Newsflow influences investor perception. In this section, we will try make short comment
and opinion on worthy newsflow items, both local and international.
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Wednesday 19 November 2003
Slow but consistent growth of IT spend expected in SA for next year
According to a recent survey in which many corporates in SA were questioned, BMI-T
has concluded that growth in IT spend for 2004 will be slow but consistent.
Interestingly, two hot new areas mentioned are least-cost routing and
mobile workforce support. We share these views and point out the commonalities with
the international expectations from Gartner, IDC and IBM's CEO, which we commented on last week.
SA IT company balance sheets generally in good shape
Recently, we completed a study on the balance sheets of 12 listed SA IT companies.
Generally, we found very low levels of debt and large cash reserves.
Although this is not always a good thing from an investment perspective, it does position
these companies well for taking on new projects, growth, enduring future hardships and acquisitions.
Friday 14 November 2003
MTN Network Solutions involved in an international bandwidth deal with Volvo SA
It is encouraging to see this win from MTN's internet related division. In association with
Integr8 IT, MTN is apparently providing an improved international connectivity solution for
Volvo SA. The solution improves on bandwidth and cost effectiveness.
Upbeat results from Japan's largest telco, NTT
NTT recently announced upbeat results for the half year to Sep03. The former public
monopoly, still 46% held by the state, cited an improved take up of high speed fixed-line
Internet connections and a solid performance from its mobile operator, NTT DoCoMo.
Japan's largest mobile operator with around 55% market share has seen an improvement in the
take up of its 3G offering, FOMA. DoCoMo is 62% held by NTT. This result bodes well for the
telecoms sector in general.
IBM CEO predicts IT spend increase for 2004
There is no doubt that 2004 is expected to be a better year, IT wise, by many. But just
how much growth in IT spend should one expect? IDC expects 5% growth while Gartner
predicts 10%. We recently learnt that IBM's CEO, Sam Palmisano, expects a
modest 2% to 4% increase in IT spend for the new year.
He points out that at least its not declining. While most of these forecasts are US-centric,
they do paint a general theme that trickles to South Africa over time.
Wednesday 12 November 2003
Business Intelligence conference by Hyperion and Global Technology
It is encouraging to see Glotec's Business Intelligence division bringing
international Hyperion representatives to a conference for users in Johannesburg
next week. The conference will focus on compliance issues and new technologies.
Business intelligence is Glotec's largest contributor. In its results for the
6 months to June 2003, this division reported a turnover of some ZAR 41mln and an
operating profit of ZAR 7.5mln.
First "non-ballot" election took place in Canada
Recently, the Eastern Ontario municipal elections were held without paper ballots.
The entire voting process was done via the Internet or by telephone. The Linux-based
voting system was provided by Diebold Election Systems. Convenience and an increased
number of votes are among the major advantages of e-Voting. However, this works in
Canada where Internet and telephone penetration is very high. A non-paper system is
highly unlikely to be implemented in South Africa any time soon.
Wednesday 5 November 2003
SNO license to be awarded with 51% stake warehoused for 8 weeks - the show must go on
Yesterday, our telecommunications minister decided that the long-awaited SNO license should
be awarded to the predetermined stakeholders (30% jointly to Esitel and Transtel and 19% to
Nexus). The remaining 51% stake is to be warehoused, with a decision made on it by government
within 8 weeks. (Bidders for this stake were both rejected by the regulator, ICASA,
some time ago.)
While this development takes away a certain level of uncertainty around TELKOM's new
competitor, its composition is still unknown. According to the minister, new shareholders
may be identified and introduced. Whatever the outcome, the integration of shareholders
and their assets is going to be a challenge over and above competing against the well
entrenched incumbent. The sector needs a strong competitor to TELKOM to reduce prices
and improve services in the long term.
Monday 3 November 2003
ICASA allows "out-of-band initiated" PINNACLE call-back operation
Traditional call-back operators, which exploit the differential in price between outbound
and inbound international calls have been illegal in SA for many years. PINNACLE's system,
which apparently uses an out of band (not Telkom) initiation of the call back, has been declared
legal by ICASA last week. The impact on TELKOM would be negative, but probably fairly
small. This is the third WIN for the consumer after the last two rulings on
wireless hotspots and Least Cost Routing. Its generally positive for telecommunications
liberalisation in South Africa.
