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Johannesburg - Technology group Allied Electronics Corporation [JSE:ATN] (Altron) says its Altech subsidiary stands to benefit from the migration to digital television in South Africa.
The group’s financial results for the year to end-February, released on Tuesday, showed a 10% decline in revenue to R22.3bn.
However, CEO Robert Venter said his company was showing a strong recovery, and the Altech subsidiary was performing well. He added that the move to digital terrestrial television (DTT), which will replace current systems for free-to-air TV in South Africa, would offer opportunities.
"Through our Altech UEC subsidiary we are very active in manufacturing set-top boxes for Multichoice, for example, and certainly with the digital migration project there's an opportunity of about 8 or 9 million boxes that need to be supplied over the next three to four years,” said Venter. He added that Altech will invest in resources as well as research and development to be a key player.
The final migration to DTT has been postponed but must be completed by 2015 in order for South Africa to comply with international regulations. The new system will require digital decoders for public access channels such as those offered by the SABC and eTV.
Telecommunications is a more significant growth area where Altech has made inroads, especially in East Africa.
Venter said that more acquisitions were on the cards for Altech.
He expects the development of broadband technologies to open up new opportunities for Altron.
Bytes, another major Altron subsidiary, saw a 1% revenue drop in what Venter described as a “tough trading period”. Bytes’ earnings before interest, depreciation, tax and amortisation (Ebitda) fell by 8% on declining margins as a result of once-off non-recurring charges in its retail ATM business.
"Altech was our star performer, Bytes was not as strong as we would have wanted and Powertech was operating in fairly weak market conditions too," he said.
"But trends are positive. We've seen three consecutive six-month periods of an upward trend which proves we've seen the worst of the recession. Our focus going forward is going to be on top-line growth and leveraging our lower cost base," he said.
Venter added that services-based business and a focus on annuity income would underpin future growth for Bytes.
Altron's group Ebitda fell by 11% to R2bn for the period under review, with a 22% reduction in adjusted diluted headline earnings per share. The group broadly maintained its dividend cover at 2.5 times based on adjusted headline earnings per share, declaring a dividend of 90c per share.
- Fin24.com
