Altech shares slump as East Africa drags

JSE-listed Allied Technologies Limited (Altech) shaved off half a percent in morning trade on Tuesday (19 June) on the JSE, having declined more than 4% in trade on Monday, a day in which the All Share Index closed 1.60% firmer.

The ICT group stayed muted in early Tuesday morning trade at R47.95, having waivered 4.46% – or R2.23 – to R47.77 on Monday (18 June 2012), mere cents off its year worst trade of R47.66, and more than R14 off its best of R61.95, achieved in July 2011.

Altech has for some time struggled with its operations in West and East Africa, prompting CEO Craig Venter in April, at the group’s annual results presentation, to highlight a number of remedial measures.

As part of these actions, in May, after a comprehensive market analysis, Altech KDN (KDN) began a collective consultative process at exco level to discuss plans for a reduction in staff numbers in which KDN identified 51 affected employees.

“The objective of the reduction was to reduce the company’s operational expenses in light of current business conditions in the region,” said Tim Ellis, the group executive of converged services and East African operations lead at Altech.

“The telco industry in Kenya is going through a challenging period and this has had a knock on-effect on KDN with respect to reduced demand for services due to regional and international competition for both local and international bandwidth services,” he said.

“The staff reduction is one of the many initiatives within KDN to align the revenue and cost base and to build a stronger, leaner and more competitive business, thereby providing KDN clients with a more services and customer orientated provider that will support their critical business operations,” Ellis continued.

He added that the changes would ensure that KDN achieves its growth strategy and becomes East Africa’s premier infrastructure independent network services provider. “KDN is adapting to market changes and conditions by becoming leaner and more agile in order to take advantage of market opportunities as they arise and to play a leading role in the East African economy.”

According to Altech, KDN continues to be a significant player in Kenya and the region and these retrenchments were part of a larger strategic initiative to rationalise KDN’s operations; this, by reducing non-critical positions and restructuring the operation into a more regionally focused one, whereby KDN provides regional unity and a single interface into key customers.

“In this respect, KDN is forming closer alliances with other Altech operations in the region (Altech Swift Global and Altech Infocom) and this collaboration is already having a positive impact,” the group said.

“Furthermore, the recent completion of KDN’s Kampala-Kigali fibre link has closed the regional ring network for KDN, from Mombasa through Nairobi to Kampala to Kigali and back through Tanzania to Dar es Salaam. This provides KDN with a competitive advantage in that the company is now able to offer its corporate customers improved high-speed connectivity and network resilience to all their sites and customers in the region,” Ellis said.

In April, 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.

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Altech shares slump as East Africa drags