Altron is betting on the growth potential of the Internet of things (IOT) as a new growth area it believes will help boost its sluggish revenue.
"As a team, we have chosen to focus on four key growth areas: cloud services, data analytics, security and IOT," CEO Mteto Nyati said at the group's interim results presentation last week.
Nyati said Altron's subsidiary Altech Radio Holdings specifically has a lot of growth prospects in terms of IOT and broadband services.
"Altech Radio Holdings is one of those operations which we feel has got a great potential within our business. It will be going after the big broadband opportunities in South Africa and elsewhere in Africa; we are gearing ourselves to go after that opportunity. Already we are a company that has one of the largest implementations of broadband in both the metros and in the provinces," Nyati told ITWeb in an interview.
"There is an emerging Internet of things and we already have a network so let's enable that network to do so much more than it is currently doing. That is what we are gearing this company to do," Nyati explained.
Altech Radio Holdings saw interim revenue improve by 29%, to R586 million, for the six months ended 31 August. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 19%, to R32 million, compared to the prior interim period.
"Altech Radio Holdings is building the Gauteng broadband network. If you look at the City of Tshwane and the City of Cape Town, we are the ones building those networks. So we are already very well entrenched in the broadband space with unique capabilities.
"Also, if you look at a company like the Passenger Rail Agency of South Africa (Prasa), we build and manage the communication and signalling networks for Prasa. We also build and manage networks for the South African Police Service ? its Tetra network ? so this places us in a unique position to do so much more because the networks are there already."
Nyati said Altron, however, has no plans to build its own specific national IOT network.
"For us, it's more about services, so we would be working with partners, like what we are doing on the broadband side we are working with others, even our competitors in that space, in order to deliver solutions to our customers. So we may have to work with the mobile network operators and we are open to that."
Overall, the JSE-listed group's interim results showed revenue was down almost 24% to R8.7 billion. In terms of continuing operations, revenue was down 10% to R6.8 billion, but would have been up 5% on a constant currency basis. EBITDA, from continuing operations on a constant currency basis, was 19% higher at R501 million. Headline earnings per share from total operations were up 29% to 40cps.
"Bytes Systems Integration may not be growing right now but to us that business is a sleeping giant when you look at the capabilities that we have there. It is a business where we are looking to leverage the growth trends of cloud, security and data analytics," Nyati added.
Bytes Systems Integration's interim revenue dropped 3% to R625 million and continues to operate at very low margins. Interim EBITDA, however, soared 250%, growing from R2 million last year to R7 million this year.
Bytes Systems Integration and Bytes Universal Systems are being combined under a new managing director.
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