Vodacom’s basic earnings per share in the year to 31 March 2010 will fall by between 25% and 35%, mainly as a result of the cellular group overpaying for pan-African telecommunications provider Gateway.
Vodacom bought Gateway in 2008 in a deal worth US$700m.
Net profit is expected to slump as a result of an impairment charge of R3,2bn that Vodacom had already raised in the first half of the 2010 financial year.
The group’s results will also be negatively affected by the reversal of a deferred R551m tax asset at its troubled Democratic Republic of Congo subsidiary, also accounted for in the group’s financial first half.
Despite the slump in basic earnings, headline earnings per share for the full year are expected to climb by between 20% and 25%. This is as a result of a R1,3bn charge associated with the group’s black economic empowerment deal. The group accounted for the charge in its 2009 financial year, helping boost headline earnings in 2010.
However, the improvement in headline earnings will be partially offset by losses on the remeasurement of financial instruments and the reversal of the DRC tax asset.
“The main difference between basic earnings and headline earnings is the impairment of goodwill,” Vodacom says.
The group says it will probably publish its annual financial results on 17 May. – Staff reporter, TechCentral
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