Verizon Wireless to Pay $8.5B Dividend to Parent Companies

by Christopher Freeburn | November 13, 2012 9:44 am

[1]Verizon Communications (NYSE:VZ[2]) and Vodafone (NASDAQ:VOD[3]) will receive a substantial dividend from their U.S. cellular joint venture[4].

Verizon Wireless announced on Monday that it will pay its parent companies a $8.5 billion dividend in December. It follows a $10 billion dividend paid to its owners in last year, Bloomberg noted.

Shares of Vodafone fell more than 3% in Tuesday morning trading in New York, while Verizon Communications slipped fractionally.

The dividend, though smaller than last year’s payout, is higher than the $7.5 billion that most analysts were expected. Verizon Wireless posted third quarter margins that surpassed Wall Street forecasts on rising smartphone sales. The wireless service provider competes with rivals AT&T (NYSE:T[5]) and Sprint (NYSE:S[6]).

Last year’s dividend was the first cash payment made by Verizon Wireless since 2005.

Vodafone owns 45% of Verizon Wireless, with Verizon Communications accounting for the remaining 55% stake. Vodafone will receive about $3.83 billion, based on its ownership stake in the joint venture.

Once the dividend is received, Vodafone indicated that it would repurchase $2.4 billion in shares. Verizon did not indicate its plans for the dividend payment.

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