Once a must-have in any income investor’s portfolio, payouts from telecom companies have withered away over the past few years. Vodafone (VOD) was among the first to buckle in 2019, slashing shareholder returns by nearly half. Then in 2020, BT (BT.A) suspended its annual dividend for the first time in 36 years. Elsewhere on the continent, Orange (FR:ORA), Deutsche Telekom (GR:DTE) and Telefonica (SP:TEF) have all cut their dividends in the past 18 months.
Most of these companies are scrambling to shore up as much cash as possible, as the cost of building out 5G networks strains their balance sheets. At Vodafone, soaring spectrum costs have narrowed its dividend cover and a huge debt pile has long cast a shadow over its ability to deliver income.