Orange (ORAN.PA), France’s biggest telecoms operator, said on Friday it would cut its dividend for the 2019 financial year by 30% and that it would review dividend policy for the 2020-2023 period in the wake of the coronavirus outbreak.
State-controlled Orange’s move aims to protect the company’s balance sheet when investors are looking closely at companies’ cash resources as the world economy is facing recession.
It also comes amid heightened political pressure, with calls from the French government to limit or cancel dividend payments, especially companies that benefit from some state-supported schemes.
Orange now plans to pay 0.50 euro per share for 2019, a 20 euro cents decrease compared to the previously expected payment of 0.70 euro per share.
The Paris-based group had also previously said it would pay at least the same amount over the 2020-2023 period.
This represents a total reduction of 530 million euros ($576 million) in dividends for 2019, bringing the total payment for that year to 1.33 billion, Chief Financial Officer Ramon Fernandez told reporters on a call.
“Based on currently available information , Orange does not expect a significant deviation from its 2020 objectives, but we are closely monitoring the situation and its developments,” Orange’s Chief Executive Stephane Richard said in written comments.
Orange said earlier this year that it planned to have “flat positive” core operating profit for the 2020 financial year, as well as an organic cash flow of more than 2.3 billion euros for its telecom activities.
French companies that make use of state financial support to see them through the coronavirus crisis must scrap dividend payments to their shareholders, the government said last month.
“If you do not have the cash to pay tax or social security charges, then you also don’t have cash to pay your shareholders, so don’t pay a dividend,” French Finance Minister Bruno Le Maire said at the time.