Altech casts eyes on Brazil, East Africa for growth

Altech CEO Craig Venter said last week the group was exploring various options, but that it would be "premature" to comment at this stage. It is expected that Altech may be looking at buying an existing player in Brazil, a market the company has been looking at for some time.

Brazil - where all new cars must be fitted with a vehicle-tracking device - will offer a very large market, but competition will be strong; there are a number of international players already active, or looking to enter the market, one analyst said.

Moreover, vehicle thefts are run to a large extent by gangs and stolen vehicles often end up in dangerous slums that police don't want to enter, the analyst said.

"It will be a difficult market, although it is large and offers much potential," the analyst said.

Altech has been focusing on numerous businesses to diversify its revenue streams from Autopage Cellular, its local telecommunications business, and the major source of revenue.

The Autopage business is expected to come under increasing pressure as competition in the maturing telecommunications market heats up further and regulatory changes affect revenue and profits.

Altech will be focusing on retaining its existing subscriber base and growing data services as future sources of growth, said Venter.

Analysts said Altech's operations in East Africa, where its subsidiary, Kenya Data Networks, is a large player in Kenya - can provide the biggest source of future growth. While its operations were affected negatively in the first half of the year, the long-term business case for the operation is good, a second analyst said.

Altech should be able to earn 30% of its operating profit from East Africa in the next three years, said Venter. Its operations in the region earned an operating profit of R19million in the first half, about 5% of its total profit.

Altech's high-security data centre, the first in East Africa, is expected to become operational in December.

Significant commitments have already been received from major customers, said Venter, and the investment would already have a positive impact on results in the next financial year.

"Things are changing fast in the telecommunications, multimedia and information technology sector and I believe the Altech group is ready to leverage opportunities in SA and Africa," said Venter.

Source: Business Times