Despite the slump in operating profit from Altech's East African operations, the company says the region is still an important and primary growth driver.
The company has invested in a fibre network in Kenya, Kenya Data Networks, and also has operations in Mauritius, Rwanda and Uganda.
However, during the latest financial year, East Africa weighed on Altech's results, although CEO Craig Venter says it was the only unit that experienced issues. Altech yesterday published its full-year results, reporting revenue of R9.7 billion, up from the previous year's R9.2 billion.
However, lower operating profit from its operations in East Africa weighed on group operating profit, which dropped from R933 million to R787 million.
During the year to February, East Africa saw a drop in operating profit of R164 million. The unit reported operating profit of R32 million, down from last year's R196 million. Revenue grew slightly during the year to R562 million, from R548 million.
Venter says East Africa should have contributed between R150 million and R190 million in operating profit. He says despite the shortfall, the east of Africa is “still a major focus area”.
In the current financial year, the unit will return to previous levels of profitability, which Venter says will be seen as early as the middle of the year. East Africa already has an order book of R360 million, and two deals are in the pipeline, worth another R50 million, adds Wessie van der Westhuizen, chief strategic officer.
Delayed rollout
In addition, notes Venter, two parts of the network were not completed as quickly as they should have been, which weighed on earnings. The network has now been finalised. The unit was also impacted by the stronger rand, which weighed on reported figures.
The East African business has signed a three-year deal to backhaul traffic for Bharti Airtel, says Venter. He says growing competition in the area will drive network use.
According to Venter, the unit is achieving good margins and will return to profit again this year. He adds the recently-completed data centre in Nairobi will also add to profit.
Altech announced construction of the data centre in September 2009. Altech and co-shareholder in Kenya Data Networks, the Sameer Group, invested $7.5 million to build the centre, which will offer disaster recovery, virtual application hosting, data and application backup.
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