International wireless conglomerate Vodafone Group plc (VOD) said it could receive up to $5.5 billion in an annual dividend from its 45% ownership stake in Verizon Wireless (VZ), according to published reports.
According to a Bloomberg report, Vodafone’s CFO Andy Halford told reporters in New Delhi, India, that the dividend amount would be based on Verizon Wireless posting free cash flow of between $10 billion and $12 billion. Vodafone has not received a dividend from its stake in Verizon Wireless since 2005 as majority owner Verizon Communications Inc. has focused on paying down the carrier’s nearly $10 billion in debt.
Verizon executives have said they did not expect to begin issuing Verizon Wireless dividends until at least the end of 2011.
Halford also told reporters that Vodafone could see its $2.5 billion tax bill associated with its 2007 acquisition of Hutchison Essar double to $5 billion based on an expected ruling from the Indian Supreme Court next month.
According to the Financial Times, the discrepancy is due to the transaction being conducted by two non-Indian companies based in the tax haven of the Cayman Islands. Vodafone said it has set aside the additional $2.5 billion that it might be charged, but continues to believe it’s not liable for the additional tax.
Vodafone earlier this year said it planned to spend $5 billion to gain full control of its Indian operations, which is India’s third-largest wireless operator with 118 million customers, or roughly 16.7% market share, at the end of 2010. India’s total mobile penetration rate stood at just under 60% at the end of last year.
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