NEW YORK (MarketWatch)—Verizon Communications Inc. on Monday confirmed it has reached an agreement to pay $130 billion to Vodafone Group PLC to buy the U.K.-based firm’s 45% stake in Verizon Wireless.

The U.S. carrier’s announcement of a deal to buy out its U.K.-based partner came after The Wall Street Journal, a sister publication of MarketWatch, reported negotiators for the companies had reached a tentative agreement Sunday afternoon.

The transaction, which gives the American company sole control over Verizon Wireless, was unanimously approved by the boards of directors of Verizon VZ, +0.36% and Vodafone VOD, -1.12% , and is expected to close in the first quarter of 2014.

Verizon will pay Vodafone about half of the acquisition in cash and the other half in company stock, and said its board had declared a quarterly dividend of 53 cents per outstanding share, an increase of 1.5 cents, or 2.9%, a share. On an annual basis, the move hikes Verizon’s dividend six cents a share, from $2.06 to $2.12 a share.

Shares of both companies rose last week after reports surfaced that they were discussing a deal.

The deal is said to be one of the largest in history.

Verizon Wireless, the largest cellphone carrier in the U.S., is the result of a joint venture begun in 1999 in the early stages of an explosion in mobile-phone usage. The U.K. company’s stake has appreciated sharply over the past decade even as the value of its European assets fell, raising the price Verizon would eventually have to pay to acquire full ownership of Verizon Wireless

Verizon had sought off and on over the years to buy out its partner but to no avail until now. The price of a deal was a big sticking point, as was the prospect that Vodafone would have to pay a stiff tax penalty on profits of a sale. The new agreement might mitigate the tax hit.

Full control over Verizon Wireless will let the New York-based parent company to better integrate its phone and cable operations and invest more money in upgrading the mobile network, already considered the best in the U.S.

Smartphones on display at a Verizon media event n New York in July. . Reuters

Verizon has been trying to fend off A&T T, -0.58% , the nation’s No. 2 wireless operator, and a host of smaller rivals such as Sprint US:S that offer cheaper plans. The company has mostly focused on network quality as key to staying ahead of its competitors.

The partnership with Vodafone and complicated legal structure of the joint venture, however, made it harder for Verizon to run the business in the most effective manner. That would no longer be the case.

What’s unclear is how much room the wireless business has to grow, especially in developed countries such as the U.S. in which virtually everyone owns a cellphone. Verizon already derives about two-thirds of its entire revenue from mobile.

Wireless carriers like Verizon believe they can capture more revenue by hooking up nontraditional devices such as computer tablets, medical-monitoring equipment and appliances, among other things. An increasing number of goods are being sold with wireless capability.

Yet Vodafone’s willingness to sell suggests the U.K. company sees less upside to holding on to an investment that has risen sharply in value for more than a decade.

The company could use some of the proceeds from a sale to reward shareholders and invest the rest to beef up its European businesses. Vodafone is the world’s second largest cellphone operator with stakes in most major European countries.