Vodafone boosted by improved chance of payout from Verizon

VODAFONE is a lot more confident of a healthy payout from the telecoms company’s stake in US mobile operator Verizon Wireless (VZW) after figures showed VZW to be in ruder health than expected.

Thursday’s release of results from VZW majority owner Verizon Communications showed that VZW significantly outperformed the parent company. Sources say this raises the prospect that VZW will have to pay dividends in order to fund Verizon Communications’ promises to increase pension contributions this year.

Verizon Communications chief Lowell McAdam said a dividend may be discussed with Vodafone before the end of the year.

VZW, which is 45 per cent owned by Vodafone and majority controlled by Verizon Communications, has been a source of tension between the two companies. McAdam signed off a healthy payout last year but has refused to commit to a regular dividend from the joint venture.

“[Verizon’s] pension contribution places further pressure on the company to upstream cash from VZW,” Espirito Santo analysts said.