that we are investigating". She added in comments published by the Boersen-Zeitung on Saturday that the company might completely switch to bond financing.
Telefonica Deutschland, the smallest of Germany's four carriers, had net debt of 842 million euros ($1.1 billion) at the end of 2012, 0.7 times its operating income before depreciation and amortisation (OIBDA).
Chief Executive Rene Schuster said in the same interview that Telefonica Deutschland was sticking to its goal of raising its dividend over the coming years - it will pay out about 500 million euros for 2012 - but declined to be more specific, saying the company had to be flexible.
He said the company had felt sharper competition since the start of the year and a change in user behaviour as customers used Internet voice and text services on their data packages instead of making traditional voice calls and sending SMS texts.
Telefonica Deutschland, which operates under the O2 brand, has reacted by shaking up its mobile packages, offering phone and text services for free since the start of this month in combination with data packages costing 19.99-49.99 euros per month.
Schuster said the company was "doubtless early to the game, perhaps a bit too early, but better than being too late". He said he expected positive effects from the switch by the summer.
Telefonica Deutschland has seen its wireless sales growth consistently slowing - to 3.6 percent in the fourth quarter - as customers made fewer calls but spent more time online on smartphones and tablets. ($1 = 0.7654 euros) (Reporting by Georgina Prodhan in Vienna, Editing by Mark Trevelyan)