Altech aims to double up revenue by moving up the technology chain, says CEO Craig Venter.
JSE-listed Altech aims to double revenue within the next five years and is targeting areas such as smart set-top boxes, which are fully IP-enabled, and in-car infotainment in a bid to reach its target.
Altech has identified four areas of growth, which will deliver about 65% of its additional R10 billion turnover target. These areas will not require heavy capital spend, but will be supported through continuous research and development (R&D) investment, says CEO Craig Venter.
Venter says the bulk of the additional revenue will come from technology innovations in areas such as set-top boxes, cloud computing and telematics. The move up the technology ladder will lead to in-car WiFi and homes connected through decoders, he explains.
Altech's R20 billion revenue target, in the next five years, is not cast in stone, but it has sufficient planning in place to make sure it gets close, says Venter. Yesterday, Altech reported R9.97 billion in revenue for the year to February. Adding back inter-company sales, it moved past R10 billion.
Venter explains that vehicle tracking is moving beyond simple recovery and is shifting to infotainment with full in-car WiFi capability. This will allow services such as traffic information and concierge offerings, enabling drivers to book restaurant reservations through the device.
In addition, cellphones will be able to connect to networks through the telematics system, says Venter. CTO Willie Oosthuysen adds Netstar is moving to value-added products, such as insurance telematics, which captures driver behaviour and influences premiums.
In the house, set-top boxes are set to become network hubs and will connect all devices to the Internet, says Venter. This will open up the possibility of downloading applications onto televisions, he adds.
Altech has already produced pilot set-top boxes that are fully IP-enabled. Decoders should be in the market within the next six to 12 months, Venter adds.
Altech's growth plans will not require much in the way of capital investment, says Venter. He says the group will pull from its current capabilities while continuing to invest in R&D.
Currently, Altech spends about R100 million a year on R&D at its set-top box manufacturer, UEC, while another R20 million is spent at Netstar. Total R&D spending is expected to come in at between 6% and 7% of revenue in future, says Venter.
Venter notes that Intel is collaborating with Altech to develop chips that can be used in decoders and vehicle tracking devices.
Last June, global chipmaker Intel said it would invest $5 million, or R34.3 million, in Altech to explore collaboration opportunities in the telecoms, multimedia and IT sectors in Africa. Venter says this amount is set to be increased.
Oosthuysen says Altech has a five- to seven-year growth horizon and is currently putting platforms in place.