VODAFONE’S relationship with its American partner Verizon Communications was tested yesterday as the UK firm faced further delays over a dividend payout from the two companies’ joint US venture Verizon Wireless (VZW).
The two telecoms firms are set to meet next week at VZW’s latest board meeting, but dividend payouts are set to be off the agenda, and are not likely to be discussed until the next meeting in December.
Verizon Communications – which controls 55 per cent of VZW with Vodafone owning the rest – has not authorised a dividend since the $10bn (£6.2bn) payout that was announced in July last year.
The standoff has become an increasing source of tension, with Vodafone shareholders calling for further payouts at July’s annual meeting and chairman Gerard Kleisterlee admitting that the relationship sometimes meant difficult discussions between the firms. Hopes of a payout were raised last month when America’s justice department cleared VZW’s purchase of extra mobile spectrum, allowing the venture to expand its operations.
Shares fell yesterday as Nomura downgraded Vodafone from a “buy” to a “neutral” recommendation. “Vodafone’s dividend level is unsustainable unless it becomes funded directly from VZW income distributions,” Nomura’s James Britton said.