Despite the collapse in share prices in sector heavyweights, most South African information and telecommunications technology (ICT) companies emerged from 2002 intact, a report released on Monday shows.
The Map of the Information and Telecommunications Technology Sector in South Africa 2003 (MITTS SA) released by World Wide Worx says that of the 40 ICT and electronics companies that have reported results for 2002, 77% reflected an operating profit. This is expected to be closer to 90% for the current year.
The report says that in a market that has seen a global downturn in sales, South Africa’s top ICT companies saw a hefty growth in turnover for the past two years. The companies included in the MITTS SA survey reported R67-billion in sales for 2000, a 31% increase to R88-billion in 2001, and a further 21% jump to R107-billion in 2002.
World Wide Worx MD Arthur Goldstuck acknowledges that the sector is not as profitable as a few years ago.
“But there is no indication of a sector that is collapsing, despite share prices plunging. In other words, market sentiment has killed off IT shares, but not IT companies. A slow-down in growth does mean that growth continues, although at a slower rate,” he asserts.
Other findings of the report are that telecommunications policy and Telkom’s (TKG) monopoly are hindering development of the sector and diffusion of ICT into key economic sectors.
Ironically, it was Telkom that bumped Dimension Data (DDT), South Africa’s biggest IT company, off the Top 40 and Indi 25 indices earlier this month after it made its long-awaited debut on the JSE Securities Exchange South Africa (JSE) and New York Stock Exchange (NYSE) on March 4.
The report says that skills continue to be in short supply and skills development has become a priority, particularly in the light of black economic empowerment requirements.
According to the report, South Africa is becoming the ICT gateway to Africa, with an increasing number of local companies expanding into southern, East and West Africa, and many multinational companies that market in Africa choosing to base their regional offices in South Africa.
Another trend to emerge from the research is increasing willingness of local ICT companies to tackle developed markets, such as Europe and the US. – I-Net-Bridge