Vodafone hopes for $5.5bn Verizon Wireless dividend

Vodafone could receive an annual dividend of up to $5.5bn from its 45 per cent stake in Verizon Wireless beginning next year, said Andy Halford, Vodafone chief financial officer.

The dividend estimate is based on the $1bn-a-month or $12bn-a-year free cash flow that Verizon Wireless generates, cash that to date has been mainly used to pay down the company’s debt. Verizon Wireless, the largest US mobile operator, stopped paying a dividend to its corporate parents, Verizon Communications and Vodafone, in 2005. Vodafone, the UK-based mobile network operator, has been pressing Verizon Communications, which owns a majority stake in Verizon Wireless, to sanction a resumption of the dividend from the end of this year when the debt is due to be fully repaid. Verizon Communications has said that Verizon Wireless is likely to pay “a fair dividend” to its parents beginning in 2012, but has not indicated what level of pay-out it favors. Analysts believe Verizon Communications will sanction a resumption of dividend payments from Verizon Wireless next year, in part to avoid the risk that Verizon Communications might have to reduce its own dividend pay-out.