Vodafone Cuts Dividend as Revenue Falls and Spectrum Costs Loom

Vodafone’s dividend has cracked under the strain of falling revenue, soaring spectrum costs and a $21 billion acquisition, according to Bloomberg.

The region’s biggest telecom carrier slashed its full-year dividend by 40% to 9 euro cents per share, reversing CEO Nick Read’s goal to keep the payout unchanged. It was the first cut since the company introduced dividend payments in 1990.

The move allows Read to conserve cash as sales in major markets come under sustained attack from rivals offering no-frills contracts and former monopolies reasserting themselves with dominant networks. Vodafone is gearing up to spend billions of euros on mobile-network upgrades and the airwaves needed for the 5G network.

The measure strips out the impact of merger and acquisition activity and currency fluctuations to present performance on a comparable basis. Vodafone cut the dividend because of lower revenue forecasts, costly auctions of mobile spectrum and risks such as global trade tensions and Brexit, Read told reporters on a call. “There could be further downsides ahead of us“ and “on that basis you want to make sure you have sufficient headroom,“ he said.