SA's largest cellular company says earnings have again been impacted by its Gateway acquisition.
However, the company's headline earnings per share will be higher, because the year to March does not carry a charge due to the empowerment deal. Last year, headline earnings were impacted by a once-off cost of R1.3 billion because of the deal.
The benefits of the charge not recurring have, however, been partially offset by losses when recalculating certain unspecified financial instruments and reversing a deferred tax loss of R500 million.
Vodacom says headline earnings per share should be between 20% and 25% higher when it reports its results on 17 May, compared to last year's headline earnings per share of 417c.
Impacted
Basic earnings per share should be between 25% and 35% lower, compared to last year's 409c, because of the Gateway impairment the company reported for the half year.
Vodacom bought Gateway in 2008, for $700 million, or R7.4 billion, at an exchange rate of R10.48 when the deal was finalised in December.
In the six months to September 2009, operating profit dropped 45%, to R3.54 billion, because of the Gateway impairment charge of R3.2 billion and a 16.8% increase in depreciation and amortisation.
The once-off charges also hit earnings per share in the six months, which dropped to 4c. Headline earnings per share, which strip out this cost, declined 12.4%, to 219c.
Imara SP Reid analyst Steve Meintjes says adding back the empowerment charge to last year's figures would, however, still indicate no growth.
“We expect the reduction in interconnection rates announced by ICASA and the RICA effects to put substantial pressure on voice revenue, although there could be some offset from increased usage,” says Meintjes. Last year, the company earned R9.8 billion or 18% of total revenue from interconnect, he explains.
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