Vodacom beats analyst forecasts

Shares in Vodacom rallied 3% in lunchtime trade on the JSE on Monday (22 October) after the group released a trading statement which exceeded analysts’ expectations.

By 12:45, shares in Vodacom moved 3%, or R3.11, higher to R106.67 on the local bourse, a fraction off an intraday best of  R106.95. The All-Share Index traded up 0.51% to 36,970 points, while the overall telecoms sector gained 1.64% to 74,917 points.

The group boasts a market cap of R158.72 billion.

Vodacom is expecting its headline earnings per share for the six months ended September to be between 20% and 25% higher than 324 cents in the corresponding period last year.

The group also expects basic earnings per share (EPS) to be between 30% and 40% higher than 301 cents in 2011.

An analyst at PSG Konsult said that Vodacom’s trading statement was possibly a “bit above expectations” but also cautioned that earnings per share in the prior period was “distorted” by the sale of Gateway Carrier Services at the end of August, the profit of which had a favourable impact on EPS for the period.

On this issue, the dealer said it was difficult to analyse the group’s impending results until getting all the details, but quickly added that the trading statement was “better than the market expected”.

He noted that Vodacom had come under some pressure in recent times having been caught up in an ongoing price war with Cell C. Shares in Vodacom reached a low of R91.78 in late June.

He said that, if Vodacom and other operators were able to show continued growth amid reduced tariffs, it would herald “a big win for the industry”.

“This is why MTN is also up,” the analyst said.

Shares in MTN also lifted R2.32, or 1.52%, to R155.32 – giving the group a market cap of R292.54 billion.

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Vodacom beats analyst forecasts