Mastercard expects SA to play a leading regional role in the EMV smart card standard
The EMV standard is a global one, encompassing all "chip based" smart credit cards and
terminal payment devices. It is backed by Europay, Mastercard and Visa. The migration
from magnetic stripe cards to chip-based cards allows banks to provide innovative
payment schemes and helps to combat fraud. The conversion is well under way in South Africa
and Mastercard expects South Africa to lead the region. This is good news for all players
in the smart card manufacturing and solutions space. Names that come to mind are
ALTECH (card solutions), namiTech, APLITEC and PRISM.
Tuesday 28 October 2003
Digicore's Pakistani operation
According to a Reuters report which interviews leaders at Digicore's investment in Pakistan,
business there seems to be going well. Digicore is supplying its vehicle tracking technology
into this market. Mention was made of an installed base of 12,000 vehicles, with growth
of 500 per month. Costs for the consumer of the GPS based tracking devices are high though.
(USD740 installation and USD17 monthly). Nevertheless, users are increasingly turning to
the technology to help curb hijacking and vehicle theft, much like in SA.
A while back, we made the point that Digicore's momentum in exporting its technology
into Europe and other markets was building. This bodes well for the company.
The stock closed yesterday at 36c, is on a PE of 4.8, and a dividend yield of 5.6%.
Digicore (DGC) has a market capitalisation of ZAR 86 mln.
Thursday 23 October 2003
Least Cost Routing case judged in favour of Least Cost Routers - negative for TELKOM
Yesterday, we learnt that the long awaited Least Cost Routing (LCR) case has reached judgement.
The sale, distribution and use of LCR equipment will be allowed.
Beneficiaries are the consumers (mainly corporates), mobile operators (MTN, Vodacom and CellC)
and LCR providers such as Orion Telecom, TelePassport, ALTECH's AutoPage and REUNERT's
Nashua Mobile. LCR technology routes calls from PABX systems in the most economical fashion,
depending on the destination. The judgement is a positive sign for telecommunication
liberalisation in South Africa.
Tuesday 21 October 2003
MTN to reduce tariffs in Nigeria - will be negative on ARPUs
Yesterday, MTN announced proposed tariff reductions for its Nigerian operation.
The company will also be launching a per-second billing tariff. This was eluded to in our
commentary dated 15 September.
This is a sign that the competitive environment in "mobile Nigeria" is definitely hotting up.
We have performed an analysis and written a brief report on the extent of these reductions, which is
available on request.
Monday 20 October 2003
Encouraging win against the incumbent for wireless hotspot providers
ICASA, our telecommunications regulator, has ruled against Telkom (TKG) that
wireless hotspot provision is legal. Is this a sign of more positive things to come in the
liberalisation of our telecommunications sector? We hope so...
ITU Telecom World is over - world telecom themes
The Geneva conference is over. Compared to four years ago, observers say it was toned down.
European leaders Nokia and Sony Ericsson were not present. There was a focus on substance,
not glitz and glamour. Interviews with leaders in the ICT space yielded the following
interesting themes:
HP's CEO Carly Fiorina:
- There will be a focus on "how things work together". The physical world is
increasingly becoming digital, mobile and virtual.
Accenture's CTO for the Communications division:
- Operators are increasingly making their networks available to application developers.
- In the voice space, wireless is winning against wired.
- The Asians are getting stronger.
- The battle for domination of the handset operating system remains strong.
USAL bids - ICASA requests public comment by 31st October
ICASA has opened up the bids received for Under Serviced Area Licenses (USALs)
to the public for comment. USAL winners will be given licenses to provide telecommunication
services in areas with low teledensity.
Thursday 16 October 2003
Q3 results season - a more upbeat tone reflecting a pickup in technology
IBM - Revenue up 9%, profits up 36%. (In line with analyst forecasts)
IBM plans to hire 10,000 people in services and S/W. Seeing a pickup in IT spending.
IBM stock was down slightly.
Intel - Revenue up 20%, profits more than doubled. (Better than analyst forecasts)
Company mentioned global strength in computer-related businesses and stronger shipments in
microprocessors and chipsets. Intel stock was up more than 2%.
Q3 Global PC sales increased by 15.7% to 38.4 million units (IDC)
This was more than IDC expected. According to them, the drivers of this growth were
lower PC prices and wireless features. We would also add that PC's
upgraded in 2000 as part of the Y2K problem are now being upgraded again.
Although this statistic does not show PC revenue, the general pickup in unit demand bodes well
for all hardware distributors, such as MUSTEK. It also shows that the technology
turnaround is here.
Tuesday 14 October 2003
ITU Telecom World conference 2003 - Geneva (13th - 17th October)
Every four years, the world's Telecom leaders get together to launch new products, discuss
industry matters and display their products and services.
