JSE-listed Allied Technologies (Altech) is set to sell its 70% stake in its West African unit and expects a deal to go through within the next six to eight weeks.
Altech West Africa underperformed in the year to February, because of increased competition in the low-priced non-secure paper recharge voucher market. In addition, its five-year “pioneer“ tax status in Nigeria recently ended and the Nigerian government has lifted the prohibition on imports of recharge vouchers, leading to increased competition.
CEO Craig Venter says, while the company has enjoyed good growth from the unit, which had been profitable since launch about six years ago, it is set to be sold as its products are reaching maturity stage.
Altech impaired West Africa operations by about R240 million during the year, as it wants to start the new financial year on a clean slate, says Venter. He says the firm has good products, but its margins are coming under increasing pressure.
The West African operation was hampered by margin pressure and slower than expected uptake of plastic bank cards, says Venter. He adds that the volumes are coming through, but orders are taking longer than expected.
Altech this morning released its full-year results and said revenue was higher at R9.97 billion, from R9.65 billion. It made a pre-tax loss of R240 million, as it was dragged down by East and West Africa.
Venter says Altech is in talks with two interested parties and a deal is set to go through within the next six to eight weeks. He adds that if a deal falls through within the next week or two, the company will have a controlled auction.
Selling out of West Africa will also allow Altech to invest the proceeds in growth areas, says Venter. He adds that the company is seeking higher margin value-added growth and wants to avoid commodity-based offerings.
Share