Sep 28, 2012
Altech progresses resolutions for underperforming assetsBack
Africa|Allied Technologies|Altech East Africa|Altech West Africa|PROJECT|Project Management|Africa|Nigeria|Product|Products|Service|Solutions|Craig Venter|Operations|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 (150 word limit)
Other ICT News
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
This Week's Magazine
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.