Vodafone Secures $3.2B in Dividend - Analyst Blog
15 Maio 2013 - 12:30PM
Zacks
Vodafone Group Plc
(VOD) in its press release stated that it would receive $3.2
billion (£2.1 billion) in dividend payment from Verizon Wireless.
Verizon Wireless, which is a joint venture between Verizon
Communications (VZ) and Vodafone, announced on May 13,
that it has set aside $7 billion (£4.6 billion) for its stake
owners. We believe the dividend from Verizon Wireless would boost
Vodafone’s free cash flow, and thereby increase returns to its
shareholders.
Vodafone expects the dividend to be paid by June end. The company,
in its upcoming preliminary results announcement on May 2, would
highlight plans to utilize the sum received.
Vodafone, the second largest carrier after China Mobile
Limited (CHL), based on subscriber count, has
significantly boosted it liquidity profile by venturing into
profitable businesses, while divesting the less profitable
ones. The company exited all minority holdings except Verizon
Wireless, which has bright prospects.
Over the last two years, Vodafone realized about £15 billion from
the sale of stakes in China Mobile, Softbank Corporation, SFR and
Polkomtel. This divestiture strategy was aimed to capitalize
prospects in the emerging markets. As a result, Vodafone expects
EBITDA margins to stabilize in fiscal 2014 with continued cost
efficiency, regional scale and improving margins in various markets
including India.
Vodafone is also among the top dividend payers and rewarded its
shareholders with regular dividends despite the ongoing economic
weakness in Europe. In Nov 2012, the company announced an interim
dividend of ???0.0327, up 7.2% year over year and consistent with
its growth target of 7.0% through Mar 2013. In 2012, the company
paid a dividend of ???2.440 per share, which was 10% higher than
the 2011 dividend payment.
However, recent rumors suggest that the Vodafone might have
to do away with its stakes in Verizon Wireless as Verizon
Communication is gearing up to beef up its ownership in its
wireless business. Verizon Wireless remains a lucrative source of
dividend paymen for Vodafone. Last year, Vodafone received dividend
of about $8 billion in two tranches after Verizon Wireless resumed
it investor returns in 2011. Prior to this, Verizon ceased paying
dividends since 2005 as it utilized the surplus for lowering debt
levels.
However, given the rate of dividend returns of Verizon Wireless, it
seems that losing stakes in Verizon Wireless would be expensive for
Vodafone, as it might affect its investors. As a result, we believe
that given the ongoing troubles with the European business and the
nascent stage of business in emerging markets like India and
Africa, the decision to part with its position in America would be
a crucial move .
Vodafone, which operates with the other European telecom players
like France T (FTE), has a Zacks Rank #3
(Hold).
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
FRANCE TELE-ADR (FTE): Free Stock Analysis Report
VODAFONE GP PLC (VOD): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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