Some of the themes emerging thus far from this year's conference in Geneva:
- Cost-effective broadband access is key - South Korea leads the broadband race.
In South Africa, ADSL has been launched by TELKOM (TKG), but in our opinion it is still too
expensive for the bandwidth you get. Competition in this area should bring prices down.
- There is a focus on small and medium sized businesses - most of the exhibitors have realised
that this segment offers potential for growth. HP and Alcatel announced a partnership to
create products and services for this segment.
Microsoft and Vodafone partner to develop mobile Web services standards
The two giants picked the ITU Telecom World conference to announce their new partnership.
Microsoft's Bill Gates and Vodafone's group strategic relationship director, Ian Maxwell
explained that, by creating mobile web services standards, new opportunities for application
developers and mobile operators will emerge. This development is significant, since it marks
the formalisation of the trend in PC/mobile convergence.
It is good news for our local mobile operators, Vodacom, MTN and CellC.
Monday 13 October 2003
GLOTEC interims to June 2003 - potential turnaround for the future
GLOTEC released its interim results to end of June 2003 late on Friday afternoon (SENS).
There will be no presentation to analysts. The results themselves were not good.
On ZAR130mln of revenue, an operating loss of ZAR30mln and a net loss of ZAR34mln was reported.
The balance sheet is not in great shape at the moment.
The main cause of these results was the banking software segment, which has already
been disposed of. This was completed in August 2003. This segment contributed a revenue
of ZAR56mln and an operating LOSS of ZAR51mln. Excluding this segment from these results
would have yielded the following for GLOTEC: Revenue - ZAR74mln, Operating profit -
ZAR13.3mln.
Can the company's new CEO build on the strengths of the profitable parts of GLOTEC to turn
this group around? Time will tell. GLOTEC closed on Friday at ZAR0.05.
Its market cap is ZAR22mln.
CUASA presentation
We attended a presentation held by CUASA (The communications users association of
South Africa) on Friday afternoon. CUASA is an important body in the SA telecommunications
sector, in that it represents a collective voice of the users.
CUASA forms the South African "leg" of the international telecommunications users group, INTUG.
Sometimes, through interacting with international experts, many of whom have been through
telecoms deregulation and privatisation in their markets, we can learn what went wrong and why.
Some of the international experience is not applicable to us in SA, but some is.
An interesting point came out of the presentation:
- Large multinational companies often find that telecommunications costs are much higher
in Africa and South Africa. Often, the "telecoms laws of the land" and inadequate or
unaffordable bandwidth make it very difficult for them to run their business communications
the way they would want.
Friday 10 October 2003
ALTECH interims to August 2003 - a tough six months ahead
Summary
We attended the presentation in Sandton last night. Overall, it was a good performance
for the 6 months to August 2003, considering the tough times that various technology players
have experienced. In these times, ALTECH's diversified nature has been a strength.
Excluding its Alcatel operation (which was sold off) from the previous period's numbers,
revenue grew by 8.5%, operating profit by 6.5% and HEPS by 10.1%. HEPS reported was 143.9
cents per share. Although many of the ALTECH businesses experience a better second half,
its going to be a challenge to match and grow substantially on the HEPS of 336.5cents for
the previous year to February 2002. Cash flows were strong and the balance sheet is in good shape.
ALTECH has around ZAR1.2bln cash on hand. The share closed yesterday at ZAR26.90, is on a
PE of 7.7 and has a market cap of some ZAR2.8bln.
NamITech
The NamITech acquisition, which is strategic to ALTECH (value=ZAR527mln) is
currently pending competition tribunal approval. Both ALTECH and NAMPAK are committed to
opposing the recommendation by the Competition Commission not to allow the deal to go ahead.
Autopage, Netstar and UEC performance
Autopage, ALTECH's cellular service provider, and main contributor to revenue,
added 11,500 contract subscribers in the period. Total contract subs are at 360,000.
With prepaids, total subs are at 465,000. According to CEO Craig Venter, ARPUs are
around R500 per sub per month. Churn is claimed to be 8.6%, which is very low.
ALTECH feels that Autopage is in a good position regarding the pending outcome of the
Least Cost Routing (LCR) court case. An interesting point was Autopage's
view of the three mobile operators over the past 6 months: CellC - the most aggressive
with discounted pricing and incentives to Autopage, MTN - good growth shown,
Vodacom - a more consolidating view, not as aggressive, focusing on data and mobility.
We calculate Autopage revenue at ZAR1249mln and operating profit at ZAR70mln.
