VODAFONE will finally see the benefit of its investment in Verizon Wireless in January, it emerged yesterday, when it will be paid its share of a $10bn (£6.1bn) dividend from the US telecoms operator.
Verizon Wireless, the biggest mobile operator in the US, said it would pay the dividend to its co-owners Vodafone and Verizon Communications on 31 January, giving Vodafone a £2.8bn total payout from its 45 per cent stake.
The move will enable Vodafone to pay its own investors a £2bn windfall after using £800m to repay debt.
The news should ease pressure on Vodafone’s chief executive Vittorio Colao from shareholders, who called for it to sell out of the joint venture rather than wait for it to yield cash.
Verizon has not paid a dividend since 2006 as it has chosen to pay off a large debt burden, but had said it intended to restart payments next year when the debt was repaid. Its chief operating officer Lowell McAdam told investors in January the company would decide by the end of the year whether to issue a dividend.
Verizon Wireless has been a phenomenal growth story over recent years and now has nearly 90m US retail customers on its wireless 3G and 4G networks, but has generated limited cash for its investors.
That has left Vodafone’s dividend yield lower than its major competitors, at six per cent compared with O2 parent company Telefonica on up to 9.8 per cent. Vodafone shares are expected to soar today.