Multi-billion dollar high-technology group Altech has warned that the company’s performance might be between 18 percent and 25 percent lower than last year, due to the poor performance in the East and West African operations.
The company revealed the news in a cautionary statement to shareholders.
“In addition, due to the impairments in respect of Altech’s East and West African operations, reflecting their poor results, the company’s basic earnings per share are expected to show a loss of between 303 cents and 310 cents, compared to a profit of 141 cents in the previous comparable financial period,” the company’s statement said.
In April this year, the company issued a statement saying the East and West African subsidiaries were facing a hard time due to “currency fluctuations, high inflation rates and interest costs, sharp drops in broadband pricing, network instability due to fibre breaks and undersea cable breaks.”
The company opened a US$7.5 million data centre in Nairobi Kenya in February this year. The new Altech Sameer East Africa Data Centre was opened to host data with international protection standards. Their operation in East Africa is in partnership with Kenya Data Networks (KDN).
Altech bailed out KDN in 2011, making the internet provider one of its core businesses in East Africa. Bailing out KDN seems to have proved a liability for Altech’s East African operations. The company has since been issuing cautionary statements over their investments in East and West Africa.
KDN on its part has performed well this year. It has been dogged with issues of downscaling staff, it has also been experiencing downtime from major cable cuts.
KDN sacked 50 of its employees in May this year citing the high cost of doing business. The market has not been favourable as more players entered the market to provide clients with fast broadband, including MTN Business.
KDN blamed the failure to deliver on its Service Level Agreement (SLA) with its clients, due to the numerous fibre cuts, leading to disputes and loss of clients.
In April this year, Altech was reported to be looking to sell off its West African business. Although in profit for five years, the West African business has not been progressing as Altech would like.
The company said: “Its recent trading performance on paper recharge vouchers was affected by mobile operators’ ability to offer cheaper alternatives. In addition, its five year ‘pioneer’ tax status in Nigeria recently ended and the Nigerian Government has lifted the prohibition on imports of recharge vouchers, leading to increased competition.”
The tech firm issues additional caution in regards to its business. “Shareholders are advised that the company has entered into negotiations, which if successfully concluded may have a material effect on the price of the company’s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement is made.”
The company expects to publish its financial report on September 26, 2012.