While growth will slow as our South African mobile market model shows,
customer retention and a focus on new innovative products should keep this business
producing cash for a long time to come.
Netstar, ALTECH's consumer based vehicle tracking operation maintained its leading
market share (47%) in a market that is claimed to be growing at 30% p.a. The Netstar
installed base now sits at 263,000. A new GSM module has been implemented for
Netstar's globalisation drive. The IPR for Netstar's RF technologies have been purchased
for ZAR8mln to avoid future royalty payments. We calculate Netstar revenue at ZAR161mln
and operating profit at ZAR24mln.
Fundamental drivers for this business are still looking strong.
UEC, ALTECH's set top box operation had a sharp decline in revenue compared to the
previous 6 months owing to problems in its Europe and Middle East channel.
While this area contributed 31% of revenue in February 2003, it only contributed 7% in the
current period. This was because of political instability in the Middle East and a new
competitor. In total, UEC sold 300,000 units in the 6 month period. Other regions
made up for the weakness in the Middle East. We calculate UEC revenue at ZAR242mln and
operating profit at 35.2mln. ALTECH disclosed a phased order book for UEC over the
next few years of ZAR523mln.
Thursday 9 October 2003
VODACOM in Nigeria
There has been much press and "noise" of late regarding Vodacom's speculated entry into
the Nigerian mobile market. In our opinion, it would make strategic sense for Vodacom
to enter this market, given its size and potential growth. However, the key question
is the price of entry.
According to Telkom investor relations, nothing official has been released from the
company regarding this matter. We can expect an official announcement from Telkom only
after the 12th of October.
NOKIA enters portable gaming market with N-Gage - takes on Nintendo
NOKIA has launched its own game console, called N-Gage.
The device is a cell phone with a small high definition colour screen on which you can play
games. We checked it out at the Vodaworld mobile expo last week. The graphics are great.
It has sound too. It also has a built in MP3 player. One can play "against or with"
ones friends via bluetooth. The only drawback is that its quite expensive.
Around R3000 for the unit and approx R300 per game. It will probably have limited
popularity here in SA with the younger audience.
NOKIA is entering this space, (dominated by Nintendo) to counter its slowing
mobile handset growth. Nokia's first attempt at a gaming console has been criticised
by the more serious gamers. However we point out that its dominance in the mobile handset
business and its experience in product design and branding, could be used to
compete successfully against Nintendo, if it wanted to.
Thursday 2 October 2003
Connection Group Holdings results (for 15 months ended 31 August 2003)
We attended the group's results presentation in Sandton yesterday.
The company has completed its transition into a focused computer retailer
(Incredible Connection). Its solutions arm, Enterprise Connection, has been sold off.
The numbers produced were healthy, given the sluggish economic environment.
Top-line performance was flat (like-for-like) with sales for the 15months at just over
ZAR1bln. Gains came from improvements in the middle-line. HEPS was up (like-for-like)
by 54% to 69 cents per share. A dividend of 18 cents was declared.
Cash flows were strong. The outgoing CEO, Toni Fourie will be succeeded by Gattan Kirk,
the current financial director.
The company has around ZAR80mln of net cash, giving it options for future growth.
The product mix is around 70% hardware (mainly PC's and notebooks).
Market share is estimated at around 45% in the home/home-office space.
Concerns for us are the reliance on hardware in the product mix,
the continuing decline in hardware prices and the volatile rand.
CCT closed yesterday at ZAR3.70 and is on a PE of 6.9 (Mkt Cap is ZAR160mln)
Wednesday 1 October 2003
Pinnacle Technology Holdings Results (for year ended 30 June 2003)
The company's operating performance was good. At the top and mid-line level,
its segments grew healthily.
The results were tainted however by an exceptional item of ZAR4.5mln.
A concern for us is also the large decline in operating cash flows.
PNC closed yesterday at ZAR0.26 and is on a PE of 3.8
Microsoft and Reuters link their instant messaging (IM) offerings
Instant messaging is a huge phenomenon worldwide. With IM software on your computer
and a constant internet connection, you can communicate instantly with anyone else in the
world who has similar software. The problem is that there are many IM platforms. The most
popular IM platforms (in no particular order) are from ICQ, Microsoft, Yahoo and AOL.
The deal between Microsoft and Reuters , in which the two companies are "linking" their
IM platforms securely using 3rd party technology, marks an interesting link
between personal/home users and those who use Reuters
(generally users in the financial services or corporate area).
It also demonstrates that technology companies and information dissemination companies
are taking IM very seriously.
