Verizon Wireless Under Pressure From Partner, Vodafone To Pay Dividends

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In the past few weeks, both the companies have conducted wide ranging talks intended to break the stalemate over the bright future of Verizon Wireless. Vodafone owns 45% stake of the American telecom giant whereas Verizon wireless owns the remaining 55 % stake.

Even though it adds to a third of Vodafone’s in service profits, Verizon Wireless has blocked all payments of dividends since 2005. The subject is turning more and more sensitive because Verizon Wireless would be practically payment free of all debts by the end of the year 2010. Last November, Vodafone laid out the prospect of the payment of dividends commencing once more in 2011. Chief executive officer for Vodafone, Vittorio Colao, has made it a priority to solve this problem by the end of this year. Questions are being asked by the shareholders about why Vodafone is clinging to the 45% stake in Verizon Wireless if the stake is not resulting in a dividend payout, even though it has largely increased in value.

Most people think that a merger of these two telecom giants is the ideal solution to this seemingly never ending problem. However, prominent sources are not very optimistic about the merger taking place between Vodafone and Verizon Wireless.
Vodafone, as of today, has a market net worth of $ 117 billion. It is extremely likely that Vodafone and Verizon Wireless will reach an agreement through talks that will permit Vodafone to sell its stake in Verizon Wireless over a period of time. Nevertheless, the stake that Vodafone owns in Verizon Wireless is worth close to $ 60 billion. Selling this would give Vodafone a gigantic tax invoice.