'Altech emerging mkt focus pays'

Johannesburg - Industry analyst Frost & Sullivan said on Thursday that South African telecommunications group Altech's strong African footprint and emerging market focus was beginning to pay off.

South African telecommunications group Altech on Thursday reported that its diluted headline earnings per share for the year ended February 2009 were 547 cents, up 11% from the 494 cents reported the previous year.

Frost & Sullivan said that Altech's focus on emerging markets has enabled it to take advantage of the sustained demand for information and communications technologies in these regions.

The group's ICT industry analyst Lindsey McDonald said: "Altech's wide portfolio of services has been key to sustaining growth in a tough environment. It offers services that are in high demand."

Frost & Sullivan said that the acquisitions made by the telecommunications group in East Africa are paying off handsomely and expects the ICT sector in the region to continue to grow at between 15% and 20% annually for at least the next three years.

"Altech is in key countries like Kenya, Uganda and Rwanda, so it has the region well covered," McDonald said. "There are signs that East Africa is growing more volatile, but there will still be growth, especially once the global crisis subsides. As more international companies look to Africa for growth, Altech is already well established to offer the services they will be looking for."

The group's acquisition of Technology Concepts (TC) has also proved beneficial. It has helped Altech to consolidate some of the other ISP offerings it has to really gear its services towards business clients.

The ECNS licence it has been granted in South Africa following the landmark court ruling in its favour will also open an important area of growth, according to Frost & Sullivan.

"To take full advantage of this licence, Altech will however need to build additional infrastructure," McDonald cautioned. "This will require additional finance, and the cost of borrowing money has increased. This increases the potential risk," she said.

Looking forward, McDonald believes that the group's next step could well be to increase its presence in West Africa.

"It makes sense for the group to look at West Africa now," she said.

"Although the business culture is quite different, it is still an emerging market and Altech will be able to leverage its existing expertise there."

Altech declared a dividend of 323 cents, which was 12% higher than the 288 cents from the previous year.

Revenue was up 32% at R9.2bn from R8.2bn before.

- I-Net Bridge