Monday 15 September 2003 - Focus on Telecommunications
SNO delay - Minister seeks legal counsel
Our telecommunications minister has apparently asked for legal counsel in the awarding of the
51% SNO stake. (The matter was in her hands after ICASA recommended NONE of the two bids.)
In our opinion, the longer the SNO takes to materialise, the better for TELKOM in the
short-term. However, we re-iterate our point made before that South Africa needs a
strong competitor to TELKOM. This will drive down prices and improve services
in the long-term. We still think the SNO can be commercial by March 2004.
(Our valuation of TKG stands at the
mid-fifties)
MTN Nigeria apparently to introduce per second billing
After many months of consumer haggling over mobile tariffs in Nigeria, MTN is apparently
going to introduce per second billing in its Nigerian operation.
We don't have the latest details from the company yet, but this is good news
for consumers. Depending on the tariff structures, it could be NEUTRAL or SLIGHTLY NEGATIVE for MTN.
(Our valuation for MTN stands at around
eighteen rand)
Thursday 11 September 2003
Gauteng schools to go online - good news for our children
A large contract has recently been awarded to various IT players to get all Gauteng schools
online. This is good news for all parties concerned. Firstly, the pupils who will be able
to use the Internet as a learning tool. Second, it is good news for the IT companies involved.
Local names such as MUSTEK, PINNACLE and SAHARA are among the
winning bidders.
Wednesday 10 September 2003
Digicore full year results - Feedback from analyst presentation
We attended the results presentation yesterday in Sandton.
The numbers speak for themselves. A good result, all in all.
See our report on our homepage.
Venfin results (12 months to June 2003) - a long term investment
We attended the analyst presentation yesterday.
The message came through quite clearly that Venfin investors should not expect to make a
quick buck.
Since the company's inception, Venfin has assembled a group of potentially synergistic
investments, mainly in the technology arena. While some have failed,
many are turning out to be exciting ventures. Cross pollination opportunities
are becoming visible.
We highlight that since inception, Venfin has INCREASED its exposure to the following:
- Vodacom (13.5%->15%),
- Psitek (20.7%->32%),
- Intervid (12.6%-17.3%) in conjunction with electing Mark Taylor to be the new CEO
- e-TV (26%-33%) - the free-to-air channel now has around 27% market share of viewership
- Inala (25.2%-33.5%)
Also, investments in Idion (IDI) and Didata (DDT) were made.
Venfin has however DECREASED its exposure to the following:
- Tracker (42.9%-32.1%)
- SAIL (30%-19.5%)
The company still has ZAR3.1bln worth of cash of which ZAR1.9bln is offshore.
Venfin continues to look for further local and off-shore investment opportunities.
Tuesday 9 September 2003
Digicore results - "Top-line down, but bottom-line up"
Bottom line driven by lower amortisation
of intangibles and a higher net operating profit. Finance
costs were also lower. EBITDA margin was higher at 17.1%.
Cash is up to ZAR36mln. Balance sheet looks healthy.
CFO was positive at ZAR23mln. A concern is the falling
top-line. Revenue fell from ZAR193mln to ZAR172mln.
Analyst presentation to be held today.
IST presents on its Nuclear division
We attended the IST presentation held for analysts and press
yesterday in Rosebank. It was informative and
very interesting. Did you know that nuclear power
contributes around 3% of South Africa's total capacity.
Also, by the company's predictions, our country will
need more power capacity in a few years time.
Intervid results - going to take time to recover
The results were poor. On a turnover of ZAR454mln, the
company reported a net loss of ZAR175mln. While the
company has obviously gone through pains of late,
there was a time when Intervid was a high flyer.
Perhaps the company's new CEO can turn things around.
Monday 8 September 2003
Idion's Vision releases its multi-platform high availability solution
This is good news for the company. Vision has been working hard at developing its
high availability solution for platforms other than IBM's AS/400. The software, called
ORION is now
available for IBM's iSeries running on Linux and Windows. Vision has responded to customer
needs and now has a bigger potential market into which it can sell its software.
Technology sentiment improves a few notches
We have noticed that the sentiment towards technology stocks has improved a few notches.
Our technology "sentiment meter" is going from a neutral to positive.
Friday 29 August 2003
ICASA recommends that both SNO (51% stake) bids are rejected
While this may be bad news for all those who were anxious to see the SNO take shape, let us
all remember that this is a process.
Remember, the SNO is going to be an important component of our economy for the very long term.
It has to happen correctly the first time.
This issue is a very difficult and challenging one. It goes much deeper than simple competition.
