Telefónica plans to cut its dividend as part of a new strategic plan that will take place on November 4, as people familiar with the matter have informed Bloomberg. The Spanish operator is one of the European telecommunications operators and its new policy aims to align itself with its competitors, according to various sources informed Bloomberg.
The change also seeks to strengthen the balance sheet, free up cash for investments and send a signal of commitment to financial discipline, the same sources added.
Under the plan, Telefónica’s dividend yield target will drop from an estimated 6.6% for 2025 and 2026 to around 4.8% for this year and around 5.2% for next, which is the estimated average for the sector according to the company’s internal calculations, according to sources. The plan has been discussed with major shareholders, they said. A Telefónica spokesman declined to comment.
CEO Marc Murtra is betting that the new strategy will drive growth and position Telefónica to play a central role in the consolidation of European telecommunications. The cut represents a radical break with tradition for a company that has always prided itself on its large payments. The former Spanish telephone monopoly has only reduced its dividend three times in the last three decades: a cut in 1998, a one-year suspension in 2012 and a temporary cut in 2020.
