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Verizon Wireless to pay its parents $7 billion dividend

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(Globalpost/GlobalPost)

(Reuters) - Verizon Wireless, the biggest U.S. mobile service provider, said on Monday it would pay its parents Verizon Communications and Vodafone Group Plc a dividend of $7 billion in June.

The dividend comes amid mounting speculation Verizon could buy Vodafone's stake in the venture if they can agree on a price. Reuters reported on April 24 that Verizon was preparing a $100 billion bid for the stake.

Based on Verizon's 55 percent ownership of the venture and Vodafone's 45 percent stake, this will entitle Verizon to cash payments of $3.85 billion while Vodafone will receive $3.15 billion, according to a regulatory filing from the company.

The Verizon Wireless board decided on the dividend on May 9, according to the company

The decision follows recent comments from Verizon Chief Executive Lowell McAdam to JP Morgan analysts that the two owners could face a "lean" year in terms of the dividend they receive from the Verizon Wireless.

Some analysts had seen those comments as a sign that McAdam was putting increasing pressure on Vodafone to sell the stake.

Verizon had refused to sanction a dividend from the Wireless asset between 2005 and 2011 because it said it preferred to pay down debt and make acquisitions.

That, however, was seen by analysts as a move to pressure Vodafone out of the joint venture.

(Reporting by Sinead Carew; Editing by Phil Berlowitz, Bernard Orr)

http://www.globalpost.com/dispatch/news/thomson-reuters/130513/verizon-wireless-pay-parents-surprise-7-billion-dividend