PARIS, June 5 (Reuters) - France Telecom’s shareholders on Tuesday rejected a resolution advocated by some of its employee shareholders that would have cut its dividend by nearly 30 percent.
Some 93 percent of shareholders at its annual investors’ meeting voted in favor of a proposal by France Telecom’s board to keep the dividend at its current level of 1.40 euros a share.
Other European telecoms operators such as Telecom Italia , Vivendi and Telefonica have recently scaled back their dividend payouts to counter a negative mix of economic recession, competition and costly network upgrades in their mature home markets.
One company union that favored a cut in the payout blamed the recently inaugurated government of Socialist President Francois Hollande for the vote, given that the government is the company’s largest single shareholder with about a 27 percent stake, including shares hold by sovereign wealth fund FSI.
“By refusing to lower the dividend to 1 euro as the employees wanted, the government has committed its first political error of its new term,” the main France Telecom union said in a statement.
The government would have surrendered 145 million euros ($180.73 million) in dividend payout if the proposed reduction had gone through, according to union estimates.
France Telecom, which like other incumbent operators has been slammed by low-price competition from upstart rival Iliad’s Free cellular brand, said it would almost certainly cut its dividend for 2012 and 2013.
Earlier during the shareholder meeting, France Telecom Chief Executive Stephane Richard played down the possibility that the company would enter an already crowded Brazilian telecoms market.
He also said he viewed some degree of consolidation in an intensely competitive European market as “inevitable.” ($1 = 0.8023 euros) (Reporting By Gwenaelle Barzic; editing by Gunna Dickson)