Why are you backing out money that should go to VOD from VZ cashflow? VZ isn't getting any cash from Wireless either. I don't dispute your read on VZ cash needs. I just think they want to start seeing the wireless cashflow or they intend to buyout VOD.
No, Verizon is getting ALL the cash from Verizon Wireless. Verizon Wireless is using all of its excess cash flow to repay debt. Verizon supplied the debt used to fuel the Alltel acquisition, and is now receiving the entirety of the cash flows used to pay that debt off.
Check their latest 10-K and find VZ's net income attributable to a non-controlling interest: 7,668 (in millions). This amount is deducted from VZ's net income on the income statement, but still shows up in their cash flow statement. This is because VZ is receiving all of wireless' cash, not just the 55% they would receive if they were paying dividends normally. VZ owns 55% of Verizon Wireless, and is required by law to consolidate its operations into its own financial statements. (This is also why Verizon Wireless' debt shows up in VZ's debt schedule, even though much of it is payable to VZ itself and from VZ's perspective is an asset rather than a liability).
VZ is already seeing all the wireless cash flow. This won't last forever. And yes, they would love to buy out VOD; VOD has not bitten.
Thanks, sir_perflui.. a lot for the info. You explained things very well. I had not seen the whole story before as you presented it. It looks like a complex situation, which is what I thought it would be. Very problematic for an investor like me who is looking for more dividend return. However, I may be willing to sit this one out into early next year to see what happens.