Financial Mail on Sunday, London, Taking Stock column

Mar 10, 2013 (Financial Mail on Sunday - McClatchy-Tribune Information Services via COMTEX) -- WE WOULD all like a distant relative who occasionally sends us a handsome present out of the blue, but the City reckons it is time that Vodafone put its lucrative arrangement with US telecoms firm Verizon on a more formal footing.

Britain's biggest mobile phone operator was last week's stock market darling, the shares rising 9.5 per cent to close at 184 \p.

The reason is furious speculation over its future with long-time partner Verizon. The pair operate a joint venture called Verizon Wireless, where Vodafone owns a 45 per cent stake and which has started to throw off cash. An awful lot of cash.

In fact, its last dividend was $8.5 billion (pounds sterling 5.6 billion) split between its parent companies. This is especially welcome for Vodafone since for many years the firm did not pay a dividend at all because Verizon insisted it must first reduce its debt -- though most observers reckoned this was a ploy to force a frustrated Vodafone to sell its stake.

Now it has started to pay out, though it is not certain when the cash will arrive. The two partners get along a lot better now, too, with Vodafone chief executive Vittorio Colao and his opposite at Verizon, Lowell McAdam, dealing far more amicably with each other than their predecessors.

This relationship has been fostered by the frequent meetings of their managements in the course of their dealings over their joint venture.

Vodafone's US operations also look good compared with its lacklustre European businesses, which have been affected by the eurozone's woes. And in India, where the telecoms market has suffered badly through intense competition and questionable regulation, Vodafone is still disputing a pounds sterling 1.7 billion tax bill imposed by the government in New Delhi.

Indeed, so successful is Verizon Wireless, as America's 4G superfast mobile internet market takes off, that some analysts reckon it could account for up to 70 per cent of Vodafone's earnings over the next few years, up from 40 per cent in 2010.

So what should Vodafone do - sit back and take the cash, sell its stake for an estimated pounds sterling 76 billion, make a bid for the whole operation, or even make a bid for Verizon (before it bids for Vodafone) Colao has sold minority stakes in other businesses, but there are persistent rumours that he is preparing for a step-change. It was only a couple of weeks ago that Vodafone was being talked of as a potential bidder for Germany's Kabel Deutschland cable company.

Perhaps Colao should borrow a line from American comedienne Joan Rivers and call McAdam to ask him: "Can we talk " ___ (c)2013 Financial Mail on Sunday (London) Visit the Financial Mail on Sunday (London) at www.thisismoney.co.uk Distributed by MCT Information Services

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