On the one hand, we want competition to reduce prices, but on the other hand, the country cannot
afford a competitor that cannot compete effectively with Telkom. If it takes another year to find
a competitor or to reshape the existing bids, then so be it. At this stage we have to try to understand ICASA's
point of view.
The matter will now be handed over to our Minister of Telecommunications.
In our opinion, the Telkom share price will benefit from this news.
Mobile phones against crime in South Africa
This is very good news for those of us who live in fear of crime. Check out
EBlockWatch.co.za . This
initiative can turn each and every person with a cell-phone into a "mini crime fighter".
Basically, if you spot a crime, DON'T BE A HERO - just call their call-centre. Then they will "broadcast" the crime
via cell-phone SMS messages to all cell phones in the area, including members of the police.
What an innovative use of mobile phone technology, and in particular, location based services.
If used correctly, this can help us all. Remember, there are FAR MORE LAW abiding citizens with
cell-phones in SA than criminals. Just be careful, the web site doesnt yet have a certificate
for the credit card transaction to purchase SMS credits. A direct deposit method is also offered.
Deutsche Telekom bids EUR 1 billion for dominant Polish mobile operator
Telecoms giant, Deutsche Telekom has bid EUR 1 billion for 51% of Polska Telefonia Cyfrowa, Poland's
dominant mobile phone operator.
This shows that the hunt for good mobile phone operators still exists. It is also a sign
that the telco slump from the 3G licensing process a few years ago is turning.
Good news for the global telecommunications sector.
Thursday 28 August 2003
ICASA set to make 51% SNO stake recommendation to minister
ICASA will announce later today which of the two SNO (second network operator) bidders will be put forward as a recommendation
to the minister of communications for the 51% stake in the SNO. The process to get this far has been conducted transparently
and rigorously, in our opinion. Remember, that the other 49% has already been awarded: 30%
jointly to Esitel and Transtel, and 19% to Nexus, a black empowerment consortium. Telkom will
soon find out the nature of its competitor.
Wednesday 27 August 2003
Mr Nic Vlok becomes Digicore's CEO
In a SENS announcement late yesterday afternoon, we learnt that Digicore has made some
changes to its board of directors. Mr Nic Vlok has become Digicore's CEO with immediate effect.
He was previously the executive deputry chairman. Also, Mr Ndaba Ntsele has
become a non-executive director. We will make contact with the company soon to assess the impacts.
The company will be presenting its full year results to investors on the 9th of September
in Johannesburg. (10th in Cape Town). See our calendar.
PC prices set to drop even further in SA - positive for our country
This is an encouraging trend for our country. What it means is that PC's will become
more affordable for those who could not afford them before. For the PC manufacturers,
this trend is not new. For the PC distributors , its not new either, but it means that
in order to ensure profitability they will have to continue sourcing cheaper stock and re-innovating their
offerings with added value, such as insurance,
service, convenience, bundled software and so on. Large local names that come to mind in this space
are companies such as Mustek and Rectron .
Jacob Modise departs from MTN
Mr Modise, who has been with the Johnnic/MTN group for years has departed.
There should be very little operational impact on MTN .
Mr Modise was an alternate director at MTN .
Bridges.org helps developing countries bridge the digital divide
This is an encouraging bit of newsflow. This international organisation helps developing countries to
bridge their digital divides. Check out their web site :
www.bridges.org The digital divide is an important problem which plagues many developing
countries. Without telecoms services (including internet access), many people are cut off
from the news, commerce and information. Basically, these people are excluded from the information
economy. Bridges.org has an office in South Africa.
Lucent wins USD25mln sub-contract in IRAQ
It appears asif this contract was for fixed-line repair work. Apparently, only half of the
country's 500,000 fixed-lines are working after the war earlier this year.
Lucent stock was up 3.3% on NASDAQ yesterday.
Monday 25 August 2003
Lazarus Zim resigns from MTN
In a SENS announcement on Friday last week, we learned that Lazarus Zim has resigned
from MTN. Zim was at MTN for about two years and was in charge of MTN's international operations.
Although each of MTN's operations (outside SA) has its own CEO, the company explained to us
that Lazarus was responsible for playing an overseeing role. He was responsible for visiting
the African operations and bringing strategic direction from a group level. He had to meet
with local shareholders in each country. While Zim's role was strategic to MTN, we doubt
that his departure will have any major short-term negative impacts. The company has considered
its options to replace Zim and we are positive that the skills can be replaced in the medium term.
