Vodafone Looking Forward to Bumper Dividend Payments from Verizon Wireless

Published on: 1st Jul 2011

­Vodafone's CFO, Andy Halford has suggested that the company could look forward to annual dividends of as much as US$5.5 billion from its 45% stake in Verizon Wireless.

The USA subsidiary has not been paying dividends for many years as it pays down debts or acquires other networks - a situation which has lead to some shareholders trying to force Vodafone to sell the asset rather than wait for dividends in the future.

Andy Halford's figure of US$5.5 billion is however based on presumptions of annual free cash flow of $10 billion to $12 billion, and that the company would return all of that as shareholder dividends. The more likely figure is 70% return to shareholders, so around US$4 billion per year for Vodafone.

Verizon Communications, which owns the controlling 55% of the wireless company has not confirmed when it will resume dividend payments, but most analysts expect something next year as the company has almost paid down its debt and future acquisitions are looking unlikely.

Dividend payments would also help the parent company pay down its own debt, which currently stands at around US$61 billion, on a consolidated basis.

 

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