Verizon Wireless said yesterday it plans to pay a $10 billion dividend to its two parents, Verizon Communications and Vodafone Group, early next year.
The long-awaited payout comes after years of clamoring from Vodafone shareholders, who felt they had received little from the cash-generating machine that is Verizon Wireless. Over the past few years, Verizon, which owns a 55 percent stake in the wireless business, has used the cash to fund other initiatives, including the purchase of spectrum and the acquisition of Alltel.
Based on their respective ownership positions, Verizon will get $5.5 billion and Vodafone will get $4.5 billion in dividends.
Verizon, meanwhile, needs its portion of the cash to fund its own dividend to shareholders. Verizon executives have said over the past year that it had planned a dividend for 2012.
While the payment had been widely expected, it was slightly lower than expected, according to Barclays Capital analyst James Ratcliffe. He estimated that Verizon Wireless will have $13 billion on hand by the end of the year.
Over the past few years, Verizon and Vodafone's partnership has grown from a purely financial one to one based on mutual technological and strategic perspectives. The companies are both moving to a 4G wireless standard called LTE. More recently, they have begun working together to sell communications services to multinational companies based all over the world.