JSE-listed Allied Electronics Corporation Limited (Altron) says that its struggling third-party service provider, Altech Autopage, is in the process of repositioning itself to offer increased ISP services targeted at enterprise clients.
Altron on Wednesday announced its interim results for the six months ended August 2014. Revenue increased by 6% to R14.2 billion supported by revenue growth from the Altron TMT division.
Normalised EBITDA showed a decline of 10% from R871 million to R784 million, and operating profit before capital items declined 14% to R525 million, from R614 million.
Diluted headline earnings per share (HEPS) and normalised diluted HEPS declined by 12% and 20% respectively, to 71 cents per share.
“The combination of Altron’s telecommunications, multi-media and IT businesses under the Altron TMT division has delivered a positive contribution to the group results with more significant successes anticipated as the integration process runs its course,” said Altron chief executive, Robert Venter.
“Against this performance, the highly disruptive labour environment prevalent during the period had a particularly negative impact on Altron Power. If one adjusts for the financial impact of the four week long NUMSA strike in July, Altron’s earnings would have been broadly in line with the prior year.”
Altron said its Altron TMT division grew revenues by 8% to R10 billion and EBITDA by 10% to R702 million.
The group said it achieved significant cross sell successes as a result of collaboration
between the Altech and Bytes businesses, including the Gauteng Broadband Network tender, and the launch of the new Altech Node smart home console which integrates the capabilities of eight different Altron group businesses.
The integration process is operating through five different workstreams, and is expected to be completed by the end of the 2016 financial year.
On a consolidated total operations level, Altron TMT increased revenue by 8% to R10 billion and normalised EBITDA by 3% to R702 million.
Revenue and EBITDA declined at Altech Autopage by 7%, and 36% respectively, predominantly as a result of continued pressures on the consumer and deflation of voice charges, Altron said.
This result was also impacted by the external funding of our handset receivables,
which has reduced margins on handset sales. The Average Revenue Per User (ARPU) has continued to decline while churn is being maintained, it said.
All network agreements have now been negotiated in line with expectations.
The Altech Netstar posted revenue growth of 6%, while EBITDA increased by 9% with margins enhanced as a result of a number of important contract wins in the fleet management side of the business, Altron said.
“The business has also launched several enhanced products into the market from which we are starting to realise benefits,” the group said.
Bytes Systems Integration achieved 15% revenue growth and 13% EBITDA growth with strong demand particularly in the South African side of the business. The international business, primarily in Africa, continues to make progress, albeit at a
Altech Node, which was successfully launched on 18 September 2014, incurred approximately R17 million of EBITDA losses for the six month period, representing the costs of bringing the product to market.
“This cost is likely to increase in the second half due to the commercial launch and the associated marketing spend,” Altron said.