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November 14, 2012

Verizon Wireless to Pay $8.5 Billion to Co-Owners Verizon and Vodafone

By Ashok Bindra, TMCnet Contributor

The cellular industry is continuing to grow, a point which was proven as mobile phone carrier Verizon (News - Alert) Wireless unveiled its dividends. On Tuesday, the largest U.S. mobile phone carrier stated that its board of representatives has declared distributions worth $8.5 billion to its owners, Vodafone (News - Alert) Group and Verizon Communications Inc., respectively. The dividends will be paid by the end of 2012.

In fact, media reports suggest that Verizon Wireless (News - Alert) serves as a profit engine for the two companies. And this is the second straight year when handsome dividends have been paid to its two co-owners.

Obviously, the rising smartphone craze has helped the wireless carrier’s profit margins to soar. In addition, quarterly sales have been exceeding analysts’ estimated projections to drive profits higher.  

The business news site Benzinga reported that the distributions will be paid in one or more tranches, with each tranche paid in proportion to the owners' partnership interests on the payment date.

Further, a Bloomberg report shows that Verizon Wireless will get over $4.6 billion which is down from last year’s dividend of $10 billion, while Vodafone’s share of from this profit is about $3.83 billion, down from $4.5 billion in 2011.

Speaking to the reporters, Vodafone’s Chief Financial Officer, Andy Halford said, “These results highlight the good quality of the decision made a few years ago by the board to remain exposed to the U.S., which is a healthy market, and specifically Verizon is a very healthy company.”

Findings also show that although Verizon Wireless was formed back in 2000 as a joint venture between Verizon Communications and Vodafone Group, Verizon Wireless owns slightly more of the company coming in at nearly 55 percent  while Vodafone Group owns 45 percent.

Edited by Jamie Epstein
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