Boston, MA 05/15/2013 (wallstreetpr) – The mobile phone joint venture of Verizon Communications Inc. (NYSE:VZ) and Vodafone Group PLC. (NASDAQ:VOD) had agreed to pay $7 billion as dividends to its co-owners. The joint venture had finally made its attempt to defuse the tension prevailing among its co-owners through this dividend announcement.
Dividend Share
The Verizon Communications Inc. (NYSE:VZ) which owns 55 percent of the joint venture business will receive $3.85 billion on the dividend share to be paid on June, 25. On the other hand, the minority investor – Vodafone Group PLC. (NASDAQ:VOD) would receive $3.15 billion of the dividend share.
Move to buyout Vodafone stake
This dividend announcement by Verizon Wireless is seen as a negotiating tactic by Verizon Communications Inc. (NYSE:VZ) to buy out the minority stake held by Vodafone Group PLC. (NASDAQ:VOD) in the joint venture. The company believes that this dividend payment would remove considerable amount of pressure on Vodafone Group PLC. (NASDAQ:VOD) to agree for the sale.
Being a minority partner, Vodafone Group PLC. (NASDAQ:VOD) does not have any control over the joint venture and would thereby have to rely on its partner for business decisions like that of dividend announcements.
Value to Vodafone
This dividend share received by Vodafone Group PLC. (NASDAQ:VOD) would enable the company to concentrate on reinvestment in fixed line assets in Europe. The company had earlier received $8 billion in dividends from Verizon Wireless in the last two fiscal years.
