Verizon Wireless delays dividend payout, Vodafone needs cash inflow

Verizon Wireless is the child conceived by to big players in the telecommunications industry and now both want its custody. One of the biggest wireless carriers in the US is still to roll out the annual dividend to both Verizon Communications and Vodafone.

Verizon Comm holds 55 percent share in Verizon Wireless, while the British telecom giant holds the rest. However, the latter has always been seen as the most likely to get a hold of the entire stake in VW.

Since the joint venture that started in 2000, none of the companies had had the muscle to grab full stake in the carrier but Vodafone has been seen as the possible winner. However, now the tables have turned and due to Vodafone’s own financial woes, inflicted from sloppy Euro performance, VZ seems the most likely candidate.

Both companies have been struggling to get full control of the chicken that lays golden eggs. Though Vodafone has its branches stretched to far sides of the world in every direction, from India to Australia to South Africa, its presence in most of the European countries has given it a troubled time in the past one year.

The Euro debt crisis has made the company incur lesser profits because users now have decreased the use of wireless data. Both VZ and VOD have diminishing landline businesses in their respective markets.

Vodafone, in that respect needs cash to pay the dividend to its shareholders.

“All Vodafone wants is its fair, 45% share of the free cash flow that Verizon Wireless is generating,” said Evan Miller, a London-based telecom fund manager at Gamco Asset Management. “What does not really work any longer for Vodafone, and its shareholders, is the uncertainty around the dividend stream.”

Verizon Communications has the upper hand now and there is a strong chance that the company might make a move to get 100 percent of Verizon Wireless.

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Posted by Usman Khalid on Sep 18 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.