Eight years ago, when I became CEO of Altech, the group was a diverse conglomerate. It depended on multinational partners who owned their own technology and intellectual property. And it was barely making a profit.
It would have been easy for us to continue to ride on the backs of our overseas technological partners. But I believe that in the long run this would have limited our growth. It would also have shown a profound lack of faith in the innovative abilities of SA's engineers, technicians and researchers.
Today, Altech is a Proudly South African group which focuses on the area where telecommunications, multimedia and information technology (TMT) converge. Innovation, product development, systems and services are key strategies for achieving sustainable growth.
It was not easy for me to sell noncore businesses that were making a profit. But the benefits of focusing and reinvesting the proceeds of these sales became obvious. Turnover is more than R4bn. As at our financial year-end on February 29 2004, more than 70% of Altech's revenues were derived from its new businesses.
These greenfield operations include:
- Autopage Cellular, the largest independent cellular service provider in SA;
- Mobile Direct and Mobile Express, both in the Autopage Cellular stable;
- UEC Technologies, a global leader in set-top box (decoder) solutions;
- MediaVerge, a leader in solutions and products for local and international television broadcasters; and
- Netstar, SA's and Africa's leader in vehicle tracking and recovery systems.
The success of these operations highlights to me the importance of investing in research and development.
Today, Altech is largely independent of foreign partners, exports to 37 countries and owns its own intellectual property (IP).
China's Shanghai Telecom uses UEC technology and the largest OEM vehicle manufacturer in Malaysia, Proton, uses Netstar technology. Global market penetration like this would not have been possible without IP generated through the group's R&D.
In my experience, any SA company wishing to expand or market services internationally needs "homegrown" technology and IP.
Our group has more than 500 support staff involved in R&D in various ways. Altech's R&D spend, with various grants, is approaching 10% of turnover, just short of R400m annually.
This is no bottomless pit. Our R&D staff have strong project management skills; and projects that enter a development phase are carefully monitored and measured. All projects must give a return on investment of at least 25%.
It's my contention that South Africans have the ability to be world leaders in a number of sectors in which we have a competitive advantage.
Altech has proved this. Through an articulation of this faith, our group is receiving royalty payments for our digital technology that we have sold to the Japanese technology giant, Kenwood.
We have set our course. Now, to stay ahead of the technology curve, we must keep on with R&D. We are always investigating new technology opportunities.
This restlessness must not be confused with a lack of direction. While the Altech group will remain focused on TMT, we must also renew ourselves continually.
Take UEC, for example. About 120 technical staff, of which at least 60 are graduate engineers and computer scientists, work here. Because of the complex and specialised technology in this field, the company has established an in-house university where staff receive focused postgraduate technical and management training. This venture works closely with international institutions such as Warwick University and the Wits Business School. UEC also works closely with the University of KwaZulu Natal, while other group companies such as Isis and Altech Informatics work with the University of Pretoria.
Innovation, science and technology are essential components for creating the SA of the future - and Altech will be part of that future.
