MTETO NYATI’S PLAN FOR A NEW ALTRON

Rein­vent­ing it­self, Altron has been re­struc­tur­ing, sell­ing off its man­u­fac­tur­ing busi­nesses and ex­pand­ing into Aus­tralia. The group’s new chief ex­ec­u­tive, Mteto Nyati, talks about his vi­sion for the group.

Finweek English Edition - - Front Page - ed­i­to­rial@fin­week.co.za

altron Group chief ex­ec­u­tive Mteto Nyati has had to hit the ground run­ning in his first few weeks at the com­pany. Ap­pointed to take over from Rob­bie Ven­ter, the son of Altron founder Bill Ven­ter, Nyati an­nounced his res­ig­na­tion from MTN ear­lier this year.

Nyati says his pre­vi­ous ca­reer ex­pe­ri­ence has stood him in good stead for the Altron job. He joined MTN in Oc­to­ber 2014 as group chief en­ter­prise of­fi­cer, soon be­ing ap­pointed as the CEO of MTN South Africa.

Be­fore that he had spent six years as man­ag­ing di­rec­tor of Mi­crosoft South Africa and 12 years at IBM. The ex­pe­ri­ence at “pure IT” com­pa­nies like Mi­crosoft and IBM are im­por­tant as these are com­pa­nies that have sur­vived by chang­ing their of­fer­ing as de­mand changes, he ex­plains.

“MTN was my first ex­po­sure to the JSE, the busi­ness an­a­lysts, the in­vestor road­shows,” says Nyati. “The first time I had to have tough dis­cus­sions with in­vestors about the busi­ness. That is a core part of my job now at Altron.”

What has fol­lowed at the com­pany was a ra­tio­nal­i­sa­tion and re­struc­tur­ing process that has made it smaller, leaner and more fo­cused.

Altron is now mov­ing from a R30bn gi­ant, to a more stream­lined R15bn com­pany, ac­cord­ing to the new CEO.

They started by fo­cus­ing on where Altron’s fu­ture lay. Build­ing ca­pac­ity within the com­pany to look at ex­ter­nal fac­tors, and po­si­tion­ing the com­pany for those re­al­i­ties, was also key, he says. These tasks re­quired a cer­tain type of in­di­vid­ual; he de­scribes them as “cu­ri­ous peo­ple” who “em­brace change”. “We had to go out into the mar­ket and look within the com­pany to find them,” says Nyati.

“We don’t look at the share price. Our job is to fo­cus in­ter­nally on our strat­egy.”

Stream­lin­ing the busi­ness

“We are ex­it­ing some of the in­dus­tries in man­u­fac­tur­ing that are not our core fo­cus,” he ex­plains. “Our fo­cus is on the ICT sec­tor. Any­thing that doesn’t talk to that vi­sion will be dis­posed of.”

Nyati says that China is the “cen­tre of man­u­fac­tur­ing in the world” and that it is very hard for South African com­pa­nies to reach the economies of scale that would al­low them to com­pete on such a level.

Al­tech UEC and elec­tri­cal busi­ness Pow­ertech Trans­form­ers are ex­pected to be sold off by the end of Fe­bru­ary 2018. Nyati de­scribes Al­tech UEC as a “great busi­ness” with a man­u­fac­tur­ing plant in Dur­ban and Mul­ti­choice as its largest cus­tomer. “It is of value to some­body, but not to us,” he ex­plains. “It doesn’t fit our ICT fu­ture.”

The re­struc­tur­ing at Altron has re­sulted in quite a num­ber of job losses. The com­pany is re­ported to have shed 40% of all po­si­tions at head of­fice, bring­ing about huge cost sav­ings.

“We as­sessed where we needed to be and how the head of­fice had to be re­struc­tured to achieve that,” says Nyati. “Very dif­fi­cult dis­cus­sions” were had with many of the Altron staff who had to leave the com­pany.

He ex­plains that there is a grow­ing con­sumer trend to re­duce the num­ber of sup­pli­ers the

com­pany deals with. Altron used to have 12 separate com­pa­nies, each with their own sales staff who would call cus­tomers. Nyati talks pas­sion­ately about break­ing down these si­los.

