Some of you may not know this, but Verizon is two separate companies. There’s Cellco Partnership, who is more commonly known as Verizon Wireless, and as the name implies is responsible for the smartphones, dumbphones, and portable hot spots that use their ever expanding network, and then there’s Verizon, period, who is leading the wired broadband space in America by investing in fiber to the home. Verizon Wireless has two owners, 55% of it is owned by Verizon, and 45% is owned by Vodafone, the world’s second largest operator in terms of customers. Now Verizon Wireless hasn’t paid a dividend, which is defined by Investopedia as a “distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders”, since 2005, and that’s rightly got Vodafone a little bit upset. Why hasn’t Verizon Wireless paid out a dividended for the past 6 years? Simply put, they were in debt, and like any financial advisor will tell you, it’s wise to pay off your debts first and foremost. Now that Verizon Wireless is basically debt free, the firm has decided to give $4.5 billion in the form of a dividend to Vodafone, and $5.5 billion to Verizon.
What does this mean for you? If you’re in one of the many countries where Vodafone has a presence, you might soon experience better coverage or even a faster network. Vodafone could also use that money to pay off their bills, which they’ve no doubt been racking up as many European countries have either finished or are just beginning their spectrum auctions. As a Verizon Wireless customer you might be wondering why doesn’t Verizon use that money to increase the speed of their 4G LTE rollout? Those types of deals, to build the actual network, are agreed upon several quarters in advance, and the accounting folks in all likelihood made sure they’d have pennies in the piggy bank for that.