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Verizon’s Wireless dividend to return

By
Josh Kosman
Published June 19, 2010, 4:00 a.m. ET

Verizon Communications said it may begin to pay a dividend from its Verizon Wireless joint venture to minority partner Vodafone Group — although, sources tell The Post, Verizon would rather buy them out.

“They need to get cash out themselves so will need to pay the dividend,” a source said, speaking of Verizon. That way it can maintain Verizon Communications’ own dividend.

Verizon Communications CFO John Killian told Bloomberg there was a reasonable chance its wireless business would start paying dividends in 2012.

CEO Ivan Seidenberg has “been coming up with excuses” since 2005 not to pay a dividend, a source said, despite Verizon Wireless throwing off roughly $1.5 billion in free cash per month. The no-dividend idea was aimed at forcing Vodafone to the bargaining table.

Verizon Wireless disagreed, and told The Post they have been using the free cash flow to invest in the network, purchase spectrum and to fund the purchase of Alltel. Verizon owns 55 percent of Verizon Wireless and Vodafone the rest.

“I think they and Vodafone are stuck together,” a source said.

Verizon believes it is doing much of the work building Verizon Wireless and yet is only getting 55 percent of the profits. Vodafone, meanwhile, is content to sit there, wait it out and count the money, a source said, unless they are paid a huge premium.

There is a second option.

British-based Vodafone wants to be a global telecom player and would buy an American carrier if the opportunity presented itself. If it did, regulatory authorities would force it to sell the Verizon Wireless stake.

Until that time comes, and nothing is imminent, this is a stalemate, the source said.