Vodafone accepts defeat in US

VODAFONE will admit defeat this week in its dispute with American partner Verizon over the payment of dividends from Verizon Wireless.

But the loss of income from its 45% stake in Verizon Wireless, the largest US mobile service provider, will not stop Britain's biggest mobile phone group from doubling dividends to 1.9p for the half year and starting a new programme of share buybacks.

Vodafone has been trying to persuade Verizon that it should continue to make payouts, but signalled it would accept shares in the Italian venture they jointly control.

One City source said: 'It seems Verizon is determined to buy capacity from Nextel for $3bn (£1.63bn) and pay down debt instead.

'But Vodafone is pretty comfortable as both of these should add to the value of Verizon Wireless and Vodafone's other operations are throwing off cash.'

Vodafone is expected to announce turnover of about £16.6bn and profits of £5.2bn.

Smaller rival mmO2 is expected to announce plans for its first dividend when it unveils half-year results on Wednesday, with profits expected to almost double to £242m.

City sources expect chief executive Peter Erskine to say mmO2 will pay up to 2p a share at the end of the financial year.

Virgin Mobile is due to report its first results since floating and analysts are hoping it will assuage investors' fears that subscriber growth has slowed.