South Africa’s Altec announced healthy revenue and profit increase

Mergers, Acquisitions and Financial Results

JSE-listed Allied Technologies played a solid game this year, with revenue up by 11% and operating profit up 32% in its final results.

The company released its results for the year ended 28 February, the bulk of which trumps the global financial downturn. Revenue is up to R9.164 billion and operating profit is looking healthy at R874 million.

The company also spiked on earnings per share, up 35% to 569c, and adjusted headline earnings up 15% to 592c.

Altech CEO Craig Venter says: “The Altech Group's outstanding performance was mainly achieved by increasing annuity revenue to 79% of total revenue. Generally, it is perceived that annuity revenue businesses are better protected during difficult economic conditions.”

Altech Autopage Cellular was one of the stronger performers in the group's stable. According to Altech's results, the unit reached a landmark one million connections in its subscriber base, up from 917 000 last year.

Venter, who has been silent on the plans for Autopage's ECNS licence, says the company will now turn a good deal of focus to the opportunities the licence presents. “The revolutionised South African connectivity market, through the issuance of I-ECNS and ECS licences, will be a focus for the group, where opportunities will be unearthed in niche areas,” he adds.

“To take full advantage of this licence, Altech will need to build additional infrastructure. This will require additional finance, and the cost of borrowing money has increased. This increases the potential risk,” she says.

Altech's strides in East African broadband prove it has the capability to compete effectively in Internet services and infrastructure.

The company's Kenya Data Networks (KDN) produced solid results for the period, which the company attributes to strong growth in the East African ICT sector and the expansion of its fibre network.

KDN will be an 11% shareholder in the Kenyan government's Teams undersea fibre cable project. “This will provide additional landing points as well as redundancy,” notes Venter.

Mc Donald adds that the acquisitions made in East Africa are paying off handsomely for Altech, with expectations that the region will continue to grow by 15% and 20% annually, for at least the next three years.

“Altech is in key countries like Kenya, Uganda and Rwanda, so it has the region well covered. There are signs that East Africa is growing more volatile, but there will still be growth, especially once the global crisis subsides. As more international companies look to Africa for growth, Altech is already well established to offer the services they will be looking for,” she notes.

Mc Donald believes the group's next step could be to increase its presence in West Africa. “Although the business culture is quite different, it is still an emerging market and Altech will be able to leverage its existing expertise there.”