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Johannesburg - Several companies trading in the information, communication and technology sector survived the global economic slump relatively unscathed.
"ICT private sector institutions have shown some resilience in these tough times," said Hubert Wentzel, divisional director of EOH consulting. "Those that have done well were able to do so because of their ability to be agile enough to adapt."
Allied Technologies Limited's (Altech's) diverse portfolio is an example of company revenue stream diversification. Frost & Sullivan ICT industry analyst Lindsey McDonald said Altech's range of services has been key to its sustained growth.
Altech reported an 11% revenue increase to R9.1bn for the year to end-February. Operating profit rose 32% to R874m, and net asset value per share increased by 15% to 2 328c.
Its latest acquisitions, internet service provider Lateral Technology Concepts and payments solutions group NuPayment Solutions (NuPay), should enable Altech to continue revenue stream growth.
Geographical diversification has also helped companies to battle declines.
Revenue growth in the Middle East and Africa as well as Australia have helped Dimension Data offset weaker performances in the Americas and Asia.
"Its global diversification and services saved the day," said MD of Kaplan Equity Analaysts Irnest Kaplan.
Recipe for success - and failure
Those companies tapping into public sector funding also benefited. For instance, GijimaAST owed a significant degree of its success to the fact that it has penetrated the government sector.
It comprised 43% of GijimaAST's R1.5bn revenue, up from 19% in 2005, said chief financial officer Carlos Ferreira. According to him, the company's exposure to the public sector has been a deliberate strategy.
"This is an area in which Gijima's competitors are still trying to find traction and the company's got first mover advantage in this space," said McDonald. "This situation should remain the same for at least a couple of years to come."
However, those companies which kept themselves busy with acquisitions have done less well.
"Faritec, it would seem, has made too many acquisitions and been unable to bed down these new operations," McDonald said. "The Dialogue group also made a string of acquisitions but is not managing to optimise these purchases due to the current financial crisis."
Rather than following a trail of acquisitions, companies may benefit from a healthy customer service reputation.
"Vox Telecom has slowed down on the acquisition trail this year and is now ensuring that it satisfies the needs of its extensive customer base," said McDonald. "This is going to be even more important as the industry becomes increasingly competitive."
Although there are concerns within the ICT industry, its overall performance has remained "above the median" in comparison to other industries, said Wentzel.
"ICT has become more strategic to a large number of organisations and is no longer seen as an expense," he said. "Budgets are not as easily cut as they used to be."
- Fin24.com