“The cus­tomer didn’t see us as one busi­ness. They saw us as dif­fer­ent en­ti­ties. Our cus­tomers now buy more from us, be­cause we of­fer ser­vices they didn’t know we were of­fer­ing,” he en­thuses.

Ac­cord­ing to Nyati, Altron has a five-year strat­egy that is re­vis­ited ev­ery six months. Dur­ing these re­vi­sion ex­er­cises, the lead­er­ship team queries whether changes need to be made and as­sess pos­si­ble part­ners.

“We are en­gag­ing with the in­vestor com­mu­nity,” he states. “We are show­ing them where we are go­ing.”

Nyati says that the Altron lead­er­ship’s job is to build cred­i­bil­ity with in­vestors by ex­e­cut­ing the strat­egy. And while com­mu­ni­cat­ing the com­pany’s strat­egy to in­vestors is im­por­tant, the share price di­rec­tion is less so, ac­cord­ing to him. “We don’t look at the share price. Our job is to fo­cus in­ter­nally on our strat­egy.”

Things ap­pear to be go­ing well. Ear­lier this month Altron an­nounced that its head­line earn­ings per share for the six months ended 31 Au­gust 2017 is ex­pected to in­crease by be­tween 16% and 36% year-on-year.

The mar­ket is clearly im­pressed – the Altron share price has re­turned 103% to share­hold­ers over the past 12 months.

In­ter­na­tional busi­ness and ex­pan­sion

Ge­o­graphic ex­pan­sion will be part of the strat­egy, with Nyati in­di­cat­ing that the Bytes UK busi­ness is do­ing well and that Altron had in­vested in Aus­tralia too.

“Bytes UK is a great busi­ness,” he says, in­sist­ing that Altron will look at of­fer­ing more of its ser­vices in the UK through the com­pany. “We’re cer­tainly look­ing at ac­qui­si­tions.” In July it was an­nounced that Al­tech

Net­star had ac­quired 100% of Aus­tralian fleet man­age­ment busi­ness Fleet Lo­gis­tics, a com­pany that spe­cialises in fleet man­age­ment for lo­cal govern­ment, the car rental in­dus­try and com­mer­cial cus­tomers.

At the time, Nyati said the deal “pro­pels Al­tech Net­star as a dom­i­nant com­peti­tor in the fleet man­age­ment in Aus­tralia, with an in­stalled base of over 40 000 ve­hi­cles”.

This trans­ac­tion fol­lowed the May 2015 ac­qui­si­tion of Aus­tralia’s Pin­point Com­mu­ni­ca­tions. This deal was about vi­tal in­tel­lec­tual prop­erty that Net­star se­cured, he ex­plains. “When we started Net­star it was a stolen ve­hi­cle re­cov­ery busi­ness,” says Nyati. “That in­dus­try has since ma­tured and evolved into some­thing else – fleet man­age­ment.”

Today, truck own­ers want to know where their ve­hi­cles are and how their driv­ers are do­ing. They also want to track diesel or petrol us­age to pre­vent theft. “We pro­vide these tech­nolo­gies,” he ex­plains. Safety and se­cu­rity are of huge con­cern in SA and he feels Altron can be a com­pany that can pro­vide so­lu­tions for re­duc­ing crime lev­els. Af­ter five months on the job Nyati says he has re­alised that the com­pany owns “very rel­e­vant” in­tel­lec­tual prop­erty, which needs to be ap­plied in busi­ness.

Altron’s sub­sidiary in the health­care sec­tor, MediSwitch, which pro­vides a plat­form for trans­ac­tions be­tween doc­tors and med­i­cal aids, could po­ten­tially play a role in the pub­lic health care sec­tor too, he reck­ons. Dex­ter IT, which au­then­ti­cates debit or­ders, is used by South African mi­crolen­ders to man­age their busi­nesses.

The com­pany, which Nyati says is “built around in­no­va­tion”, holds nu­mer­ous patents and invests in lo­cal re­search and devel­op­ment – spend which needs to be chan­nelled to­wards areas that have the pos­si­ble com­mer­cial­i­sa­tion and job cre­ation spin-offs, he be­lieves.

Mteto Nyati Chief ex­ec­u­tive of Altron Group

In Aus­tralia, Altron sub­sidiary Al­tech Net­star has be­come a huge player in the fleet man­age­ment field.

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