The new Altron: Leaner and more diversified | Fin24

The new Altron: Leaner and more diversified

Oct 09 2017 13:26
Lloyd Gedye

Mteto Nyati is chief executive of Altron Group. (Picture: Supplied)

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Altron Group chief executive Mteto Nyati has had to hit the ground running in his first few weeks at the company. 

Appointed to take over from Robbie Venter, the son of Altron founder Bill Venter, Nyati announced his resignation from MTN earlier this year. 

Nyati says his previous career experience has stood him in good stead for the Altron job. He joined MTN in October 2014 as group chief enterprise officer, soon being appointed as the CEO of MTN South Africa.

Before that he had spent six years as managing director of Microsoft South Africa and 12 years at IBM. The experience at “pure IT” companies like Microsoft and IBM are important as these are companies that have survived by changing their offering as demand changes, he explains.

“MTN was my first exposure to the JSE, the business analysts, the investor roadshows,” says Nyati. 

“The first time I had to have tough discussions with investors about the business. That is a core part of my job now at Altron.” 

What has followed at the company was a rationalisation and restructuring process that has made it smaller, leaner and more focused.

Altron is now moving from a R30bn giant, to a more streamlined R15bn company, according to the new CEO.

They started by focusing on where Altron’s future lay. Building capacity within the company to look at external factors, and positioning the company for those realities, was also key, he says. 

These tasks required a certain type of individual; he describes them as “curious people” who “embrace change”. 

“We had to go out into the market and look within the company to find them,” says Nyati.

Streamlining the business

“We are exiting some of the industries in manufacturing that are not our core focus,” he explains. “Our focus is on the ICT sector. Anything that doesn’t talk to that vision will be disposed of.”

Nyati says that China is the “centre of manufacturing in the world” and that it is very hard for South African companies to reach the economies of scale that would allow them to compete on such a level.

Altech UEC and electrical business Powertech Transformers are expected to be sold off by the end of February 2018. 

Nyati describes Altech UEC as a “great business” with a manufacturing plant in Durban and Multichoice as its largest customer. 

“It is of value to somebody, but not to us,” he explains. “It doesn’t fit our ICT future.”

The restructuring at Altron has resulted in quite a number of job losses. The company is reported to have shed 40% of all positions at head office, bringing about huge cost savings.

“We assessed where we needed to be and how the head office had to be restructured to achieve that,” says Nyati. “Very difficult discussions” were had with many of the Altron staff who had to leave the company.
He explains that there is a growing consumer trend to reduce the number of suppliers the company deals with. 

Altron used to have 12 separate companies, each with their own sales staff who would call customers. Nyati talks passionately about breaking down these silos.

“The customer didn’t see us as one business. They saw us as different entities. Our customers now buy more from us, because we offer services they didn’t know we were offering,” he enthuses.

According to Nyati, Altron has a five-year strategy that is revisited every six months. During these revision exercises, the leadership team queries whether changes need to be made and assess possible partners.
“We are engaging with the investor community,” he states. “We are showing them where we are going.”

Nyati says that the Altron leadership’s job is to build credibility with investors by executing the strategy. And while communicating the company’s strategy to investors is important, the share price direction is less so, according to him. 

“We don’t look at the share price. Our job is to focus internally on our strategy.” 

Things appear to be going well. Earlier this month Altron announced that its headline earnings per share for the six months ended 31 August 2017 is expected to increase by between 16% and 36% year-on-year.

The market is clearly impressed – the Altron share price has returned 103% to shareholders over the past 12 months.

International business and expansion

Geographic expansion will be part of the strategy, with Nyati indicating that the Bytes UK business is doing well and that Altron had invested in Australia too.

“Bytes UK is a great business,” he says, insisting that Altron will look at offering more of its services in the UK through the company. “We’re certainly looking at acquisitions.”

In July it was announced that Altech Netstar had acquired 100% of Australian fleet management business Fleet Logistics, a company that specialises in fleet management for local government, the car rental industry and commercial customers.

At the time, Nyati said the deal “propels Altech Netstar as a dominant competitor in the fleet management in Australia, with an installed base of over 40 000 vehicles”.

This transaction followed the May 2015 acquisition of Australia’s Pinpoint Communications. This deal was about vital intellectual property that Netstar secured, he explains.

“When we started Netstar it was a stolen vehicle recovery business,” says Nyati. “That industry has since matured and evolved into something else – fleet management.”

Today, truck owners want to know where their vehicles are and how their drivers are doing. They also want to track diesel or petrol usage to prevent theft. 

“We provide these technologies,” he explains. Safety and security are of huge concern in SA and he feels Altron can be a company that can provide solutions for reducing crime levels.

After five months on the job Nyati says he has realised that the company owns “very relevant” intellectual property, which needs to be applied in business.
Altron’s subsidiary in the healthcare sector, MediSwitch, which provides a platform for transactions between doctors and medical aids, could potentially play a role in the public health care sector too, he reckons.

Dexter IT, which authenticates debit orders, is used by South African microlenders to manage their businesses.

The company, which Nyati says is “built around innovation”, holds numerous patents and invests in local research and development – spend which needs to be channelled towards areas that have the possible commercialisation and job creation spin-offs, he believes.

This article originally appeared in the 5 October edition of finweekBuy and download the magazine here.

mteto nyati  |  altron  |  altech

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