STOCKHOLM (Reuters) - Telecom operator Tele2 TEL2b.ST on Tuesday withdrew its financial guidance for 2020 and put plans for a special dividend payout to shareholders on hold due to the global coronavirus pandemic, sending its shares down 7%.
The Swedish company, which had previously targeted low single-digit growth of end-user service revenue and mid-single-digit growth of its underlying core profit said its focus for the year had now shifted to cost control.
“We don’t think the preconditions are there to grow our revenues this year,” CEO Anders Nilsson told Reuters.
“And due to that we have changed focus to now focus at defending our earnings from last year.”
First-quarter underlying earnings before interest, tax, depreciation and amortization, including costs for leased assets were 2.24 billion Swedish crowns ($223 million), in line with 2.25 billion crowns in the year-earlier quarter.
That was below the 2.32 billion mean analyst estimate, according to a consensus forecast compiled by the company.
“The withdrawal of guidance in our view is somewhat disappointing, given that telcos are meant to the bastion of stability and visibility of earnings,” JP Morgan analysts said in a research note.
Tele2 also said its board had decided to suspend a proposed extraordinary dividend payment of 3.5 crowns per share set for May, saying it was “prudent to maintain a financial buffer” given the lack of clarity of the virus outbreak effects.
Nilsson said that move was purely a precautionary measure.
The proposal for an ordinary dividend of 5.50 crowns per share to be put to the annual general meeting in May remained unchanged, the rival of Sweden's Telia TELIA.ST said.
Reporting by Johannes Hellstrom; Editing by Simon Johnson and Niklas Pollard
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