Altech in key empowerment drive

Craig Venter, CEO for Altech

Craig Venter, CEO for Altech, a South African multi-billion rand high-tech group, shares his insights on the future of the group, the SA government’s role in the ICT sector and a recent empowerment deal with Southern Palace. What are your plans as regards further investment in IT and broadband infrastructure in South Africa?

Craig Venter: We will continue to stick to our growth strategy around convergence in the Technology, Multi-media and Information Technology (“TMT”) sectors.

Locally we invested more than R30 million in upgrading Altech Technology Concept’s (ATC) network to offer businesses a range of high quality telecommunication products and services. The new network went live in February 2011.

Future growth will be driven by value added converged services – offering voice and data services – and an alignment between Altech Autopage Cellular (AAPC) and ATC is well underway to provide the necessary platform to execute a converged voice / data offering to the AAPC client base of one million customers so as to position AAPC and ATC to aggressively compete in the enterprise market. What are your opinions on government’s approach to job creation in the IT sector?

Craig Venter: It is important that the private sector works with government to create an enabling environment in which business and government can work together for job creation, economic growth and prosperity.

The Minister of Communications, Roy Padayachie, has indicated government’s commitment towards liberalising the South African telecoms market and this bodes well for the future of ICT growth in South Africa and the local economy.

The continuing discussions by the Minister of Communications with ICT industry leaders bodes well for the future of ICT growth in South Africa and the South African economy. Collaboration between government and industry stakeholders is a must in order for South Africa to reach its job creation and economic growth goals.

It is a well-known fact that the level of broadband penetration within a country has a direct impact on GDP– as much as 1% for every 10% broadband penetration achieved.

In this vein, we were delighted by the decision by the Department of Communications to choose the European standard of DVB-T2. DVB-T2 will give South Africans access to many more free-to-air channels than what is possible with the older version of the standard and will go a long way to reducing the digital divide in South Africa.

Demand for set-top boxes (STBs) in this country is estimated at over nine million and thirty million for the rest of sub-Saharan Africa and Altech UEC is well positioned to capture a significant portion of this demand. Additionally, the move to DTT will have an impact on job creation in the local manufacturing sector.

Furthermore, for South Africa to be globally competitive, we need more than the infrastructure we already have or are planning to build. We need a strong core of highly skilled professionals in science, engineering and technology. We need to demystify math and science and take it into the mainstream so that everyone can participate in it on an equal basis.

In this vein, we recently opened our Kwamashu Multi Media Centre for Learning in KwaZulu-Natal. The centre is a three-way collaboration between the Department of Education, Altech UEC and Protec, a non-profit organisation that takes children from previously disadvantaged backgrounds and develops them in the areas of maths, science, English and life orientation.

Our partnership with government is part of an education offensive and is in response to the dire need for quality mathematics and physical science education for scholars from disadvantaged communities and under resourced schools.

Partnerships like ours with the Department of Education will enable us to cultivate a new crop of science and technology students at secondary and tertiary level. Can you expand on the recent partnership with Southern Palace and Altech’s strategy in the M&A market?

Craig Venter: Altech entered into an empowerment transaction whereby the Southern Palace Group of Companies (Pty) Limited (“Southern Palace”) acquired an effective 25% plus 1 share equity holding in the holding company for the sub-group consisting of Altech AlcomMatomo, Altech Alcom Radio Distributors and Altech Fleetcall.

Together the three companies provide a range of radio communication and fleet management services and solutions to clients in the Southern African region.

Southern Palace is an industrial holding company with investments in telecommunications, transport, automotive, equipment manufacturing, steel and metal recycling.

Each partner is able to add value while being complimentary to each other in terms of their skills set and business record.

The vendor-financed value of the assets concerned amounted to approximately R405 million.

Any international business of the sub-group concerned outside of South Africa and its intellectual property have been retained and remain wholly-owned by Altech.

In terms of our M&A strategy, Altech will continue the diversification of its income base through globalization and M&A activity.

We have grown to where we are – 33 operating companies in 14 countries – due to a calculated and highly selective M&A strategy that has paid off well and will continue to do so. In the past 10 years we have moved from a telecommunications to a converged services group.

What is required to be successful in mergers and acquisitions is a strong M&A strategy, strong balance sheet, robust reputation and in South Africa, strong Broad Based Black Economic Empowerment credentials.

Transformation and progressing key empowerment transactions remains high on our agenda and during the past financial year (2010 / 2011) we completed several important empowerment ownership transactions involving key operating subsidiaries and assets to the value of more than R2.4 billion and achieved a consolidated Level 3 B-BBEE (Broad-Based Black Economic Empowerment) contributor accreditation.

The company also achieved a 110% procurement recognition level, 28.6% black ownership and 13.2% black female ownership, scoring maximum points in these areas.

Our goal is to become a truly global organisation and our growth strategy is built around ensuring that the Group has a global footprint. Statistically, 70% of acquisitions either fail to add value or reduce the value of the acquiring company. The acquisition frenzy that began with the “tech boom” resulted in many companies’ share price falling by over 90% and saw shareholder value destroyed. We resisted joining this frenzy and our share price was hardly affected. During the past two years we have concluded well over a dozen acquisitions.

By: Denisa Oosthuizen