South Africa’s Vodacom reported a 22 percent increase in full-year earnings and said its plans to pay a higher dividend would not prevent more acquisitions.
Vodacom, majority-owned by Britain’s Vodafone, said it would pay a dividend of 175 cents (US$0.07) per share this year and plans to increase its dividend payout ratio next year.
Vodacom’s chief financial officer, Rob Shuter, said in a conference call with reporters that the company was still looking for acquisitions.
“There is still massive capacity to leverage the balance sheet for large transactions,” he said.
The mobile telecom market in Africa is increasingly competitive, and analysts say that major players may need further acquisitions to protect market share.
MTN, Africa’s largest mobile phone company by subscribers, is in talks to buy assets from Egypt’s Orascom Telecom, although it faces opposition from Algeria’s government.
Vodacom, South Africa’s largest mobile operator, said it was in talks to sell its stake in wireless broadband provider iBurst for an undisclosed amount.
“We haven’t concluded anything. It will be probably in the next quarter,” chief executive officer Pieter Uys said in the same conference call.
The company was also hit with an unexpected US$35 million tax from the Democratic Republic of Congo (DRC), where it is involved in a dispute with its local partner.
“We are confident DRC presents a good opportunity in the long term, but we need a stable operating environment to be successful,” Uys said.
Headline earnings per share for the year to end-March rose 22.3 percent to 510 cents. Headline earnings, which strip out some one-off and non-trading items, are the main profit gauge in South Africa.
The company said it will spend 7.4 billion rand (US$981 million) in capital expenditure in the next financial year.
It also plans to raise its dividend payout ratio to 60 percent next year from 40 percent now.
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