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Verizon Wireless to fork over $8.5B to parents

Verizon Wireless’ continued success is set to again benefit its parent companies as the domestic carrier said it plans to make an $8.5 billion dividend payment to Verizon Communications and Vodafone Group by year end. Verizon is set to garner a 55% stake in that payment in line with its ownership stake in Verizon Wireless, with Vodafone set to pocket 45% of the payment.

Verizon Wireless noted that the payment will be “paid in one or more tranches, with each tranche paid in proportion to the owners’ partnership interests on the payment date.”

Vodafone noted in mid-2011 that it expected to begin receiving up to $5.5 billion in annual dividends from its stake in Verizon Wireless based on the domestic carrier’s $10 billion to $12 billion in annual free cash flow. That report was followed shortly by Verizon Wireless announcing its first dividend payment to its parent companies of $10 billion.

Verizon Wireless recently reported more than $6 billion in operating income for the third quarter, which was a 17.4% improvement compared with the third quarter of 2011. Through the first nine months of the year, Verizon Wireless’ operating income has soared nearly 20% year-over-year to nearly $17 billion.

Verizon Communications has on numerous occasions been questioned regarding its attempt to acquire a larger stake in Verizon Wireless, which Vodafone has to this point not wanted to discuss. Just last week Verizon EVP and CFO Fran Shammo noted at an investor conference that the company remained interested in picking up a larger stake in the wireless venture.

“They are a great partner to us,” Shammo said at the Wells Fargo Technology Media & Telecom Conference in New York. “They’ve never stood in the way of expanding Verizon Wireless. It is a great asset. They understand the value of that asset. But look, at the end of the day I continue to say if there is a willing seller, we are a willing buyer, but I am not going to overpay. So it is what it is. And they are content to be a partner and we are content to have them a partner. And we continue to run the venture and we do it the way we want, and we generate a lot of value.”

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