Mov­ing and shak­ing

Finweek English Edition - - Companies & Markets -

WHILE SOME in­ter­na­tional mar­kets are still rough for Vo­da­com, the group has made head­way back home in South Africa with net­work up­grades, tar­iff changes and the in­tro­duc­tion of new ser­vices. Re­sults are due for the year to end-March and there’s some light at the end of the tun­nel for Vo­da­com as it puts some harsh ac­count­ing re­quire­ments be­hind it.

SA’s largest cel­lu­lar net­work (by sub­scribers) has also ben­e­fited from dark days at its chief ri­val, MTN South Africa, which has been plagued by billing prob­lems of late and, by all ac­counts, is haem­or­rhag­ing dis­grun­tled con­tract sub­scribers.

When the group an­nounces its re­sults it will pro­duce earn­ings per share im­pacted by an im­pair­ment charge re­lated to the ac­qui­si­tion of pan-African tele­coms com­pany Gate­way that Vo­da­com bought in 2008 for US$700m. The R3,2bn charge due to over­pay­ment for Gate­way was raised by Vo­da­com in its first half 2010 and will im­pact on net profit in the group’s re­sults.

Nev­er­the­less, head­line earn­ings per share for the year are ex­pected to be be­tween 20% and 25% higher, against 417c for the pre­vi­ous year, thanks to a black em­pow­er­ment charge that was ac­counted for in 2009, boost­ing earn­ings in 2010. The mar­ket re­acted to that an­nounce­ment and its share price en­joyed a climb over the sub­se­quent week and is cur­rently sit­ting at around R55,75/share com­pared with R54,10 in mid-April.

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