Its a case of the company is larger than the individual. MTN stock declined only 0.5% on Friday. No need to panic on this news. (Irnest Kaplan)
GRINTEK Telecom involved in an innovative mobile data saving service
It is encouraging to see local technology companies responding to the worm and data security
scares that prevail by announcing a service which adds real value. A small local company (part of
a larger UK based group) has teamed up with Grintek Telecom to provide a service to mobile phone users to save and retrieve
their phone numbers at POS devices nationwide. It sounds like the service is going to be simple to use and
would cost very little for the end user. We think that the idea will work well. (Irnest Kaplan)
Worm fever
It appears asif the world has gone "worm crazy" on fears of the latest virus and worm scares.
Our advice to people is to make use of the latest anti-virus software and if necessary, internet
security software. Names like Symantec and McAfee are excellent for home users. Worms are not
generally that dangerous, just disruptive. The worm and virus designers generally want to slow
the Internet down, not maliciously destroy data. Don't be scared. Just take the necessary
precautions. Its worth it. (Irnest Kaplan)
Thursday 21 August 2003
Nokia gets serious about wireless gaming
Nokia has bought into Sega's wireless gaming technology. This has implications for the
other handset manufacturers and wireless operators. For starters, other handset
manufacturers need to take heed of Nokia's strategy and think of their own wireless
gaming strategy. Ericsson teamed up with Sony a long time ago, mainly for the
consumer electronics advantage, but Sony is also the leader in the gaming console
market (with its PlayStation console). That leaves Motorola and Samsung.
Lets see what develops here.
On the wireless operator front, remember that operators need to increase usage of their networks
during off-peak hours, which is typically in the evenings. This is when gamers are typcially
busy playing games. Wireless operators would obviously encourage the move from leading handset
players getting into the gaming arena. The only problem here is that gaming is very complex.
Although we are seeing more "intelligence" being built into today's handsets, most people
still use their handsets for voice and simple text messages. Perhaps that is going to change.
Didata, Cisco and Telstra offer voice over IP in Australia
Didata has teamed up with Cisco and Australia's main fixed-line operator,
Telstra to offer a voice over IP (VOIP) solution to a large bank in Australia.
According to the bank, 30,000 VOIP "seats" will be installed by December 2004.
Good news for all the players involved. Also good news for those involved in the convergence
of voice and data.
Tier 1 ISP, DataPro generously connects SA charities
Great to see DataPro connecting up local charities to the Internet. The company now provides
67 charities and non-profit organisations with Internet access.
Telkom WiFi hotspots free for ADSL subscribers
Encouraging to see Telkom providing free WiFi access for ADSL subscribers at selected hotspots
in South Africa. Telkom estimates that the service will become commercial by early next year.
We (Kaplan Equity Analysts) havent tried it yet, but are still waiting for our ADSL
subscription. Apparently, Telkom has run out of ADSL ports at our nearest local exchange.
Wednesday 20 August 2003
Didata partners globally with NASDAQ listed Concord
Concord is a specialist in application performance optimisation. Its software is used by
companies (many of the Fortune 500) to manage application
performance on an enterprise wide basis. Didata has used Concord's software in its
GSOA (Global Services Operating Architecture) and has previously
been a regional partner to Concord. It looks asif this deal is a cementing of the
relationship between Didata and Concord on a worldwide basis.
In our opinion, this is good news for both companies. Concord was up 4% yesterday on NASDAQ.
Hyperion reports good results - good news for Glotec
Global leader in business performace management software, Hyperion, has reported results
for its quarter ending June 2003. EPS was up by 39% q-o-q. Turnover however, was only up by 2%.
The company also reported major new customer wins. All in all, a good result. Hyperion (HYSL)
closed slightly up (0.5%) on NASDAQ yesterday.
In South Africa, Glotec (GLT) has reported good success with Hyperion and says that
SA's take up rate of the software is on par and even higher than take up rates internationally.
Digicore says results are going to be materially higher
Interesting to see that Digicore put out a SENS announcement yesterday to say that its
results are going to be "materially higher" than the last period.
The company is announcing its full year results to June on the 9th of September 2003.
We will be attending to see what progress the company is making. We will be looking for
an improvement in market share domestically and progress in Europe.
Ernst & Young Security Survey is good news for some
Ernst & Young's recent Security Survey suggests that corporate South Africa is not doing
enough to proactively protect its information networks. This is good news for all IT players
in the security and availability space. Names such as Didata and Idion
come to mind, but many more do exist. The recent US power failure adds to this story's profile.
