Vodacom earnings miss estimates on network spending, prices

Vodacom Group Limited, the largest provider of mobile-phone services to South Africans, said fiscal first-half profit rose by 6.4 per cent, missing estimates as it boosted spending to avoid a repeat of network outages.Diluted earnings per share excluding one-time items increased to 3.22 rand in the six months ended September 30, the Johannesburg-based company said on Monday in a statement. That was lower than the 3.33 rand median estimate of four analysts surveyed by Bloomberg News. The company, 65 per cent owned by Newbury, England-based Vodafone Group Plc, is lowering prices to gain clients, to compensate for slower growth in service revenue. Vodacom reduced data and voice prices in the period, by 22 per cent and 24 per cent respectively in South Africa, where other operators have lowered tariffs. Sales climbed 7.6 per cent to 31.7bn rand ($3.97bn) while net income was little changed at 4.4 billion rand in the six months compared with a year earlier. Capital expenditure surged 68 per cent to 3.46bn rand. "Theres still scope for more price reductions, according to our business plan," Chief Financial Officer, Rob Shuter, said on a conference call. Vodacom wants to increase data revenue by 30 per cent a year. Vodacom shares declined 1.1 per cent to 88.25 rand at 10:33am in Johannesburg, paring their gain this year to 15 per cent. The company said it expected the margin based on earnings before interest, taxes, depreciation and amortization to improve this fiscal year.
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