Altron CEO Mteto Nyati can finally focus his attention on the group’s core information and communications technology (ICT) business. The group said on Tuesday it had found a buyer for Altech UEC, which is best known for making set-top boxes for MultiChoice. The unit also manufactures televisions and tablets.
The sale will be a huge relief for Nyati and his management team, who inherited the difficult task of finding buyers for Altron’s underperforming manufacturing businesses, particularly Powertech Transformers — which makes cables and transformers, mostly for Eskom — and Altech UEC.
Nyati joined the company from MTN SA in April 2017. But while Altron is now free to focus entirely on its ICT operations, returning the business to its former glory will be a long and arduous task.
In 2007, the group was valued at nearly R16bn, making it one of SA’s largest listed firms. But strategic missteps, including its decision to hang on to the manufacturing assets despite the writing on the wall, meant Altron’s fall from grace was swift. By early 2016, the group was worth just R1.7bn.
Nyati has made some progress in turning the ship around — Altron is now worth R6.4bn — but now the real work will have to begin.
To regain its status on the JSE, Nyati wants to see Altron double its earnings before interest, taxes, depreciation and amortisation (ebitda) within five years. In the year to February, ebitda came in at R1bn.
China Mobile, the state-owned operator based in Beijing, has made an inconspicuous entry into the SA market. In a statement on its website dated September 10, the cash-rich mobile operator said that it had opened an office in Johannesburg and that Godfrey Motsa, the CEO of MTN SA, attended the ceremony.
According to the statement, China Mobile signed an agreement that day for a "strategic alliance relationship" with MTN Group. In the statement, Motsa said the partnership could lower the cost of telecommunication services, "especially roaming".
The companies would also share technology and innovation, China Mobile said.
"The two companies will collaborate on international business expansion, international transmission interconnection and network resources sharing etc. The [agreement] takes China Mobile one step closer to meeting its goal of an interconnected world that includes Africa."
MTN says it is not yet ready to talk about the partnership. In the meantime, the news has reignited speculation that China Mobile could take a strategic stake in MTN, whose shares are floundering under demands from Nigerian authorities. China Mobile, which is keen on deals, is sitting on net cash of about $70bn (R1-trillion). Buying a fifth of MTN would set it back just R31bn at current prices. On the face of it, a tie-up makes a lot of sense, considering that MTN’s investment case has been blighted by obscene demands from several African nations, including Nigeria and Benin.
Given strengthening ties between China and Africa, China Mobile, which is about 70% state-owned, would be able to use its political clout to placate authorities looking to make a quick buck off MTN.
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