Altech targets R10bn in new growth areas

As the sun sets on its West African operations, listed ICT group Allied Technologies (Altech) says it will target new growth areas, including cloud computing and global telematics within its existing divisions of Altech Autopage and Altech Netstar to unlock R10 billion in potential revenue.

On Wednesday (April 25), Altech reported a marginal rise in revenue to R9.97 billion, from R9.65 billion before, and operating profit from capital items of R649 million, from R787 million.

Adjusted headline earnings declined to 388 cents, from 529 cents in 2011.

Chief technology officer and chief strategy officer, Willie Oosthuysen said that Altech would pursue new synergies within Altech Netstar in order to grow its geographical footprint.

Altech CEO, Craig Venter said that the group would continue to pursue international business development opportunities, noting that the insurance telematics market provided a strong growth prospect for the year ahead.

The group added that value-add services in fleet management – including dynamic routing and a bureau service – were under development, and discussions were on-going with Octo Telematics in Italy regarding a future partnership.

Venter has previously stated that Netstar has been exploring the possibility of an acquisition in Latin America. On Wednesday, the company head said that it was in advanced stages of a ‘major acquisition’ in Latin America which would make Netstar the biggest vehicle tracking company in the world.

Oosthuysen said that Altech would also look to leverage opportunities within cloud computing through its subsidiary, Altech Autopage, and its data centres in Kenya.

Both Oosthuysen and Venter stated that as much as R10 billion in revenue would be achievable through new growth areas, in tandem with existing businesses within the group.

Lehlohonolo Mokenela, information and communication technologies research analyst at Frost & Sullivan noted that, while Altech’s operations in East and West Africa disappointed, it posted more positive numbers in its local operations, as both Altech Autopage and Altech Netstar grew their subscriber base and recorded higher earnings – 2.8% and 6.8% higher, respectively – from the previous period.

Mokenela expects to see a more positive performance from the group in the coming period, as new management in the East Africa units begin to settle in. “Altech has a strong presence in East Africa, where it is the largest data network provider with significant investments in two undersea cables,” Mokenela said.

“Through Kenya Data Networks, the company also has a good platform to provide data centre services in the region.”

Venter also noted that Altech Sameer East Africa Data Centre was now generating revenue and would contribute to results going forward. He added that partnership opportunities were also being explored for Altech East Africa.

The CEO said that the sale of Altech’s west African operation was in advanced stages, with the completion date between six and eight weeks away.

In 2011, Venter said he was confident that Altech could become a R20 billion company within five years. On Wednesday, he said: “Even if management achieved 70% of that target, I would be happy with that. I do believe we can do that.”

Venter said that part of that R20 billion goal would include cloud computing and global telematics. “We might not achieve R20 billion, but I hope that it gets damn close,” he said.

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Altech targets R10bn in new growth areas