(Adds company, broker comments, shares)
MILAN Feb 20 Italian power grid company Terna
pledged on Monday to spend 30 percent more on
modernising its domestic network over the next five years to
help boost earnings and grow dividends.
State-controlled Terna said it would invest around 4 billion
euros ($4.3 billion) to 2021 to strengthen the grid to deal with
more renewable power and build interconnection with other
countries such as Montenegro, France and Austria.
Terna, one of Europe's biggest power grid players, makes
most of its money from returns set by the regulator designed to
improve its domestic transmission business.
The boom in green energy with its intermittent output and
the fall in traditional more centralised thermal production has
prompted Terna, like other European transmission operators, to
invest more in digital technology and storage systems.
Such investments command fatter returns, fueling earnings
and dividend payments.
Terna, which counts State Grid of China as one of its
largest shareholders, said it was extending out to 2021 its
current policy of growing dividends by an annual 3 percent.
"We see the commitment to 3 percent annual dividend growth
through to 2021 as an additional positive," London broker
At 1515 GMT, Terna shares were up 1 percent while the
European utility index was up 0.2 percent.
But Terna is also looking at non-regulated businesses like
broadband and solar power projects to top up profits as well as
running transmission operations outside Italy in places such as
Brazil and Uruguay.
The company, which runs around 64,000 kilometres of power
lines in Italy, said it expected core earnings to reach around
1.7 billion euros in 2021 from 1.58 billion euros this year.
Non-regulated business will contribute around 350 million
euros to earnings before interest, tax, deprecation and
amortisation (EBITDA) over the period, it said.
($1 = 0.9418 euros)
(Reporting by Stephen Jewkes; Editing by Mark Potter)