US mobile operator Verizon Wireless said yesterday that it will distribute a dividend of US$10bn to its owners on 31 January 2012, almost seven years after its last dividend.
Verizon Wireless is a JV between US telco Verizon Communications, which holds…
US mobile operator Verizon Wireless said yesterday that it will distribute a dividend of US$10bn to its owners on 31 January 2012, almost seven years after its last dividend.
Verizon Wireless is a JV between US telco Verizon Communications, which holds a 55% stake, and British telco Vodafone, which holds 45%.
The dividend will follow the weighting of this ownership, with US$5.5bn going to Verizon Communications and US$4.5bn (£2.8bn) to Vodafone.
Vodafone said that it would distribute £2bn of this amount in a special dividend. The rest of the proceeds would be used to reduce net debt.
Vodafone CEO Vittorio Colao said: “Our long term partnership in Verizon’s strong and successful wireless business has seen the value of our investment increase significantly over recent years.
“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 to improve our customers’ experience, further strengthen our competitive position and create additional value for shareholders.”
Verizon Wireless suspended its dividends in 2005 in order to pay down debt. Vodafone retained its stake in the company, despite speculation that it would sell.
Last week, Verizon Communications CEO Lowell McAdam said that the goal of both himself and Vittorio Colao had been “to try to turn the temperature down a little bit and to improve the bottom line of the business”.
Morgan Stanley commented in a research note released after the Verizon Wireless announcement that Verizon Communications and Vodafone “are likely to remain partners for some years to come”.
They also said that Verizon Wireless “appears to be retaining flexibility to make acquisitions”.
Verizon Communications released its Q2 results on 22 July, which showed that Verizon Wireless had made 2.2 million new additions, including 1.3m retail postpaid customers. This brought its number of retail customers up to 89.7m. Adding in wholesale customers, the number increases to 106.2m.
EBITDA for Verizon Wireless was US$6.67bn, up slightly from US$6.51bn for Q2 2010. Operating income also saw a slight increase, with US$4.69bn compared to US$4.68bn in Q2 2010.
