Vodafone Group Plc shouldn’t count on receiving a hefty dividend payment each year through its 45 percent stake in Verizon Wireless.
Verizon Communications CEO Lowell McAdam says it's unrealistic to return to a recurring, multiyear dividend policy because Verizon Wireless may want to acquire competing businesses in order to secure more spectrum. McAdam made the comments to The Financial Times. Verizon’s rival, AT&T, has cited the need for spectrum as one of the reasons for its pending $39 billion acquisition of T-Mobile USA.
Verizon – the majority owner in Verizon Wireless, the largest U.S. mobile operator with 106.3 million wireless connections – will examine the dividend payment annually, McAdam said.
Over the summer, Verizon Wireless announced the first dividend payment in six years: a $10 billion payout to its owners with $4.5 billion going to England-based Vodafone early next year.
Basking Ridge, N.J.-based Verizon Wireless isn’t exactly hurting for money. In the second quarter, wireless revenues climbed 10.2 percent to $17.3 billion while Verizon Wireless posted operating income of $4.69 billion. Last year, the wireless giant brought home $18.7 billion in operating income on annual revenues of $63.4 billion.