Vodafone shareholders will get $3.3 billion from a long-awaited Verizon Wireless dividend, raising hopes for regular payouts from the U.S. company after a six-year drought, according to Reuters. Shares in Vodafone, the world's biggest mobile phone operator by revenue, rose as much as 5.7 percent on Friday after Verizon Wireless said it would pay $10 billion to the British company and co-owner Verizon Communications . "Verizon's attempt to squeeze Vodafone has resoundingly failed, they now have no choice but to pay the cash," analyst Robin Bienenstock at brokerage Bernstein said, predicting regular dividends. Vodafone has not received a payout from Verizon Wireless, in which it holds 45 percent, since 2005, partly because Verizon had hoped to force Vodafone out of the joint venture by not paying a dividend, say analysts. The development is the latest victory in a campaign by Chief Executive Vittorio Colao's campaign to make Vodafone's sprawling portfolio more effective. In the last year, Vodafone has resolved several shared-ownership issues, including buying Essar out of an Indian joint venture for $5.46 billion and selling a stake in China Mobile for $6.5 billion. Newbury, England-based Vodafone said its shareholders would receive 2 billion pounds ($3.3 billion) from its $4.5 billion share of the windfall via a special 4 pence-a-share dividend to be paid in February, with the balance used to pay down debt. Shares in Vodafone were up 4.5 percent, or 7.2 pence, at 172.6 pence by 1033 GMT, having earlier risen as high as 174.9 pence to levels not seen since May. It was the biggest gainer on Britain's blue-chip FTSE 100 index . "We believe this will mark the resumption of regular dividend flows from VZW (Verizon Wireless)," Investec analysts wrote in a note to clients, adding it may also prove a turning point in Vodafone's relationship with its U.S. partner. "Verizon Wireless is the cash cow for Verizon (Communications) and in order that Verizon can sustain its dividends to shareholders, we believe the cash must continue to flow from VZW," they wrote, reiterating a "buy" recommendation on Vodafone shares. Vodafone had flagged in May that it expected to receive a dividend from Verizon next year. "The timing of this announcement is pleasingly early and Vodafone immediately saying exactly what it will do with it is also welcome news," MF Global analyst John Karidis said. "This 4 pence special dividend may well happen every year, and it may well grow." Bernstein's Bienenstock noted that including the special dividend, the effective yield on Vodafone next year would be 14.5 percent, putting the mobile operator ahead of many of its competitors in the sector such as Deutsche Telekom , on 6.5 percent, and BT on 3.7 percent.
