Vodacom First-Half Profits Drop 98% on Write-Downs

­South Africa's Vodacom has issued an interim trading statement for the six months up to October and reported a 16.5% growth in the group mobile customer base to 41.6 million. The company, now controlled by Vodafone, also reported an 8.0% growth in group EBITDA to R9.3 billion.

Net profit collapsed by 98% to R61 million (US$8.1 million) from R3.69 billion a year ago.

Commenting on the results, Vodacom Group CEO Pieter Uys said: "This has been a period of substantial development for Vodacom during which we achieved continued growth, with a robust performance from our South African operations in particular. We faced a number of headwinds, primarily in our international operations that were hard-hit by weak economic conditions and a resulting scramble for market share by the major operators."

However, the company was hit by a R3.2 billion (US$424 million) impairment charge from its acquisition of the satellite telecoms provider, Gateway. The company also reported the reversal of deferred taxation asset in the DRC of R551 million.

Uys commented: "Gateway, which is a core part of our African expansion strategy, was also heavily impacted by the 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."

The drop in earnings was largely in line with an earlier statement from the company, which had predicted a drop of between 95% and 105%

Posted to the site on 9th November 2009