Vodacom Group’s settlement of a former employee’s claim for compensation is expected to cost the company about R550 million ($32 million), according to Bloomberg Intelligence.
The Johannesburg-based company on Thursday flagged a smaller rise in profit after it settled a long-running dispute with an ex-staffer who sought a payout for a popular call-back service he proposed more than two decades ago.
Vodacom expects a 30% to 40% increase in earnings per share for the six months through September because of the “one-off cost,” according to a statement. That estimate is lower than the 40% to 45% jump it forecast in a October 31 trading statement, before the settlement was agreed.
Read: ConCourt upholds Vodacom please call me appeal
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“Vodacom will be pleased to close this long-running uncertainty, with the mid-point impact on earnings R550 million ($32 million), compared with judgments against it earlier in the legal process of tens of billions of rand,” said Bloomberg Intelligence senior industry analyst John Davies.
The company declined to comment on the settlement amount.
The company’s shares rose as much as 4.1% on the news, and traded 1% higher at R137.12 by 1:04 p.m. in Johannesburg, to value the firm at R285 billion.
Read: Vodacom in ‘Please Call Me’ out-of-court settlement with Makate
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Vodacom, majority-owned by Vodafone Group Plc, on Wednesday agreed to pay Kenneth Makate an undisclosed amount to end the drawn-out dispute.
It previously offered Makate R47 million ($2.7 million), while South Africa’s Supreme Court of Appeal suggested compensation ranging from R29 billion to R63 billion in a ruling that was subsequently set aside by a higher court.
Vodacom will release its interim results on November 10.
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