Verizon Communications, the second-largest US telecoms company, has cast doubt on whether Vodafone will get dividend payments from their US mobile phone joint venture any time soon by warning Verizon Wireless is “not close” to paying off its debt.
Verizon refused to confirm UK-based Vodafone’s statement last month that Verizon Wireless could resume dividends payments in about two years because the debt will have been cleared.
Denny Strigl, Verizon’s chief operating officer, said Verizon Wireless’s net debt stood at about $10bn. “We are not close to paying that down,” he said in an interview with the Financial Times.
One rebel Vodafone shareholder criticised the company’s “passive investment” in Verizon Wireless this month.
Efficient Capital Structures is asking investors to vote at Vodafone’s annual meeting next month in favour of spinning off its stake in Verizon Wireless, or creating a tracker stock linked to it.
Verizon has management control of Verizon Wireless. Asked whether Vodafone was correct to say Verizon Wireless could resume dividend payments in two years, Mr Strigl said: “I have no comment.”
Vodafone’s last dividend payments from Verizon Wireless were worth $923m. They related to fiscal year 2004 and were received in March 2005. Verizon Wireless’s net debt stood at $11.3bn in September 2006, which is the most recent filing for the joint venture sent to US regulators.
Mr Strigl said Verizon had “moved on” from its efforts last year to buy Vodafone out of Verizon Wireless.
Vodafone has been unwilling to sell its 45 per cent stake in Verizon Wireless unless offered a hefty premium.