Altech negotiating a foreign acquisition
TECHNOLOGY group Altech is negotiating to buy a global high-tech player under a strategy to generate 45% of its revenues abroad, up from just 14% today. CEO Craig Venter would not name the target or say which sector it operated in, but said Altech was happy to spend its R500m cash reserves and go into debt for foreign acquisitions.
“It’s a significant global player that operates mainly in South America and Europe,” he said. “There are some significant opportunities still to address and we are not averse to debt .”
Altech’s results for the year to February show steady growth across all divisions has pumped up its revenue to R8,2bn from R6,7bn a year ago.
After-tax profit of R435m was up from R423m and headline earnings per share rose 23% from 414c to 511c. It is paying a dividend of 288c per share, up from 240c.
Cash reserves will plunge from R1,5bn to R500m as it pays expenses, including a dividend and R600m for its purchase of 51% of the Sameer group’s telecoms and internet operations in Kenya and Uganda.
Altech is competing with MTN to buy the local branch of Verizon, a US-based voice and data carrier. While MTN could afford to pay more, Venter believes Altech stands a good chance of winning as Verizon may expect competition authorities to block a takeover by MTN.
“We don’t have a huge data presence in SA so I don’t think we’d have competition challenges,” Venter said. However, one industry source said rival voice and data carriers were already preparing to lobby the competition authorities to prevent the deal if Altech was the preferred bidder.
Venter said Altech’s investment in Kenya and Uganda through the Sameer group opened up huge opportunities to grow into other countries as Altech controlled the largest data network operator in central and east Africa. Africa accounted for less than 1% of world broadband networks, but volumes were growing 70% a year.
Altech’s UEC division, which develops set-top boxes, hopes the government project to convert broadcasting signals from analogue to digital will create demand for up to 7-million units. With no local rivals in that sector, UEC was confident of winning a substantial share of the work, Venter said.
Altech’s two main money-spinners are Autopage Cellular and Netstar . Their recurring revenue, plus record-breaking order books for its other divisions, meant Altech was comfortably placed to avoid much damage if SA’s economy deteriorated, Venter said.
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