Good year for Altech

By Candice Jones, ITWeb online telecoms editor

Johannesburg, 15 Apr 2009

Local ICT firm Allied Technologies (Altech) could see a substantial boost in earnings at its upcoming year-end results.

In a trading statement, it says basic earnings per share for the year ended 28 February are expected to be 30% to 38% higher than previously reported. It also notes that adjusted headline earnings could see growth of between 10% and 19%.

Altech has experienced good financial growth over the last few years. This was confirmed at its last interim results, for the six months ended August 2008, when the company's revenue was up 13% and headline earnings up 19% for the half year.

The company has been focusing on building its annuity-based revenue, which is widely tipped by analysts to be the safest income to help firms withstand the economic downturn. It also has fingers in several lucrative pies that keep it in good stead.

These include Altech UEC's participation in the roll-out and manufacture of the required seven million set-top boxes to be used in the migration to digital terrestrial TV broadcasting. It also has a partnership agreement with SA's second national operator, Neotel, which gives Altech the rights to distribute its consumer products. The company's diverse product solutions also give it the opportunity to start playing hardball in a converged ICT arena.

By August last year, Altech had 77% annuity revenue over 23% hardware-based income. This compares to August 2003, when it had 55% annuity and 45% hardware-based.

Altech made headlines during this financial period with its battle against the Department of Communications for its right to self-provide. The company followed up on its victory with an investment in 11% of The East African Marine System undersea cable.

The company also announced its R45 million acquisition of Internet service provider (ISP) Lateral Technology Concepts. Altech says it has been interested in purchasing an ISP for some time. It feels the changes in the regulatory landscape make moving into Internet service provision a natural extension of Altech's existing business.

These are only the local investments; investors can expect to see some international movement at the company's financial year-end. At the interim results presentation, Altech made it clear it wants to aggressively grow its global footprint.