Vodafone could receive an annual dividend of up to USD 5.5 billion from its 45 percent stake in Verizon Wireless beginning next year, said Andy Halford, Vodafone chief financial officer. Halford's comments, made to reporters during a visit to India, represent the first time that Vodafone has publicly indicated what size of pay-out it is expecting, the Financial Times reports. The two companies have been negotiating over the dividend since last year and Halford said that no agreement has been reached yet. The dividend estimate is based on the USD 12 billion a year in free cash flow that Verizon Wireless generates, cash that to date has been mainly used to pay down the company's debt. Verizon Wireless stopped paying a dividend to its corporate parents, Verizon Communications and Vodafone, in 2005. Vodafone has been pressing Verizon Communications, which owns a majority stake in Verizon Wireless, to sanction a resumption of the dividend from the end of this year when the debt is due to be fully repaid. Verizon Communications has said that Verizon Wireless is likely to pay "a fair dividend" to its parents beginning in 2012, but has not indicated what level of pay-out it favours. Vodafone generated GBP 7.1 billion of free cash flow in the year to March 2011. So a Verizon Wireless dividend worth USD 5.5 billion would boost Vodafone's free cash flow by almost 50 percent and therefore should significantly increase returns to the mobile operator's shareholders.
