Along the right lines

10 October 2003

Some investors wanted a bigger buyback; this one won’t eliminate acquisition risk at the Spanish telecoms group. But Telefonica’s shareholder returns are pretty good given the risks to its cashflow. And there is scope for them to rise.

This content is for Subscribers only

Context News

Telefonica said on Friday it would buy back an additional E4bn of its own shares by the end of 2006. That is equivalent to about 7.5% of its equity capital.

The buyback comes on top of Telefonica's commitment to pay an annual dividend of E0.40 per share over the 20032006 timescale. That puts the stock on a dividend yield of about 3.9%.

Telefonica forecast that it would generate more than E27bn of cumulative free cashflow over the years 2003 to 2006.

Of this, at least E11.4bn has been designated to be returned to shareholders. A further E7.9bn is described as solvency protection to help the company keep its singleA credit rating. The balance, E7.7bn, is earmarked for the longterm expansion of the business and financial flexibility.

Email a friend

Please complete the form below.

Required fields *