Vodafone Pushing for More Dividends from Verizon Wireless

­Vodafone's CEO, Vittorio Colao has confirmed that the lack of dividend payments from its 45% stake in the USA's Verizon Wirleess is one of the most important issues on the company agenda.

The Financial Times reported that Vittorio Colao said: "We need to solve the US situation." He was speaking at a Morgan Stanley investor conference in Barcelona.

Since Verizon Wireless is accounted for by Vodafone as an associate, and at present pays only limited dividends, Vodafone's credit metrics (based on either EBITDA and/or FFO) do not benefit from the appreciating value of the potential earnings stream from Verizon Wireless.

A recent note by Fitch Ratings acknowledges the value in the Verizon Wireless asset both as a potential source of significant dividends, and that the stake is potentially a monetisable asset. However, the requirement to pay down debt relating to the Alltel acquisition means that the dividend from Verizon Wireless is unlikely to realise its full potential until 2011 at the earliest.

Last November, at the same Morgan Stanley-organised conference in Barcelona, Vittorio Colao had indicated that the company is open minded about its 45% stake in Verizon Wireless, but that the company felt that retaining the stake would be the best thing at the moment. Since then, the company has commented on several occasions that it wants to retain its holding in the company.

Last September, during a rearranging of Vodafone's divisions, the Verizon Wireless stake was separated out from other parts of the company and is now managed directly by Vittorio Colao and chief financial officer Andy Halford.

Verizon Communications, which holds the remaining 55% of the wireless company has often indicated that it would like to buy out Vodafone's holding in the company.

Colao also confirmed that the company is open to selling any operations where it is a minority shareholder, outside of its key markets of Europe, Asia and Africa.

"No well-run company likes to have minorities," he added. He also hinted at a possible deal in Nigeria without going into details.

On the web: Financial Times

Posted to the site on 22nd November 2009