Vodacom takes R3.2bn Africa hit

Johannesburg - Despite a big impairment charge on its African expansion strategy, South Africa's biggest mobile operator Vodacom declared an interim dividend of 110 cents per share.

Vodacom reported headline earnings per share declined 12.4% to 219 cents for the six months to end September 2009. Earnings per share dropped to 4 cents, from 248 cents.

The group incurred net impairment charges of R3.2bn in the six month period, which relates to its recent acquisition of Gateway, part of its African expansion strategy. This results in the earnings per share drop.

Headline earnings per share excluded the Gateway impairment, but a remeasurement of loans granted of R232m and the reversal of a deferred taxation asset of R551m arising from the reduced profitability of Vodacom DRC drove the figure down.

Revenue from the South African operations grew by nearly 7% to R24bn, but revenue from the international operations declined to R2.9bn, an 11% drop.

Vodacom said it is too early to expect a recovery.

"It is too soon to be confident in a sustained recovery across all customer segments," Vodacom said.

Vodacom added just over 579 000 new mobile customers in the six month period and grew the base 11.7% to 28.2 million customers from a year ago.

Vodacom, majority owned by Britain's Vodafone group, listed on the Johannesburg Stock Exchange in May after the deal with Vodafone.

The company said it has gained advantages from becoming Vodafone's subsidiary.

"Vodacom has implemented projects to extract value from the relationship in many areas, including human resources, products and services, international roaming, technology, billing and finance," Vodacom said in its results statement.

- Fin24.com