Nos increases profits. But cuts dividends

  • ECO News
  • 21 February 2020

The telecom operator led by Miguel Almeida increased profits, but revenues grew slightly. The dividends will shrink, but we will give all the results obtained to the shareholders.

Nos increased profits, but revenues grew slightly due to poor adhesion of the premium sports channels. In view of these results, and also from the perspective of the necessary investments in 5G, the company led by Miguel Almeida cut dividends. Even so, it will give all profits to shareholders.

The consolidated net profits in the 12 months of 2019 “reached 143.5 million euros, an increase of 4.2% on 2018,” of 137.8 million, says the company in a statement sent to the Securities Market Commission (CMVM). “EBITDA reached 641.1 million euros, up 2.7%, with the EBITDA margin improving 0.5 percentage points to 40.1%,” driven by the number of services and “significant efficiency gains.”

The positive evolution was also seen in revenues, although in this case the growth was modest. “Revenues registered an increase of 1.5%, with the telecommunications area and the cinema and audiovisual area showing positive evolutions compared to 2018″, says the company led by Miguel Almeida.

“In 2019, Nos recorded total revenues of 1.599 billion euros,” Nos adds, highlighting that “telecommunications revenues reached 1.522 billion euros in this period, 1.1% more than in the previous year, despite the negative impact caused by the reduction in termination rates and the decrease in consumption of premium sports channels.”

“The cinema and audiovisual area recovered in the second and third quarters and slowed down in the fourth quarter. However, considering the whole of 2019, it registered a growth in revenues of 6.5% to 118.8 million euros,” the telecom operator concludes.

More investment, more debt. And less dividends

2019 was a year of growth, but also of “strong investment, particularly in the telecommunications area,” says the company.

Last year, the total Capex reached “374.4 million euros, of which 99.7 million euros were made in the last quarter,” which ended up increasing the company’s debt. “At the end of the period, net financial debt stood at 1,094 million euros, 4.9% more than in 2018, representing 1.9x EBITDA, a conservative ratio compared to the sector’s counterparts.” Despite being “conservative,” the company cut dividends.

“The Board of Directors of Nos. approved a proposed dividend per share of 27.8 euro cents, representing 100% of consolidated net profit generated in 2019 and a dividend yield of 6.2% at the date of this report,” says Nos. Last year, based on 2018 earnings, it paid 35 cents per share.

“Although Nos’ capital structure is still within the 2x net financial debt/EBITDA threshold after leasings, and the robustness of operating and financial performance, the Board of Directors approved a dividend proposal more in line with current limitations around the visibility of the potential operating and financial implications of the terms of the next 5G spectrum auction, which will only be known later this year,” it says in a statement.

“Critical year” but viewed with “absolute confidence”

Miguel Almeida highlights the “important steps in creating the new Nos, in all its fronts, from technology to processes, from environment to diversity, passing naturally, in a very central way, through the relationship with our clients.”

“We have done this by ensuring the continuation of the course of growth and improved profitability that we started six years ago,” the CEO stresses, in the message accompanying the results.

But at the same time as showing pride in the path Nos have taken until the end of 2019, this year the CEO promises to “accelerate the pace of internal transformation”, even anticipating a “critical year on the external front, with several processes that will shape an important part of our future.” A statement immediately followed by criticism of “unjustified and inappropriate regulatory hostility,” referring to Anacom (the national regulatory authority in Portugal for communications).