Sep 28, 2012
Altech progresses resolutions for underperforming assetsBack
Africa|Allied Technologies|Altech East Africa|Altech West Africa|Paper|PROJECT|Project Management|Africa|Nigeria|Product|Products|Craig Venter|East Africa|West Africa
© Reuse this
The group, which has been weighed down by the operations over the past 18 months, was confident that good headway has been made since the 2011 financial year-end.
CEO Craig Venter, speaking at Altech’s 2012 financial year interim results presentation, said that significant corporate involvement and the implementation of internal remedial measures in 51%-owned Altech East Africa visibly improved operations, but the financial performance was not yet seen.
The company has initiated formal processes to find a partner for the historically profitable division, as Venter believed that this would accelerate the turnaround. He pointed out that the operations brought in profit of R30-million in the first year of entry and another R100-million the year after, but the “wheels came off” in the third year.
Venter outlined a number of factors contributing to the lower performance, including management challenges and high staff turnover, as well as poor customer service and network reliability issues leading to loss of key customers.
The parent company also based key decisions on inaccurate and nonfactual information provided by East Africa’s management.
Further, he said, former management failed to adapt to the group’s strategy, management controls and governance were not adhered to and project management, execution and quality controls were insufficiently implemented.
Venter said that Altech had installed a new management team, which was making headway.
He also pointed to the group’s underestimation of the risks involved in entering a new geographical area and new area of activity, as well as the capital- and labour-intensiveness of the business.
“The network operations in East Africa continue to be challenged; however, there have been some positive improvements with regard to network stability and data centre performance over this period [six months to August 2012],” he said.
Meanwhile, Altech was disposing of its 75% shareholding in the struggling greenfield start-up operation Altech West Africa, in Nigeria.
The West African operation, which was started in 2005 and was highly profitable for five years, underperformed during the past 18 months on the back of increased competition in the low-priced nonsecure paper recharge voucher market and a reduction in demand for secure recharge vouchers.
The firm was further impacted by delays in receiving customer requirements for plastic-chip card products, high top and senior management turnover, unanticipated product technology changes, the Nigerian government’s prohibition on imports of recharge vouchers and the expiration of the company’s pioneer tax status.
The sale of the operation, which was deemed noncore within the Altech group, would be earnings enhancing and the proceeds of the sale would be redeployed into high-growth areas within the Altech portfolio.
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Other ICT News
Updated 2 hours 40 minutes ago Top Indian mobile carrier Bharti Airtel posted a 61% rise in quarterly profit on Tuesday but fell short of analyst estimates as its African business continued to weigh. Bharti Airtel's African business has been a drag on the company, four years after it spent...
Updated 1 hour 44 minutes ago Electricity producer Eskom has, for the first time, offered a detailed timeline for the synchronisation of Medupi Unit 6, which is officially scheduled for December 15, 2014. Addressing a joint meeting of the Portfolio Committees on Public Enterprises and Energy on...
Updated 1 hour 45 minutes ago As South Africa had largely exhausted the use of traditional mechanisms to stimulate the fiscus, government now needed to swing its focus to dealing with the internal structural issues that had, thus far, prevented the country from unlocking its true economic value,...
Updated 1 hour 53 minutes ago The Western Cape High Court will on Monday hear a Sanral application for information about the proposed N1/N2 Winelands Toll Highway Project to be kept secret, the City of Cape Town said. The application would be heard behind closed doors, mayoral committee member...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...