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    Vodafone Seeks $5.5 Billion Annual Div From Verizon Wireless

    By Eric Savitz | Forbes – Wed, Jun 29, 2011

    verizon-wirelessNow, that would be a big dividend.

    Vodafone CFO Andy Halford on Wednesday said the company could get a dividend of up to $5.5 billion in 2012 from Verizon Wireless.

    That sounds startling, but he's just doing the math.

    Vodafone owns 45% of Verizon Wireless, but under terms of their arrangement with Verizon, which owns the other 55%, the wireless operator has been using its prodigious free cash flow to pay down borrowings from Verizon. But with the debt largely paid off, as the Financial Times reports, the time has come for Vodafone to start reaping a return on its investment. Verizon Wireless has been generating about $12 billion a year in free cash flow; 45% of that comes to $5.5 billion. The rest of the cash would presumably go to Verizon.

    The FT notes that a $5.5 billion payout from Verizon Wireless would increase Vodafone's free cash flow by almost 50%.

    The two companies are negotiating a solution to the cash flow question, and it is no small matter to Verizon; among other things, the company pays out a fat $1.95 a year in dividends to common holders, for a total annual payout of  - just a coincidence - $5.5 billion.

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