Vodafone's US venture to pay £2bn dividend

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.

PROMOTED VIDEO
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
News
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
i100
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Arts and Entertainment
Jamie T plays live in 2007 before going on hiatus from 2010
arts + entsSinger-songwriter will perform on the Festival Republic Stage
Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Analyst - (Active Directory, Support, London)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...

Junior Quant Analyst - C++, Boost, Data Mining

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Junior Quant Analyst (Machine Learning, SQL, VBA)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition