Vodafone could potentially receive an annual dividend payment of as much as $5.5 billion from Verizon Communications (NYSE:VZ) for Vodafone's 45 percent stake in Verizon Wireless, Vodafone's CFO said. However, Vodafone cautioned that no deal has been reached yet on the dividend, which has been a lingering issue between the two parent companies.
Speaking to reporters, Vodafone CFO Andy Halford said that, assuming Verizon Wireless has free cash flow of $10 billion to $12 billion, the dividend payment could be up to $5.5 billion. Halford said no agreement has been reached, though analysts expect Verizon to begin paying the dividend to Vodafone next year, after it pays down the debt it has from Verizon Wireless.
Verizon has not paid out a dividend from Verizon Wireless since 2005, though Verizon has said it will soon begin paying out a "fair dividend" to Vodafone, possibly in 2012. In May, Halford said Verizon Wireless had $9.6 billion in debt on its books as of the end of March, and that Verizon was paying down the debt at a rate of $1 billion per month, according to Bloomberg.
A Vodafone spokesman pointed out that Halford's estimate was a purely theoretical one and that his comments did not signal a new direction in the relationship or a change in Vodafone's strategic interest in Verizon Wireless, according to Dow Jones Newswires. Verizon spokesman Peter Thonis declined to comment.
For more:
- see this Bloomberg article
- see this FT article
- see this Dow Jones Newswires article (sub. req.)
- see this Reuters article
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