Vodafone dividend could rise in 2012

Telecoms giant Vodafone could receive a dividend from its stake in Verizon Wireless as early as 2012, boosting the British company's own ability to hand back cash to shareholders.

By James Quinn, US Business Editor
Published: 8:29PM BST 18 Jun 2010

John Killian, finance director of Verizon Communications – which owns a 55pc stake in the joint venture compared to Vodafone's 45pc – said the US mobile giant could begin making payouts to its owners the year after next.

The confirmation will come as welcome relief to Vodafone's army of small British shareholders, especially in light of BP's temporary cessation of dividend payments to fund its relief efforts in the Gulf of Mexico.
After BP, Vodafone is one of the top five dividend paying companies in the UK, and as such its income flows are closely watched.
Shares in Vodafone closed up 1¾ at 143p on the news, still below the company's year-high of 154.4p set in late March.
In an interview with Bloomberg, Mr Killian said: "It's a Verizon-controlled decision as to when we pay the cash out and how much we pay."
However, he noted that dividend payments could resume in 2012 as Verizon Wireless will have paid down its debt by then.
Vodafone has not received any money from Verizon Wireless since 2005, when payments were halted.
Robin Bienenstock, Sanford C Bernstein's telecoms analyst, noted: "This would have a transformative effect on Vodafone, increasing free cash flow by over 30pc."
She added that Verizon Communications may need to access Verizon Wireless's cash balance to fund its own dividend, after problems at the parent's landline division.
Although Mr Killian's comments appeared to be read by the market as an interesting development, sources close to Vodafone pointed to recent comments by Andy Halford, Vodafone's finance director, at the company's most recent results in which he noted that Verizon Wireless continues to maintain a strong cashflow. He went on note that the joint venture's debt was approximately $20bn (£13.5bn), and was decreasing at a rate of around $1.5bn a month because of the strong cashflow, suggesting that in just over a year the venture would begin to accrue significant amounts of cash.
Vodafone is due to make its final dividend payment of 5.65p a share on August 6, for all shareholders on the register on June 4, bringing its total dividend for the year to 8.31p a share, producing a yield of 5.8pc.
The company said in May it expects total dividends per share will be no less than 10.18p a share for the 2013 financial year.
A Vodafone spokesman declined to comment.