(Adds more detail, company comment)
WARSAW, Oct 21 (Reuters) - Poland’s largest telecom operator Orange Polska said it might cut its dividend by half in 2016 after it agreed to pay the equivalent of nearly all its 2014 core profit for new mobile broadband frequencies.
The French Orange’s unit said in its third quarter results statement that it might offer a payout of 0.25 zlotys per share in 2016, compared to the 0.50-zloty dividend it paid this year.
The firm said on Monday it would pay 3.2 billion zlotys ($848 million) for new 4G frequencies in an auction which fetched 9.23 billion zlotys for state coffers, well above what the government had anticipated.
The cost equals 82 percent of Orange Polska’s 2014 EBITDA.
Analysts had expected the telecom to cut dividends to pay for the frequencies after the result of the auction was revealed.
“Including payment for spectrum, we expect net debt-to-EBITDA ratio at the end of 2015 to be at around 1.9-2.0 times, above our self-imposed target of 1.5 times,” Orange Polska chief financial officer Maciej Nowohonski said in a statement.
“We will work on the structure of our balance sheet, deleveraging opportunities and options regarding efficiency improvement. These elements will be announced in February 2016,” he added.
The group said its third-quarter net profit fell by a lower than expected 21 percent year-on-year to 110 million zlotys, coming in slightly above analysts expectations of 104 million.
The group’s revenue for the period fell by 2.4 percent to 2.97 billion zlotys and beat market consensus of 2.95 billion.
The telecom confirmed its 2015 cash flow guidance of around 900 million zlotys excluding acquisitions, after generating 833 million by the end of September. ($1 = 3.7742 zlotys) (Reporting by Adrian Krajewski; Editing by Elaine Hardcastle)