South African technology firm Altech has finally shed its majority stake in its West African business, selling off 75 percent in the face of revenue losses.
Altech West Africa has been facing a major revenue losses over the last 18 months despite having been initially profitable since inception in 2005 in Nigeria.
The company said in a statement that it had reached an agreement to dispose of its 75 percent interest in AWA.
Altech’s main business in Nigeria was producing recharge voucher cards for major telecommunications companies in the region. It recently embarked on producing plastic card products for various banks in Nigeria.
This business has dipped due to other options available in the market, including direct printing of recharge slips.
The company confirmed other factors that saw them exit the West African market.
“The costs involved in maintaining Altech management control of AWA from South Africa, additional investment required to enhance AWA’s production facilities, as well as the fact that AWA‘s product area is non-core to the Altech group,” were the reasons stated by the company.
The East African arm of the company is still facing an uncertain future, with Altech confirming that they are not reaping much from the business.
Altech’s business in East Africa is mainly from their partnership with Kenya Data Networks, which they bought out in 2011.
KDN has been unable to honour its Service Level Agreement (SLA) to provide stable Internet because of major fibre- optic cable cuts. The company has also seen competition erode its market share.
In February this year, Altech opened a US$7.5 million data centre in Nairobi, to diversify its offering to the businesses community in East Africa.
Major South African businesses have shut down their businesses in East Africa citing harsh business conditions. Multichoice is one of the few such surviving businesses in East Africa. Its digital broadcasting arm DStv has weathered much of the storm caused by local competition.
Earlier this month, Altech issued a cautionary statement to its shareholders warning that the company’s profits would dip compared to the same period last year. The company released its financial results yesterday with a R586 million (US$71.3 million) net loss.