South Africa-based Altech has established a leading position as a provider of converged communications in South Africa and East Africa. CEO Craig Venter explains how the company is gearing up to go global.
The telecommunications world is one of continuous change and certainly offers an exciting ride for those flexible and responsive enough to achieve success in this highly competitive environment. For South Africa-based Altech, already a prominent player in the South African TMT (telecommunications, multi-media and information technology) markets, the long-term goal is to continue developing converged services across the TMT environment and to expand internationally to establish a truly global footprint.
Today, the Altech Group comprises some 33 companies spread across 14 countries, but this configuration is not likely to remain static for long. “We have achieved this international spread through a calculated and highly selective mergers and acquisitions strategy that has paid off well and we believe it will continue to do so,” explained CEO Craig Venter. “During the past two years we have concluded well over a dozen acquisitions and we currently have R1 billion in cash available for further acquisitions. So we will continue to search for opportunities and our primary focus in this respect is the BRIC (Brazil, Russia, India and China) markets.”
Altech is currently structured into three divisions. The Telecommunications and Converged Services division provides communication services ranging from voice, data and video to digital radio communication networks and internet services. The Multi-media and Electronics division designs and produces a variety of multi-media and electronics products such as set-top boxes, and distributes electronic components, products and solutions. Meanwhile the Information Technology division provides services ranging from the production of prepaid cellular vouchers, payment and collection solutions for the micro finance industry and point-of-sales and PIN pads.
Within the home market, the Altech name is perhaps most easily recognised through Altech Autopage Cellular, the country’s largest independent cellular services provider. Another major business sector is Altech Netstar, a leading provider of stolen vehicle tracing and recovery technology and services, which operates across southern Africa and responds to some 600 incidents per month on average.
In the wider African context, Altech has been a prime mover in delivering converged telecommunications to East Africa. This initiative began in 2007 with the launch of a new broadband network and internet services company, Altech Stream Rwanda. Then it continued through 2008 with the acquisition of a controlling interest in three subsidiaries of Kenya’s Sameer ICT Group for a total of US$85.2 million. Today, Altech Stream East Africa is the largest data network infrastructure player in East Africa and its operating companies include Altech Kenya Data Networks, Altech Swift Global, Altech Infocom Uganda and Altech Stream Rwanda.
Mergers and acquisitions are notoriously difficult to manage, but Altech has learned a great deal from the success of its expansion into eastern Africa. While the ongoing focus is to continue to bed down these regional interests, the company has continued to invest there, not only acquiring interests in the TEAMS (The East African Marine System) and SEACOM submarine communications cables which connect the east of Africa with the global communications network, but it has also recently completed the construction and commissioning of a new VeriSign Level 7 security approved data centre in Kenya. The aim is to provide new converged services in areas such as disaster recovery, data archiving, hosting and intrusion management. “This facility has enabled us to offer governments, multinational corporations and local businesses access to state-of-the-art data security,” Venter said, “and we have already received significant commitments from major customers.”
When considering the feasibility of a new target for acquisition or partnership, the company operates a comprehensive due diligence process. However, there are a number of specific considerations that are taken into account. These include examining the risk profile and issues around language, culture and the business environment. At the industry level, a clear understanding of current developments and growth prospects is essential and care is taken to examine the regulatory environment including specific licensing and local ownership requirements. At the corporate level, the company seeks to establish what opportunities exist for identifying and profiling potential target companies and finally, it analyses the value to be gained by establishing partners with local knowledge.
The market in eastern Africa, however, is changing rapidly and Altech is adapting to meet the challenges. “With regard to East Africa, the competition is increasing,” said Venter. “Moreover, with the additional marine capacity being made available, bandwidth pricing is likely to drop. We will continue to focus on our core strengths to ensure efficiency and customer satisfaction.”
At an operational level, the company’s strategy over the past 10 years has been to move from a telecommunications organisation to a converged services group—in other words bringing all the TMT offerings together and making them available through a single network or interface. Looking forward to the next five years, the company aims to fully capitalise on its strengths in each of its marketplaces and in particular to continue focusing on convergence and developing the next generation of communications technology.
Research and development will be playing a role in this and the company is stimulating the growth of new intellectual property through a company-wide policy of innovation.
In the wider context, there is a wealth of opportunities that Altech intends to tap into. The South African government driven digital migration programme, for example, will result in a country-wide switch from analogue broadcasting to digital broadcasting technology and there are tremendous opportunities for supporting that migration with digital technology.
With this level of growth and development on the horizon, the company has taken steps to prepare the organisation for expansion by appointing a new chief operating officer, Jeffrey Hedberg. His brief is to provide operational leadership for each of the Altech Group companies and he will be supported by group executives in each of the three operating divisions. “The appointment is in line with our key strategic objectives of growth through globalisation, income base diversification, M&A activities and convergence,” Venter said. “We believe his international experience will be of significant value as we gear up to take a global leadership position in the TMT sector.” http://www.altech.com/
