Listed electronics and telecoms company Altech is set to invest heavily in Brazil, to take advantage of vehicle theft in the South American country.
Altech's move to globalise its Netstar vehicle tracking division comes as the Brazilian government is trying to persuade SA's Department of Communications that its digital TV standard, ISDB-T, should be used for the country's migration to digital broadcasting.
Government's controversial decision to review its initial selection of the European DVB-T standard confused industry and has hurt set-top box manufacturers, such as Altech's UEC division.
However, Altech now aims to move into the Brazilian market through its Netstar division and will shortly announce a “significant” acquisition, says CEO Craig Venter. He reveals that the company is looking at buying a telecoms and vehicle tracking unit in Brazil.
Venter would not disclose the exact value of the deal, but says it should come in at under R600 million. He says Altech is in the “throes of making it happen”, but has not disclosed more information.
Altech has a history of being acquisitive and is focusing on globalising Netstar during the rest of the financial year, notes Venter. The company traditionally shies away from debt and is likely to fund the deal through its cash reserves. Venter expects Altech to have between R600 million and R800 million in the bank at year-end.
Huge market
In addition, 71 776 vehicles and motorcycles were reported stolen in the year to March, which is a decline on the 75 968 stolen last year, according to police statistics.
However, Brazil has a substantially larger population than SA, with about 200 million people, compared with some 48 million locally. Altech has been seeking to enter the South American country for some time.
Two years ago, Brazilian authorities announced a plan to install automobile and motorcycle trackers on every new vehicle in the country, starting in August 2009.
New deals
Altech's Netstar division accounted for R472 million of Altech's R4.8 billion revenue in the first six months of the year to August. It has recently signed deals with City of Cape Town, SA Blood Service, Sandown Motors and Taxi Choice, which will positively impact the next reporting period.
Altech Netstar claims to have pioneered the stolen vehicle tracking and recovery industry in SA in 1994. It employs over 800 people, based at its head office in Midrand, regional offices in Durban and Cape Town, and branches in Port Elizabeth, Rustenburg, Richards Bay, Newcastle, Witbank, Bloemfontein, Polokwane and Nelspruit, it states on its Web site.
Over 10 000 Netstar tracking units are installed each month, through a network of over 100 fitment centres around the country. It also has operations in Zambia, Namibia, Swaziland, Botswana and Malaysia.
Competitor Digicore also has its eye on the South American market. CEO Nick Vlok recently said South and Central America is a focus area for expanding the company. Vlok explained the business has a presence in some countries in the region on the back of its relationship with BHP Billiton, and will expand further on the continent.
In addition to expanding into Brazil, Altech is completing due diligence on an IT company in which it expects to invest. Venter says there is a possibility that Altech's IT assets could be merged with those in Altron if the parent company buys out the 38% of Altech that is listed on the JSE.
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