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T-Mobile US to pay $19 billion in dividends, buybacks

T-Mobile US announced a second tranche of its shareholder return program of up to 19 billion U.S. dollars for the period from the fourth quarter of 2023 to the end of 2024. Under the program, T-Mobile US announced the intention to declare and pay dividends of around 3.75 billion U.S. dollars in total to be paid out on a quarterly basis from October 1, 2023, to December 31, 2024. The amount available for repurchases of shares of T-Mobile US will be reduced by the amount of any cash dividends declared and paid by T-Mobile US.

Beside this, Deutsche Telekom plans to sell a portion of its T-Mobile US shares on the market beginning in 2024, without jeopardizing its own majority ownership position in T-Mobile US. The precise number of T Mobile US shares that Deutsche Telekom plans to sell is yet to be decided.

The first quarterly dividend from T-Mobile US of around 750 million U.S. dollars is set to be paid in the fourth quarter of 2023. In total, Deutsche Telekom expects to receive around 1.8 billion U.S. dollars after taxes in dividend payments over the next five quarters. T-Mobile intends to increase the dividend per share by around 10 percent annually.

In mid-July 2023, Deutsche Telekom held an equity interest of 51.4 percent in T-Mobile US. The stake has grown over recent quarters because Deutsche Telekom did not sell any of the shares from its portfolio during the first tranche of T-Mobile US’s shareholder return program in which T-Mobile US announced it would buy back shares for a total of 14 billion U.S. dollars from October 1, 2022 to September 30, 2023. As such, Deutsche Telekom remains on course for a sustainable and stable majority in its U.S. subsidiary, allowing Deutsche Telekom to maintain its majority equity stake in T-Mobile US if new shares of T-Mobile US are issued to Softbank in Japan, which had been agreed as part of the merger with Sprint in the event of the T-Mobile US share price achieving a certain defined price (true-up).

Deutsche Telekom confirms the statements made at its 2021 Capital Markets Day. As such there is no change to the dividend policy. Recurring adjusted earnings per share remains key. 40 to 60 percent of this is to be paid out to shareholders, with a minimum dividend of 60 eurocents per share. A return to the comfort zone for the debt corridor – the ratio of net debt to adjusted EBITDA of 2.25 to 2.75 – is expected by the end of 2024.

CT Bureau

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