The (potential) new king of broadband
Altech may yet surprise the market with a fully-fledged, bundled triple or quadruple play offering, including its own high-speed data products.
In an interview with Moneyweb after the release of Altech’s results on Thursday, CEO Craig Venter spoke passionately about what the United Kingdom (UK) market shows.
“Look at the UK,” Venter ventured. “There you have your Sky (pay-TV), mobile phone, fixed-line and data bill consolidated on to one fixed subscription every month”. He is adamant that this is the future.
Venter believes that Altech is the best-placed outfit to make this a reality in South
Africa. He cites the group’s extensive experience with managing subscribers at Autopage (850 000 subscribers) and Netstar (over 400 000 users) as the key to beginning to bundle offerings together. “With UEC,” he says, “we have the opportunity to potentially bundle video, voice and data for customers on a single bill.
UEC manufactures the set-top boxes required for digital TV (be it pay-TV or the soon-to-be-migrated free-to-air channels). Multichoice’s DStv decoders and PVRs (personal video recorders) are developed and made by UEC. Venter says with the licensing of four new pay-TV operators, Altech as a group could also potentially have four new customers.
Altech’s WiMAX test licence is one of the other big pieces in the puzzle. The company has deployed and is testing a pilot network in Midrand. Having seen a demo of it last week, Venter speaks with enthusiasm and is very bullish about the technology’s prospects. “It’s much faster than HSDPA and an amazing technology,” he says. He sees commercial WiMAX players as being to the benefit of consumers, as this will increase competition in the high-speed data market.
The group is confident of being awarded a commercial licence for WiMAX and Venter refers to subsidiary Altech Alcom Matomo’s experience in building other networks (for example, Netstar) when asked how quickly Altech could go to market.
The company is looking at the entire continent for growth opportunities in data. With its purchase of a controlling interest in the Sameer ICT group and its deployment of a high speed data network in Rwanda, Altech is busy staking its claim in this market in Africa.
Venter says that while Vodacom and MTN have ambitions to build fibre networks in SA, the Sameer deal alone means Altech has 1 000km of fibre running from Uganda down the length of Kenya. It now also has 300km of fibre in Nairobi alone, along with 150 wireless internet hotspots.
The Sameer network also has an international gateway licence for Kenya with a link to Uganda. Altech says it plans to extend this network to Tanzania and the DRC.
Once that’s complete, it isn’t rocket science to figure out that Altech would need only a network in Mozambique and to clear regulatory hurdles in SA before it could (potentially) have a fibre network stretching from here all the way to Kenya, with all countries along the way connected.
This is the kind of strategy Venter speaks about. With a network like this in place, backhaul through Southern and Eastern Africa could become a lucrative business on its own. Venter acknowledges that this has been mentioned when discussing strategy.
The rollout and/or acquisition of networks in African markets is being done with the strategy of them all sharing common technological standards. The WiMAX network in Rwanda, for example, is at the 2.5GHz standard, the same spectrum Altech would use in SA, if awarded a licence.
Altech announced revenue of almost R4bn (R3,994bn, up 20%), with operating profit 6% higher (R306m). Venter concedes that operating profit has come down, but counters that it is now being made off a much higher revenue base: “A few years back the group was turning over R5bn, and in these past six months we’re already almost at that level [R4bn].” He adds that Altech has good prospects going forward, with a very healthy order book totalling R4,2bn. Headline earnings per share increased by 11% to R2,20 for the six months ended August 31.
Moneyweb
Loading ...