Vodacom profit down

The group incurred net impairment charges of R3.2 billion in the six month period, largely relating to Gateway, a satellite firm it had acquired.

Headline earnings per share decreased 12.4 percent to 219 cents, the company — majority owned by Britain’s Vodafone — said.

“Gateway, which is a core part of our African expansion strategy, was heavily impacted by weaker economic conditions. We impaired this asset in response to reduced mobile traffic on the continent and strong pricing pressure and have subsequently taken steps to improve its profitability,” CEO Pieter Uys said.

Profit was also impacted by the reversal of a deferred taxation asset of R551 million due to the declining profitability of its business in the Democratic Republic of Congo (DRC).

Vodacom declared an interim dividend of 110 cents per share.

For the period under review, the company experienced growth of 16.5 percent in its group mobile customer base to 41.6 million.

Uys said while the macroeconomic outlook remained uncertain, South Africa was showing early signs of recovery based on some indicators of customer behaviour.

“However, it is too soon to be confident in a sustained recovery across all customer segments.”

Vodacom’s local business was likely to continue to feel the impact of the implementation of the Regulation of Interception of Communications and Provision of Communication-Related Information Act, but as distributors and customers grew more familiar with registration requirements, gross connections were expected to increase.

“Lower mobile termination rates are a likely consequence of the regulatory process currently underway, and Vodacom will work with government and the regulator to implement the reductions in a way that will minimise instability in the sector.”

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Vodacom profit down