Verizon Wireless has announced today that they’ll be shelling out 43 cents per share on November 1st., up 2.5 cents last quarter. This is kind of funny, considering some Vodafone shareholders wanted to drop Verizon so they could get more dividends. Irony’s a drag, ain’t it, ECS? This is the first time Verizon’s increased their dividends since March 2005, so no doubt their 2.5 million-odd shareholders will be pretty happy about the news.
After so much trouble and brouhaha, Vodafone has decided to keep its 45% stake in Verizon, despite the objections of investor group ECS. The group felt that they could get more in straight-up returns than continue holding onto the American carrier, but most other investors felt otherwise. Regardless, the vocal minority has been shushed into submission, and now Vodafone can carry on with business.
The Vodafone shareholder group Efficient Capital Structures continued to hound the company to drop its 45% share of Verizon Wireless at a shareholder’s meeting today. Vodafone’s apparently been sinking money into the venture, resulting in fewer dividends to investors, and Verizon’s been issuing none whatsoever while dealing with debt.
“Verizon Wireless has been a cash drain for Vodafone, a situation forecast to continue for another eight years unless agreement is reached with Verizon Communications,” said ECS in a statement. … ECS also rejected claims by Vodafone that there would be tax implications if the Verizon Wireless holding was spun-off.
Efficient Capital Structures, a group that owns a 45% in Verizon Wireless, yesterday demanded that Vodafone separate its joint venture with Verizon Wireless and restructure its debt in the hopes of bringing Â£38 billion to shareholders. The proposal was chucked out the window on sight, but today it looks like Vodafone had to send the intern out to the parking lot to gather the mess back together. By law, Vodafone is required to pitch the proposal to shareholders, on the off chance that they think the new changes could make them more money than Vodafone’s original plans. The biggest complaint to the proposal is that issuing bonds to investors would limit the company’s ability to get involved in new ventures, pose significant risk and cut American progress short.
“ECS’ proposals would lead to Vodafone becoming a sub-investment grade borrower,” said Vodafone in a statement. “As such, Vodafone’s cost of debt would rise materially, contributing to incremental interest expense of at least GBP2 billion per annum. At this level of leverage, it is unlikely that Vodafone could benefit from tax deductibility on the full interest amount. Vodafone’s existing dividend policy would also be put at risk.”
A shareholder vote will be held July 24th.