Cell C takeover not on cards
The talk of Altech being interested in taking control of Cell C started when the mobile operator made no secret earlier this year that its majority shareholder, Saudi Oger, was considering disposing of its 60% stake in the company.
Operationally, Cell C has been performing well, but its hefty dollar- and euro-denominated debt, along with volatility in exchange rates, has put its balance sheet under pressure.
Venter says taking over Cell C is not on the cards, because that would complicate its relationship with mobile operators MTN and Vodacom, which do a lot of business with cellular services provider Autopage, an Altech subsidiary.
Says Venter: “It would be difficult because we would be competing with our own customers.”
Such a deal could also provoke the competition authorities to consider the market power that Altech would have.
It’s not surprising there has been some talk that Altech is after Cell C. Altech has signalled that it’s out to make further acquisitions, that it wants to get into the broadband sector and that it has a healthy cash pile of R1,7bn to fund its expansion. It has also reached an agreement with US-based CityNet to enable Altech to enter the broadband infrastructure and operator space in sub Saharan Africa.
Altech has been granted a temporary mobile WiMax licence. It may be able to compete with mobile operators if the licence is awarded permanently.
Venter says the group will be testing WiMax and will look at what kind of business model it can employ.
The group has confidence in WiMax. Says Craig Venter, Altech CEO and Robbie’s older brother: “It is widely expected to emerge as the dominant wireless Internet protocol delivery technology for the next 10 years.”
The younger Venter says Altech will enter the broadband market by offering Internet access, but will eventually offer voice and video-on-demand services.
Both Altech and Altron’s other businesses have expansion plans for SA and abroad, but will not be throwing their money at anything. “We will be selective,” Robbie Venter insists.
Expanding abroad is part of the group’s strategy to reduce the risk of being heavily focused on SA. He says the SA economy is performing well, but it is as well to have “another leg to stand on”.
Venter says the group will expand abroad by making a few small acquisitions rather than one large one. A big acquisition is more likely in SA.
Exports and revenue from foreign operations account for 20% of total revenue. Venter wants to increase this to 25% in the next few years. The company is on its way to achieving this: the Indian operation, Altech UEC India, has achieved its first order and has bought Swanib Cables in Namibia.
Venter says that besides expanding into broadband, Altron’s other businesses are doing well.
IT subsidiary Bytes Technology increased its dividend by 24% to 56c/share and bought UK-based Xerox reseller Xclusive solutions for £3,2m, and Vantage for £1m.
Powertech, the cable and power subsidiary, has increased its order book from R1,06bn at February 2006 to R2,1bn at April 2007, and plans R655m in capital expenditure over the next three years.
Venter says parts of the business focused on construction will probably slow down, but those concentrating on state entities will do well after the 2010 soccer World Cup, because these institutions have a 10- to 20-year planning time frame.
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