Preview: Vodacom expecting earnings rise

Vodacom Group says it expects headline earnings per share for the year ended March 2012 to be between 5% and 10% higher than HEPS of 656 cents per share in 2011, when the group reports its results on Monday (21 May).

It also expects basic earnings per share to be between 20% and 25% higher than 561 cents per share, as a result of the high impairment charges impacting the prior year EPS.

“Vodacom Group delivered a strong performance with Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) growth of approximately 10% for the year ended 31 March 2012,” the group said in a statement earlier in May.

It noted that basic and headline earnings were negatively impacted by an effective tax rate of 36% mainly due to STC on higher dividends paid and the movement in net deferred tax assets derecognised; and higher depreciation and amortisation from higher capital expenditure including non-cash capital additions.

For the year ended March 2011, Vodacom reported revenue of R61 .197 billion and an operating profit of R13.696 billion.

Customers increased 9.0% to 43.5 million across the group, with South Africa contributing 61.0% of the total base.

Vodacom’s market cap is at about R148.6 billion, and the group announced a year-end dividend of 280 cents – bringing its total dividend for 2011 to 460 cents.

Shares in the group have undergone a dramatic turnaround in fortunes in recent weeks amid ongoing woes for its operation in the Democratic Republic of Congo.

Having peaked at just over R110 a share on the JSE at the beginning of April, shares in the group have declined more than 10%, closing at R99.86 on the local bourse on Friday.

Bloomberg reported that Vodacom may lose its entire shareholding in a wireless unit in the DRC after a court ordered the confiscated stock be auctioned in June if a $21 million dispute with a consultant wasn’t settled.

The court issued an order on 14 May to auction Vodacom’s 510,000 shares in its 51% held Vodacom Congo SPRL unit, in order to enforce its January judgment that Vodacom pay Moto Mabanga’s Namemco Energy a $21 million consulting fee.

It said in the announcement that “in the case of failure of payment of the amount due to the plaintiff,” it would continue with a sale of the seized shares on 3 June.

Mabanga started legal proceedings against Vodacom in 2011, seeking a $40.8 million success fee for work done during 2007 and 2008.

On Thursday, investors also reacted negatively to a price war waged between Vodacom and Cell C after the former announced the launch of its Freedom 99 prepaid tariff, offering calls to all networks at 99 cents per minute mere minutes before Cell C said it had also reduced its prepaid call rates to 99 cents.

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Preview: Vodacom expecting earnings rise