Vodacom's earnings may be 25% higher this year
Vodacom said the earnings were "favourably impacted" by a strong performance and by the replacement of secondary tax on companies with a dividend withholding tax‚ which was not included in the income statement tax expense.
Vodacom's basic earnings per share for the six months to September are expected to be between 30% and 40% higher than the previous year's earnings per share of 301c cents. Headline earnings are expected to be between 20% to 25% higher than last year's 324c.
The secondary tax on companies (STC) for the six months to September last year was R417m. Vodacom's earnings per share for the six months to September last year were affected by impairment charges of R318m in relation to Gateway Carrier Services‚ it said.
Vodacom sold the loss making Gateway business in August this year and the profits from this sale had a "favourable impact on earnings per share for the period"‚ it said.
"This is a good trading update. Vodacom has performed well even though the market is mature in South Africa. Moreover‚ these are troubled times as there is a lot of uncertainty in the market generally but Vodacom is quite defensive, as people are still using their cellphones to communicate‚" said Irnest Kaplan‚ managing director of Kaplan Equity Analysts.
If the STC was stripped out‚ the headline earnings per share would be up by around 12% on a like-to-like basis‚ which "is a very good performance‚" he said.
"I imagine there could be a good performance from Vodacom assets outside South Africa and good costs control in South Africa‚" he said.
"The trading update also shows (Pieter) Uys left Shameel (Joosub) with a good business‚" said Kaplan.
Joosub was appointed Vodacom's chief executive in September‚ taking over from Uys‚ who will officially leave the group at the end of March next year.
Earlier this month Joosub announced a series of changes aimed at positioning South Africa biggest mobile network operator for its next phase of growth.
These included a price reduction for international voice calls‚ the launch of a high-speed fourth generation network and possible extension of its financial services products.
Source: I-Net Bridge
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