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OPERATIONAL REVIEWSTELECOMMUNICATIONS Revenue for the reporting period was marginally higher compared to the same period of the prior year, largely due to slower subscriber growth and a decrease in tariffs from the networks. The Operating Income budget was achieved; however this was below that of the prior year due to the expected non-achievement of the Vodacom quarterly incentives for the first quarter. Agreement has been reached with Vodacom to recover some of these incentives during the remainder of this financial year, subject to certain subscriber acquisition targets being met. During the period AAC focussed on more effective cost of sales to drive future growth in subscriber numbers and stay competitive in the market. In line with the continued focus on broadband and data growth, AAC launched the "Broadband Central" campaign nationally which has resulted in positive growth in all broadband products. An alignment with Altech Technology Concepts (ATC) is well underway and will provide the necessary platform to execute a converged voice/data offering to the AAC client base. The expected completion of the Phase 1 roll out of a number of competitive integrated services such as hosting, hosted services, consumer ADSL and VoIP is planned for November 2010. In addition, ATC has been relocated to the AAC campus in Midrand to further facilitate collaboration between the organisations. The reduction of Mobile Termination Rates implemented by ICASA continued during the period under review. The implementation of the suggested rate reductions initially to 65 cents had an impact on the Fixed-to-Mobile Least Cost Routing (LCR) revenues, although these were in line with expectations and budgeted for accordingly. AAC in collaboration with ATC will implement a VoIP solution with the intention of migrating a large proportion of existing LCR customers to the new VoIP platform. ICASA was expected to announce a final decision on Mobile Termination Rates, however, this has been delayed. The expanded investment within ATC will provide the necessary platform to develop and market converged voice/data services on an enhanced basis. Significant emphasis has been placed on retaining existing subscribers and signing up new customers through AAC's current national retail stores and by increasing the distribution footprint with the opening of additional retail stores in specific A-grade shopping malls. Sales via the retail franchise channel have increased by 51% over the previous half year. Service delivery remains a core focus and initiatives to improve areas of service delivery are constantly underway. Meeting the 31 December 2010 deadline for RICA registrations is also a priority. Altech Netstar Group Netstar Traffic was launched in partnership with Garmin and a Radio Data Signal (RDS) agreement was signed with the SABC, making Altech Netstar the only tracking company with the ability to broadcast digital traffic updates via radio. Altech Technology Concepts Approval for the expanded investment within ATC was concluded during the period. This will allow ATC to transform from a Tier-2 to a Tier-1 internet service provider by implementing a new network with its own international links. ATC will have both SEACOM and SAT-3 capacity, thereby ensuring international link redundancy. This new infrastructure will enable ATC to enter the market by November 2010 with a number of new internet and related products for both the business and consumer markets. ATC will extend its range of managed services that will be offered to the corporate market via its already strong market presence and to the SME and consumer market via Altech Autopage Cellular. Converged Services and Connectivity
Altech Alcom Matomo Altech Alcom Radio Distributors Altech Fleetcall Altech Stream East Africa Progress with infrastructure roll-out will resume fully in the second half of the year, and longterm network growth will continue. KDN's position as the infrastructure provider of choice in East Africa will be strengthened by the current expansion of its network in neighbouring countries, notably Uganda and Rwanda. On the marine side, SEACOM capacity has been fully allocated and optimisation programmes are in progress to balance the loading between TEAMS and SEACOM capacity, in addition to providing a blended offering with increased resiliency. Competition in the environment has increased significantly with additional marine capacity being made available to the East African market, with a resultant impact on bandwidth pricing. This has enhanced the need for focussed operations and hence the businesses have been orientated along wholesale and retail lines, with KDN focussing on the wholesale and regional segment whilst the other Altech companies in Uganda, Kenya and Rwanda focus on the retail and application segments of the market. It has been a year of consolidation and rationalisation for Altech Swift Global ("Swift"). The company's technical platforms have been integrated into the KDN infrastructure framework, whilst all retail services and products have been assimilated from KDN into the Swift portfolio as a function of the retail/wholesale business re-orientation. Altech Infocom Uganda ("Infocom") is the leading internet service provider (ISP) brand in Uganda and is recognised as a technologically-strong services entity. It also holds attractive telecommunications infrastructure and service licensing rights within Uganda. In addition to its existing WiFi and WiMax network business, Infocom is starting to generate positive revenue from distributing undersea data cable capacity to Uganda. Major projects which are planned include the completion of the Kampala-Kigali fibre loop and the metro fibre implementation in Kampala. Altech Stream Rwanda is a start-up broadband network and internet service provider (ISP) which was granted the necessary internet and gateway licences in June 2007. By the 2009/2010 financial year end the business had completed the rollout of an outdoor WiFi network for consumers and a WiMax network for corporate customers, both covering most of Kigali, the capital city. The company is well positioned to achieve market leadership in Rwanda through the distribution of undersea bandwidth capacity and interconnect facilities, and has recently secured ducts from the Government of Rwanda from the Ugandan border through to Kigali. The company has also been successful in winning a key government tender for the provision of bandwidth services to the Government of Rwanda. MULTI-MEDIA AND ELECTRONICS Additional investments were made in the local manufacturing plant (which services the local and international markets) and a total of two million STB units were produced in the last 12 months. Ahead of the implementation of the South African Digital Migration (DTT) programme, AUEC developed a terrestrial STB and has been participating in trials with all potential operators. AUEC is already selling DTT set-top-boxes into the African and Australian markets, so the business impact of the delay in SA DTT has been mitigated. UEC Australia has already delivered 24 000 STBs to the Australian market for its Digital Migration. In total, AUEC has delivered 1,7 million STBs into the Australian market to date. When the DTT standard decision is taken for South Africa, UEC will be well positioned to produce locally designed and manufactured settop- boxes for whichever of the two standards (DVB-T or ISDB-T) is chosen. Coupled with this opportunity, AUEC has developed the MediaGate concept which allows movies to be loaded onto a USB memory stick and played via an internet protocol STB in the home. This concept will open a new market in the Telco arena as converged technologies increasingly become a customer requirement. Arrow Altech Distribution (AAD) TECHNOLOGY (INFORMATION TECHNOLOGY) Altech West Africa The company's product lines have been expanded by adding the capability to supply initialised and personalised chip-card products to Nigerian telecommunications network operators and financial service providers. Professional services capacity has been added to enable the supply, implementation and support of the Altech group's e-Security range of products in Nigeria that includes the supply and support of the Verisign range of products. Altech Card Solutions (ACS) Altech NuPay ALTECH TRANSFORMATION THE WAY FORWARD On behalf of the board Dr Hilton Davies Craig Venter Dr John Carstens 31 August 2010 |
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