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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (11998)	6/29/2012 2:23:27 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 34328

Any opinions on PT, Portugal Telecom? Div yield 16% today, but no guarantees for tomorrow. Dividend has been very variable, ranging from $0.28 to $1.31; paid twice a year; ex-div May 22, Dec. 29. stock troughed at $3.63 in 2008, peaked at $12.35 in 2010, now at $4.42 market cap $4B cash + ST inv. $5.32B debt LT $14.6B interest expense about $300M/year PE 9.4 P/S 0.4 (lowest in the last 10 years) book value per share: $5.16 assets total 28B$ sales ttm $9.5B shares out have steadily declined from 1,250M in 2004 to 897M now PT has a monopoly in Portugal; 45% of revenues are from Brazil and Africa; also in China. PT owns 15.5% of Oi (Brazilian, largest telecom in Latin America), and will be getting 170M$/y dividends from them. The company's activity covers every segment of the telecommunications sector: fixed, mobile, multimedia, data and corporate solutions. PT also distributes television programming over the Internet. The last time PT has had access to the bond markets was in the beginning of 2011. Although it's unclear at this point when the credit markets will lend again to Portuguese companies, PT has the advantage of having a bank (Banco Espirito Santo) as one of its main shareholders. In case of financial stress, BES ( BKESY.PK) will most likely support PT because the bank sees this stake as strategic. seekingalpha.com from 1Q12 conf. call: With regard to our debt, our cost of gross debt was 4.6%....average maturities now stand at 5.3 years.... That compares to 4.2% in the first quarter 2011. The liquidity position excluding the consolidation of Oi and Contax in Brazil and including cash, underwritten commercial paper lines and facilities was €3.4 billion as at 31st March 2012.... ...we are confident about the financial flexibility that we have in our balance sheet. We are fully funded until the end of 2013. International businesses now represent 50% of Portugal Telecom’s revenues. ...we will adjust, if we have to, our CapEx to defend cash flow in the future. As we said on our last call with regards to future shareholder remuneration strategy, it will be discussed in due course at our board. Whilst we continue to believe that our cash flow underpins flexibility to pay the dividends in line with the guidance we provided, we look with frustration at our low share price and resulting high yield offered by our shares. So, once the board has reviewed the matter, we will report back to you immediately. seekingalpha.com my comments: What they said about the dividend, on the conf. call, sounds like they will cut it. Obviously, European sovereign default risk, and the possibility of PT not being able to roll over debt, are the reasons this stock has been hammered into the ground. However, in spite of the word "Portugal" in its name, it is really a multinational, with large interests in growing countries who are at zero default risk. And, even if the Portugese government defaults (worse-case scenario), PT has ample cash and profits to meet debt payments. If there are sovereign defaults, PT will probably have to sharply reduce capex (currently running at 15% of revenues) and dividends, for year or two. Looking at the numbers, I see bankruptcy risk for PT as near-zero (am I'm missing something?). disclosure: no position yet; I'll probably wait until they cut the dividend, then reconsider. seekingalpha.com seekingalpha.com ycharts.com dividend.com