Vodafone shareholders are set to receive a £2bn windfall next year, after its joint venture in the US resurrected its dividend following years of squabbling between the two partners.
The board of Verizon Wireless approved the payment of a $10bn (£6.1bn) dividend to its two stakeholders late last night.
Vodafone, which holds 45 per cent of the venture, will see its share work out at £2.8bn, with Verizon Communications receiving the rest.
The UK company, which has not received any payments from the US venture in six years, hailed the announcement as "good news".
Vittorio Colao, chief executive of Vodafone, said: "The dividend from Verizon Wireless allows us not only to reward our own shareholders with an immediate and sizeable cash return, but also to continue to reinvest in our business."
The dividend will be paid on 31 January next year. In February, Vodafone will pay a special dividend to shareholders of £2bn, or 4p per share. One source close to the company hailed the news, saying it had been "a long time coming".
The company intends to release more details about the timetable at its interim results in November. The rest of the sum will be used to cut its debt.
Vodafone's shares are expected to soar in London this morning on the news, and last night were up as much as 7.1 per cent in late trading in the US.
Verizon Wireless, the largest US operator by number of subscribers, shelved its dividend in 2005 to focus on paying off its debts.
The strategy caused a severe headache for Vodafone management, who came under pressure from investors to sell the stake, negotiate renewed payments or even merge with Verizon Communications.
Incoming Verizon Communications chief executive Lowell McAdam said this morning he could not envisage a merger between the two companies. He said: "We can leverage each other's scale, but I would not send any kind of messages here that something like that's immediately on the horizon."
He acknowledged that the relationship between the two companies had been strained over the years but added: "I think that Vittorio's and my goal over the past 18 months has really been to try to turn the temperature down a little bit and to improve the bottom line of the relationship."
Verizon Wireless first indicated last year it may be ready to pay a dividend by 2012 when it had finished the bulk of paying down its debt.
Mr Colao said that the "long-term partnership in Verizon's strong and successful wireless business has seen the value of our investment increase significantly over recent years".
Analysts estimated the value of Vodafone's stake in the business has risen from $20bn to upwards of $65bn. "This is a massive increase in capital valuation," Vodafone said. "And the business is growing at 6 per cent a year."
The UK mobile group's management rejected an offer from Verizon Communications to buy out its stake in 2006. Earlier this week, outgoing chairman Sir John Bond told those gathered at the company's annual general meeting that the decision to reject the offer five years ago "has been vindicated".
Mr Colao has systematically sold off minority stakes in foreign operations over the past year. Vodafone said: "Verizon Wireless has always been a special case. There were minority stakes and then there was Verizon."
In April, Vodafone sold its 44 per cent stake in French mobile phone group SFR to Vivendi in a deal worth €7.9bn following months of talks.
This followed the sale of its 3.2 per cent stake in China Mobile, which brought a return of $4.3bn, and its sale of a holding in Japanese wireless operator SoftBank. The most recent deal involved the sale of its 24.4 per cent stake in Polish operator Polkomtel for close to €1bn.