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.

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
ebooksAn unforgettable anthology of contemporary reportage
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
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

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering