At least Vodafone chief executive Vittorio Colao can end 2010 with increasing confidence that a five-year impasse over the future of the company’s American associate will end in 2011
Verizon Communcations, which owns the 55 per cent of Verizon Weireless that Vodafone doesn’t own, has said it expects to hold discussions next year about a restoration of dividends with Vodafone.
Verizon Communications has blocked dividend payments by Verizon Wireless over the past five years, in what many outsiders have seen as an attempt to pressure Vodafone into selling its stake.
Ivan Seidenberg, Verizon Communications’ chief executive, has long ruled that Verizon Wireless’ prodigous cashflows should be used to pay off its debt and, with 55 per cent of the shares, he calls the shots on the issue.
But that reason for withholding payments to Vodafone will run out in 2011 when Verizon Wireless’ debt is likely to be paid off. And now Seidenberg has told an investor conference in New York that Verizon Wireless is now generating so much cash “you can’t spend it all”.
He also said Vodafone chief executive Vittorio Colao (pictured) was right to suggest discussions should take place next year about the US mobile operator’s dividend policy.
With Seidenberg stepping down as Verizon Communications’ chief executive in the second half of next year, and his number two Lowell McAdam, formerly head of Verizon Wireless, taking over, the possibility of change is clearly rising.
The alternative to a resumption of dividends, according to Colao, is a sale of of Vodafone’s stake. Analysts say it could be worth more than £30 billion, which would be very handy, but that sale of it could also lead to a massive tax bill for Vodafone.