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The Group is regularly subject to an evaluation by tax authorities of its direct and indirect tax filings. The consequence of such reviews is that disputes can arise with tax authorities over the interpretation or application of certain tax rules applicable to the Group’s business. These disputes may not necessarily be resolved in a manner that is favourable to the Group. Additionally, the resolution of the disputes could result in an obligation to the Group. The Group has made sufficient provision for any losses arising from tax exposures that are more likely to occur than not.
The Group has discussions with relevant tax authorities on specific matters regarding the application and interpretation of tax legislation affecting the Group and the industry in which it operates. All reliable assessments of tax exposure identified have been quantified and accounted for as appropriate.
The Group has considered all matters in dispute with tax authorities and has accounted for any exposure identified, if required. |
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The Group is currently involved in various legal proceedings and has, in consultation with its legal counsel, assessed the outcome of these proceedings. Following this assessment, the Group’s management has determined, after assessing recoverability, that adequate provision has been made in respect of these legal proceedings as at 31 March 2017. |
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Vodacom Congo contracted GHI to install ultra-low cost base stations on a revenue share basis. Shortly after rolling out the first
sites GHI sought to renegotiate the contractual terms, which Vodacom Congo declined. GHI then accused Vodacom Congo of
infringing its intellectual property rights and demanded payment of compensation in the sum of US$1.16 billion. In July 2016,
Vodacom Congo filed a request for arbitration with the International Chamber of Commerce’s International Court of Arbitration
(ICC). In its replying papers to the arbitration process, GHI has revised its claim to US$256 million. Each party has appointed
an arbitrator and the arbitrators have appointed a third arbitrator to act as chairman of the tribunal. |
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A patent infringement claim was filed in July 2016 against Vodacom Congo. The plaintiff is asking the Commercial Court of
Kinshasa/Gombe, inter alia, to prohibit Vodacom Congo from providing the M-Pesa service and to order Vodacom Congo to pay
damages of US$200 million for losses resulting from the alleged patent infringement. A hearing was held in December 2016, and
the matter has been referred to the Public Prosecutor (in accordance with procedural rules of the Democratic Republic of the
Congo) for an opinion, before a judgement is delivered. |
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Negotiations with Mr Makate in terms of the Constitutional Court order to determine a reasonable compensation for a business
idea that led to a product known as Please Call Me commenced but were interrupted by Mr Makate’s application to the
Constitutional Court for the variation of its original order. The Constitutional Court dismissed Mr Makate’s application and
negotiations continue in accordance with the first order of the Constitutional Court. |
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The Group issued various guarantees, relating to external financial obligations of its subsidiaries, which amounted to R119 million (2016: R113 million).
Foreign denominated guarantees amounting to R1 005 million (2016: R1 102 million) were issued in 2015 in support of Vodacom Congo (RDC) SA relating to liabilities included in the consolidated statement of financial position.
Vodacom (Pty) Limited provides a guarantee for borrowings entered into by Vodacom Group Limited. At 31 March 2017, and in prior years, none of the borrowings under guarantee were utilised. |