NEW YORK (Reuters) - The head of the majority owner of Verizon Wireless indicated on Thursday that the wireless venture would pay a dividend once it has reduced its net debt in line with its cash flow levels.
Verizon Communications (VZ.N), which has 55 percent ownership and operational control of the venture, has favored using Verizon Wireless cash to reduce the venture’s debt load instead of paying its parents a dividend.
However, this has frustrated shareholders in Vodafone Group Plc (VOD.L), a 45 percent owner of Verizon Wireless. The investors have been pushing Vodafone management to find a way to collect some returns from the company’s stake in the No. 1 U.S. mobile service through a sale of the stake or a dividend.
Verizon Chief Executive Officer Ivan Seidenberg told a Goldman Sachs conference that he sees that situation changing.
“As our business generates cash and we reach a point where net debt gets closer to about a balance, then a distribution of cash to the owners is probably the right thing to do,” he told the audience. “I don’t have any problem with that.”
Seidenberg’s comments follow an appearance by Vodafone CEO Vittorio Colao at the same conference the day before.
Colao had rejected speculation that Verizon and Vodafone could merge and said that a Verizon Wireless dividend or a split of the joint venture were the most likely options.
Reporting by Sinead Carew; editing by Lisa Von Ahn