The TPG Telecom Ltd (ASX: TPM) share price is dropping lower on Friday despite making an announcement this morning.
At the time of writing the telecommunications company's shares are down almost 3% to $7.83.
What did TPG Telecom announce?
Last month when the telecommunications company released an update on its proposed merger with Vodafone Australia, it revealed plans to pay shareholders a fully franked cash special dividend prior to the completion of the merger.
At that point the company wasn't able to say how much it would be paying to investors. But that has changed today, with the company revealing the quantum of the dividend it plans to pay if the merger goes ahead as planned.
According to the release, TPG Telecom plans to pay a fully franked special dividend in the range of 49 cents per share to 52 cents per share. While this equates to a generous 6.1% to 6.45% dividend yield based on its last close price, it has fallen short of expectations.
Goldman Sachs was forecasting a 67 cents per share special dividend, while UBS had suggested a dividend no lower than 60 cents per share would be declared.
Investors that own shares on the record date of 1 July 2020 will be eligible to receive this dividend, which will be paid at a yet to be determined date prior to the implementation of the merger.
What now?
TPG Telecom will be holding a scheme meeting and extraordinary general meeting on 24 June 2020.
At this meeting, which will be held online because of the pandemic, shareholders will be voting on its proposed merger with Vodafone Australia.
Though, this vote looks to be a formality. The market appears to universally see the merger as the best way for the two telcos to take on industry giant Telstra Corporation Ltd (ASX: TLS).
