Vodafone Group plans to pay out £2 billion (€2.3 billion) to shareholders after it gets a £2.8 billion dividend from its co-owned US unit Verizon Wireless in early 2012.
The British company said it plans the payout after Verizon Wireless announced plans to pay a dividend, in a move which should resolve a long-running stand-off between the two parent companies of the US wireless service.
"Verizon's attempt to squeeze Vodafone has resoundingly failed, they now have no choice but to pay the cash," analyst Robin Bienenstock at brokerage Bernstein said, predicting regular payouts would now follow.
Vodafone, which had in May flagged its expectation of receiving a dividend from Verizon next year, said it planned to pay shareholders 4 pence per share in February and would use the balance of the proceeds to pay down its debt.
"The timing of this announcement is pleasingly early and Vodafone immediately saying exactly what it will do with it is also welcome news," MF Global analyst John Karidis said.
"This 4 pence special dividend may well happen every year, and it may well grow."
Bernstein's Bienenstock noted that including the special dividend, the effective yield on Vodafone next year would be 14.5 per cent, putting the mobile operator ahead of many of its competitors in the sector such as Deutsche Telekom, which has an annual dividend yield of 6.5 per cent, and BT on 3.7 per cent.
The $4.5 billion total payment to Vodafone is $1 billion less than the amount the British company's chief financial officer said he expected as recently as June 30th, but analysts at Deutsche Bank said it was higher than their base case expectations.
Reuters
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