Verizon Communications may be planning to resume paying dividends to Vodafone in 2012.
Verizon Communications CEO Ivan Seidenburg told investors at the UBS Global Media and Communications Conference in New York that he hopes to hold talks with Vodafone…
Verizon Communications may be planning to resume paying dividends to Vodafone in 2012.
Verizon Communications CEO Ivan Seidenburg told investors at the UBS Global Media and Communications Conference in New York that he hopes to hold talks with Vodafone in 2011 on the issue of resuming dividends.
He said he agreed with Vodafone CEO Vittorio Colao, who had called for the “next meaningful conversations about the distribution of cash [to] come at the end of 2011”.
Seidenburg added that “at current course and speed, we should have a discussion next year about what happens in 2012 and 2013”.
He also said: “We have now reached a point where people perceive the scale of Verizon Wireless is producing so much cash that you can’t spend it all.”
Vodafone refused to comment.
The two telcos jointly own Verizon Wireless, with Vodafone holding a 45% stake. Verizon suspended dividend payments to Vodafone in 2005, after Verizon Wireless built up a large debt burden through its acquisition of US telco Alltech earlier in the year.
Some industry observers see Verizon’s dividend strategy as an attempt to force Vodafone to sell its Verizon Wireless stake, which has been valued at US$33bn.
Vodafone shareholders have reportedly been pressing the UK telco to divest its minority stakes in overseas companies such as SFR and Polkomtel. It did sell its 3.2% stake in China Mobile in September.
Vodafone has so far resisted pressure to sell its stake in Verizon Wireless, also distancing itself from rumours of a possible merger with Verizon.
In September, Vodafone’s CEO, Vittorio Colao, told the Goldsmith Sachs conference that “theoretically, conceptually” a merger was an option, but that it was “less likely” than two other options: the two companies separating, or Verizon resuming dividends to Vodafone.
On December 2, Verizon announced that there would be a quarterly dividend to its own shareholders of 48.75 cents per outstanding share.
The dividend will be payable to Verizon shareowners of record at the close on January 10, 2011. It will be paid out on February 1, 2011.
Verizon also said that it had made US$4bn in dividend payments in the first three quarters of 2010.
