(Telecompaper) Portugal Telecom announced a sharp reduction in its proposed annual dividend for 2013 and 2014 to EUR 0.10 per share. The company already halved its dividend last year, to EUR 0.325 per share. PT said it remains confident about cash flow generation, but given the weak economy, financial market conditions and the need to invest in the business, it decided to take a more prudent stance on the dividend policy. It added that its balance sheet remains strong, following the recent bond issues and the sale of its stake in CTM. The announcement came alongside first-half results showing operating cash flow (EBITDA minus capex) down 32 percent from a year earlier to EUR 421 million, as EBITDA on the Portuguese market declines and capex requirements increase at its Brazilian affiliate Oi. Free cash flow for the period was a negative EUR 16 million, and adjusted net debt was at 3.6 times estimated EBITDA, up from 3.3 a year ago.