Altech CEO Craig Venter.
Altech has subsequently been written down to zero leaving the group with an R670-million impairment.
The technology company still relies on its two cash cows Altech Autopage Cellular (58%) and Altech Netstar (10%) for more than two thirds of its revenue of R5.2-billion, but even solid performances by these businesses couldn't protect Altech from posting an R485-million loss for the six months leading up to August 31 2012.
However Altech CEO, Craig Venter, stressed at the group's financial results presentation on Thursday that Altech's executive team had been working hard to turn things around.
Venter said his executive team had been flying in and out of Nairobi every week or two weeks making sure they turned the businesses there around.
"We leave again on Sunday," he said, stressing his point.
Altech operates in Kenya, Uganda and Rwanda and began investing in the region in 2008.
Venter said the East African markets were very volatile and moved very quickly.
He also said there had been serious delays with certain projects, such as the two-year delay in building a link between Kampala in Uganda and Kigali in Rwanda.
Bandwidth costs
He also said that the number of new undersea cables that had landed in East Africa recently, has resulted in an 85% drop in submarine bandwidth costs, which had hit the company hard as it had purchased capacity at high prices and this bandwidth had to be impaired.
Venter said Rwanda was doing well, but there was no "quick fix" for the businesses in Kenya and Uganda.
Venter announced that Altech had sold its West African business that dealt in paper-based vouchers and chip credit cards. He said the disposal process was started in May this year and a sale agreement was signed earlier this month.
Venter said Altech had known that it was going to look to offload the West African business as it wasn't a value add business.
Altech started the Greenfield operation in April 2005 after the Nigerian government offered incentives to companies who start manufacturing ventures in Nigeria. Venter said the company performed well for the first five years, pulling in about R50-million in profit before tax every year, but he said the pressure on the bottom line started 18 months ago.
He said that demand for paper-based vouchers for cellular operators had declined and that there had been delays in the rollout of two to three million chip cards in Nigeria due to inefficiencies with the centralised service provider who was appointed.
Venter also said that changes in import protection and special taxation rates in Nigeria had compounded problems.
"The last 18 months have been incredibly tough for my team and me" said Venter. "It's better to take the blow on the chin, clean the slate and move on."
Subscriber number growth
On the local front, Altech Autopage Cellular reported that its average revenue per user was down by 12.5% due to the drop in cellular call rates, however, the company did show a 26% growth in subscriber numbers.
Altech Netstar reported good growth in the government market and is now operating in 21 countries.
The company also finally laid an ongoing matter to rest, when the Constitutional Court ruled in its favour regarding an ongoing Competition Commission case.
Venter said the decision vindicated Altech's decision to fight the case over the principle. He said there was a deal on the table for Netstar in South America.
"We are still talking," said Venter. "But we wanted to get our African ventures sorted out first."
On the set-top-box front Altech UEC remained steady but is eagerly waiting the decision on the digital terrestrial television set-top-box RFP.
Altech UEC services markets in Africa, Europe and Australia and delivered 141 000 set top boxes to Australia, 1.2-million set-top-boxes to Germany and 200 000 high-definition public video recorders to Turkey.
Altech sees a major opportunity to expand this business with South Africa's DTT process, the growth of Multichoice DStv and the new GoTV services in Africa.