Vodafone hopes for $5.5b dividend from VZW

Dylan Bushell-Embling
30 Jun 2011

Vodafone hopes to start receiving an annual dividend of $5.5 billion from its 45% stake in Verizon Wireless from next year.

Vodafone has not received a dividend from its joint venture with Verizon since 2005, when Verizon Wireless started withholding the funds to pay down debt.

But Vodafone has been pressing Verizon Wireless to resume payouts once the debt is repaid in 2012, and its CFO toldFT.com that Vodafone is expecting $5.5 billion based on Verizon Wireless' estimated $12 billion in free cash flow.

A dividend of this size would increase Vodafone's free cash flow by almost 50%.

Vodafone and Verizon have been negotiating over the dividend since last year, but have yet to reach a definitive agreement.

CEO Vittorio Colao has hung on to the stake, even though in 2009 he indicated that he was considering selling out - possibly to Verizon – and has since arranged sales of Vodafone's minority holdings in companies including Softbank, China Mobile and SFR.

The thawing relations between Vodafone and Verizon has led to renewed speculation that the two may pursue a “mega merger,” although obstacles including Vodafone's debt burden may make this unlikely.

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