Jasco banks on telecoms

Johannesburg - JSE-listed Jasco says its business is favourably placed to leverage the expansion of electrical and telecommunications networks in Africa.

"Despite a slowdown, MTN, Vodacom and other telecommunications companies plan to expand network coverage. Our products such as WiMAX and WiFi increase service offerings for network operators," said Jasco CEO Martin Lotz.

"Submarine cables being installed for international bandwidth will also stimulate the African telecommunications infrastructure market. We believe broadband prices will massively reduce from here."

Lotz was speaking to Fin24.com after the release of its results for the six months to end-February 2009, for which it reported a 16% gain in operating profit.

Jasco's telecommunications offerings tackle the last mile of network deployments - that is, the portion of the network which links homes and offices to exchanges - with wireless technologies used to extend core networks to customers.

Annuity income from security technology contracts looks promising, and Jasco has large contracts to fulfil in 2009. Lotz said he expects consumer spend to improve towards the end of this year.

Malesela Taihan Electric Cable (M-Tec), a company acquired by Jasco for its electrical business unit, has performed poorly since entering the stable due to a drop in volumes and commodity prices.

A delay in the rollout of overhead conductors to client Eskom further damaged the new business' performance and negatively affected the group's overall business performance.

But M-Tec has a five-year contract providing cables to Telkom that will start up in 2009, among other agreements it says will bolster the business.

M-Tec provides aluminium, copper and fibre cabling. This allows the business to benefit from network maintenance from the likes of Eskom and Telkom, as well as provide fibre for next-generation network rollouts.

- Fin24.com