Vodafone gets dividend from Verizon venture

 
City A.M. Reporter
VODAFONE will finally get its dividend payout from Verizon Wireless, after its US partner said last night that its board has agreed to dole out a bigger-than-expected $8.5bn (£5.4bn).

The announcement follows months of investor speculation as to whether Verizon Wireless, which is controlled by Verizon Communications, would choose to pay a dividend this year.

In the past the dividend has been a bone of contention for Vodafone shareholders, anxious to get a return on their ownership in the top US wireless service.

The standoff had 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.

Verizon Wireless, which is 55 per cent owned by Verizon and 45 per cent owned by Vodafone, said the distributions would be paid in one or more tranches, with each tranche paid in proportion to the owner’' partnership interests.

The payout compared with a $10bn dividend announced by the company in July 2011. The dividends are due to be paid on or before 31 December, Verizon Wireless said.

Verizon had suspended the dividend from 2005 until 2011 while it focused on paying down debt at Verizon Wireless.

Last month, Verizon Wireless posted strong third quarter results, with earnings up 17 per cent, raising hopes that a bumper dividend was around the corner.

Verizon Communications chief Lowell McAdam had been taciturn about the prospect of a payout, however.

FTSE 100-listed Vodafone shares closed 0.6 per cent lower at 166.6p yesterday.