Verizon's failure to commit to recurring annual dividends at its joint venture with Vodafone was written off yesterday as "bluster".
Lowell McAdam, the newly appointed chief executive of Verizon Communications, said the company would not commit to a consistent dividend at its mobile business Verizon Wireless as it may need to use the funds for takeover deals or to buy radio spectrum.
Vodafone declined to react to the comments but one source close to the company calmed investors' nerves by saying the management was confident the dividend would continue to be paid annually after it was resurrected in the summer.
The issue had caused significant tension between the two venture partners after Verizon Wireless, the largest US operator by number of subscribers, failed to return capital for six years, until it announced it would pay out $10bn (£6bn) at the end of July.
Will Draper, a senior analyst at Execution Noble, said: "Really this is just bluster from Verizon. There's nothing to buy that would need that sort of cash. The chief executive is just giving himself some wiggle room." He continued: "Verizon needs the money much more than Vodafone does to fund its own dividend, as well as a pension and healthcare deficit."
There had been fears that the public comments could place renewed strain on the relationship between the two companies, which was denied by the Vodafone insider.
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