Subscribe
  • Home
  • /
  • Business
  • /
  • Altech Autopage subscriber base selling for R1.5b

Altech Autopage subscriber base selling for R1.5b

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 25 Sept 2015
Altron CEO Robert Venter expects interim results to show a headline loss per share of between 60 cents - 70 cents.
Altron CEO Robert Venter expects interim results to show a headline loss per share of between 60 cents - 70 cents.

Altron will sell its Altech Autopage subscriber base to South Africa's major telcos for almost R1.5 billion. Altron announced that the sale was imminent back in May and has now officially laid out the details of the deal that will see MTN, Vodacom and Cell C taking over Autopage's GSM subscriber bases.

MTN, Vodacom and Cell C will together pay a cash consideration of approximately R1 467 million plus VAT for the acquisition. In addition MTN has agreed to purchase Autopage's handset receivables book relating to its subscriber base for an additional R219 million plus VAT. Cell C and Vodacom have also agreed to the billing and collection of Autopage's handset receivables book pertaining to their respective subscriber bases, less agreed administration charges that they may incur.

Autopage is South Africa's largest independent cellular service provider and has around a million customers. Altron says the sale will help to reduce the overall debt of the group and restore cash to the company's balance sheet.

No Autopage employees will be transferred to the telcos in the deal and Altron and Autopage will be bound by a two-year restraint of trade, stopping them from directly competing as a cellular service provider against the three purchasers.

The Disposal is still subject to unconditional approval by the Competition Authorities as well as needing an official go ahead from Altron's shareholders and the Altron board.

Termination rates hurt

Altron says its decision to sell was largely due to the impact of cuts to mobile termination rates on its income, as well as "aggressive market competition".

Towards the end of September last year, the Independent Communications Authority of South Africa (ICASA) decreed a reduction in mobile termination rates, the amount telecoms operators charge each other for ending calls on their networks, with a planned glide path for further reductions going forward.

Altron says it had to take into consideration the impact which these mobile termination rate reductions will have on Autopage's business in the future.

"The consequence of these mobile termination rate reductions is that Autopage and the industry has and will continue at an escalating rate to experience increasing pressures", says Altron.

Loss predictions

Tough times for the majority of Altron's divisions has resulted in the company warning that its interim results will see a headline loss per share of between 60 and 70 cents, compared to headline earnings per share (HEPS) of 72 cents in the previous corresponding period. Basic earnings per share are expected to be a loss of between 148 and 158 cents, compared to a profit of 58 cents last year.

Altron says the loss has a lot to do with a decline in profit for its TMT division (telecommunications, multi-media and IT businesses) despite a pleasing performance by its IT businesses. Tough times for the multimedia division were blamed on a "combination of reduced order intake in its core set-top box business in Africa, as well as on-going delays regarding the roll-out of the South Africa digital terrestrial television migration program".

Disappointing retail customer take-up of the Altech Node saw management announcing the decision to close this business earlier this month, after attempts to find a buyer failed. The company will retain and continue to use the Node's technology within the group but has promised active subscribers a refund of R1 999 per Altech Node device.

Altron says the Autopage business has continued to decline and its power division, in particular Powertech Transformers, is also experiencing a marked performance deterioration "as a result of difficult macro-economic conditions and the various challenges created by Eskom's current position".

Altron's interim financial results for the half-year ended 31 August 2015 are expected on 7 October.

Share