Electronics and telecommunications group Altron is eyeing its R1 billion cash pile to pursue acquisitions, internal investments and to pay dividends, says CEO Robert Venter.
For the six months ended 31 August, Altron reports that revenue surged 17% to R6.989 billion and operating income advanced 14% to R502 million, translating to a 16% rise in headline earnings per share of 81c.
In terms of JSE rules, the previous year`s results have been restated to comply with International Financial Reporting Standards.
The September sale of its 51% stake in African cellular operator Econet for $87.5 million (R570.437 million) plus interest was not included, because the funds received were too late for this set of results. This led to a R155 million profit.
The group sees opportunities arising out of the Convergence Bill (renamed the Electronics Communications Bill) which will allow the group`s subsidiaries to offer full voice over Internet Protocol suites (Bytes Technology Group), clear up the status of virtual private network operators (Autopage Cellular), and accelerate the roll-out of broadband services, says Venter.
There will also be opportunities to be a supplier to the second national operator, he says, once it becomes operational, although he acknowledged that a significant amount of infrastructure has already been installed in the new generation network by shareholders Easitel and Transtel.
"In the short-term there definitely will be an opportunity for us. However, it seems most of the capital investment has been done," Venter says.
Econet`s surprise bonus
Referring to the sale of the Econet stake, Venter says it was an unexpected situation where the two parties did not agree, but rather than allow for a protracted acrimonious action, the two had quickly come to an agreement that allowed them to go their separate ways.
"We are not fixated on becoming an owner of cellular network operators in Africa or elsewhere. However, telecommunications is one of our three legs (the other two being multimedia and IT) and we will evaluate deals when they arise and on their individual merit," he says.
Venter attributed the better-than-expected results to positive business confidence and sound economic conditions, increased consumer and higher public sector spending, as well as an active building and construction industry. The successful integration of CS Holdings and Digital Health Care Solutions at BTG, as well as a recovering ICT market, also contributed to growth.
Performance leads to results
Overall performance was driven by better than expected results from most of its operating companies including Autopage Cellular, Netstar, Altech Card Solutions and Isis, Venter says.
Autopage Cellular and Vodacom yesterday signed a five-year renewal of their service provider and incentive agreement with an option to renew for a further five years. Agreements with Cell C are already in place and discussions with MTN in this regard are at an advanced stage.
BTG performed above expectations with revenues increasing 23% to R1.7 billion and operating income by 35% from R95 million to R128 million, reflecting, for the first time, the inclusion of the businesses acquired from CS Holdings and the consolidation of 100% of Digital Healthcare Solutions, Venter says.
The 100%-owned Powertech group saw its revenue increased by 22% to R2.1 billion, despite the continuing strong rand, depressed conditions in the telecoms cabling industry and increased competition from foreign imports. Operating income was up by 28% to R131 million from R102.7 million on the back of strong results produced by ABB Powertech Transformers, Aberdare Power Cables, the Battery Group and the Industrial Group.
The return to profitability of Aberdare Cable`s offshore operations and the improved performance from the power cables division, Venter says, had a positive impact on the performance. However, the downturn in the telecoms sector resulted in Aberdare Cables mothballing its copper and fibre telecom cables manufacturing plant in Port Elizabeth during September.
The ongoing conversion of the financial sector to the Europay MasterCard Visa standard has seen some delays but continues to benefit Altech and BTG, according to Venter.
"In the light of the positive outlook for the sectors in which the group operates, Altron is well positioned to achieve acceptable growth in headline earnings and dividends for the full year," Venter says.
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