Although the Allied Technologies (Altech) group reported higher revenues last night, the company experienced losses in the recent financial period as a result of some of its international operations. The group sold some of its operations in both West and East Africa as it prepared to focus more on the local operations.
The annual results for the financial year, ended 28 February 2013, revealed a 6% increase in revenues from continuing operations for the year, to R10,6-billion compared to R9,5-billion for the previous year. This was largely driven by the strong performance of the South African operations, particularly Altech Multimedia.
However, Altech Netstar and Altech Cellular delivered a somewhat flat performance. In a trend that has come to characterise the market, the cellular unit reported a drop in ARPU due to high competition in the market, which has seen a general drop in prices.
“In recent years, the company’s profits have been eroded by losses in the West and Central African operations. The underperformance of these operations has seen the company record impairments in these investments,” notes Frost and Sullivan’s ICT research analyst, Lehlohonolo Mokenela.
For the latest financial period, Altech reported a R1,3-billion loss primarily due to poor performance by these operations. However, from its continuing operations, the company reported a 73% increase in profits and a headline earnings per share of 268 cents, 23% up from the year before.
“By trimming down its West and East Africa operations, the company seems intent on realigning its strategy and focussing on its core operations in South Africa,” says Mokenela.
Potential areas of growth for the group still lie in Altech Multimedia, whose plans are being frustrated by delays in the transition to the digital terrestrial television.
Other potential areas of growth lie in convergence, following the group’s reported merger of ATC and its cellular arm, in order to increase its footprint in that market. In addition, the company expects to grow profits from its vehicle tracking operations following measures taken to reduce operating costs.
Frost & Sullivan believes that disposing of the West and East African operations, which were weighing down on profits, will result in the group experiencing better profits in subsequent periods.
However, Altech Netstar and Altech Cellular delivered a somewhat flat performance. In a trend that has come to characterise the market, the cellular unit reported a drop in ARPU due to high competition in the market, which has seen a general drop in prices.
“In recent years, the company’s profits have been eroded by losses in the West and Central African operations. The underperformance of these operations has seen the company record impairments in these investments,” notes Frost and Sullivan’s ICT research analyst, Lehlohonolo Mokenela.
For the latest financial period, Altech reported a R1,3-billion loss primarily due to poor performance by these operations. However, from its continuing operations, the company reported a 73% increase in profits and a headline earnings per share of 268 cents, 23% up from the year before.
“By trimming down its West and East Africa operations, the company seems intent on realigning its strategy and focussing on its core operations in South Africa,” says Mokenela.
Potential areas of growth for the group still lie in Altech Multimedia, whose plans are being frustrated by delays in the transition to the digital terrestrial television.
Other potential areas of growth lie in convergence, following the group’s reported merger of ATC and its cellular arm, in order to increase its footprint in that market. In addition, the company expects to grow profits from its vehicle tracking operations following measures taken to reduce operating costs.
Frost & Sullivan believes that disposing of the West and East African operations, which were weighing down on profits, will result in the group experiencing better profits in subsequent periods.