Monday 18 August 2003
Mark Shuttleworth recommends open-source
Here is a topic that one can debate for hours. Proprietary v.s. Open-source technology. Both have clear
advantages and disadvantages. In our opinion, the key strength of a proprietary system like
Bill Gates' Windows platform is
control of quality. The key strength of open-source (e.g. Linux) is low cost.
What Mark is saying is that South Africa should embrace low cost open-source technology and
become an open-source centre of intelligence. Mark is right, but South Africa needs skills.
He points out that Microsoft hasnt formally yet responded to the open-source movement.
In our opinion, this will come soon. Watch this space...
Telkom formally starts to market ISDN 128k package
Telkom has now formally started marketing its ISDN 128k package. We're not sure why this is
happening now? It has been available for years. Also, it should cannibalise their ADSL takeup.
In our opinion, this is happening, because ISDN is still more reliable that ADSL for
business use. ADSL is "bursty" and information rates are not guaranteed. Better for home users.
But business users want reliability and guarantees, which is what ISDN gives. The only snag with
ISDN is that you pay for the calls at normal call rates. So if you're online for a whole day,
you will pay a lot of money. Multiply that by 20 working days per week and your bill will be
well into the thousands. Too much for SMME's. ISDN does however make a perfect backup solution
for corporates.
Nokia and Sony-Ericcson winning market share
An independent report has shown that Nokia and Sony-Ericcson gained the most market share
recently in the mobile handset space. In our opinion, Nokia will continue to dominate and
Sony should not be written off either. Sony's experience in consumer electronics should
come through in the mobile handset game with time.
Friday 15 August 2003
Cell C Results
We attended a presentation given to analysts and media yesterday.
CellC has performed better than we expected. As of 31 March 2003, the company reported
1.25 million subscribers (10% mkt share). Overall, it was a good result. At this
initial stage we expect minimal impact on MTN and TKG stock.
USA NATIONAL POWER FAILURE
The US had a major power failure about 8 hours ago. Many cities, including NY City suffered and
are continuing to suffer a total blackout. This is a national disaster. This event will impact
world financial markets. We have created an article on our homepage to follow the event
and its impacts over the next couple of days.
Thursday 14 August 2003 - long issue
We are attending an analyst presentation at CellC today.
DataPro MD says TELKOM will "retain its vice-like" grip on the
SA telco market. This may well be the case in the short-term, but we are of the opinion
that other players are hungry to compete. They may not have the network or the size at the
moment, but they certainly do have brains, hunger, passion and determination.
DIDATA wins a R62mln deal for a customer database solution with
the Metal Industries Fund Administrators. Good news for DIDATA.
The MSBlaster Internet worm does its rounds internationally.
You can read about how this "trojan" works on www.symantec.com. Apparently the source of
the virus doesnt like Microsoft much. Merrill Lynch has now prevented its 48,000 staff
from using outside "free email" services like AOL, Yahoo and Hotmail from within the company.
This is all good news for IT companies playing in the security space.
MTN has launched a prepaid airtime top-up service via credit
card through its portal, MTNICE. The credit card holder can set up beneficiaries
and top up their airtime too. This looks good for parents who buy the kids cell-phones
and want to top them up on a monthly basis. There may be some uses here in the SMME market too.
It would be interesting to know what percentage of MTN's pre-paid user base has credit cards...
Wireless enablement in the corporate market is picking up,
both locally and internationally. This is good news for mobile operators, wireless integrators
and mobile device manufacturers.
Wednesday 13 August 2003
The SNO consultant report (for the 51% stake bids) was released by
ICASA yesterday. It is well structured and thorough. It highlights the level of funding
that each bidder is prepared to commit to the SNO. It also examines the business plans and
technological component of each bid. Although there is no stock market impact at this stage,
lets give ICASA credit for conducting a transparent process thus far.
ICASA plans to make a recommendation to the minister by the 28th of August.
IBM's CEO, Sam Palmisano thinks that there are signs
that the economy has bottomed out, but warns that the tech sector still has issues.
It is interesting to see their drive towards Linux and open-source technology.
Tuesday 12 August 2003
ICASA is scheduled to release the consultant report on the SNO bidders today at 3pm. Consultants were asked to review the bids from "Communitel" and "Two".
Stakeholders and members of the media are invited to attend at ICASA's offices in Sandton. The report will be made available
on the ICASA web site
International analysts concerned with voice volumes from BT.
Monday 11 August 2003
Derek Wilcocks from Didata thinks that the SNO is "unlikely to sustain a price war". We agree with him on the price war issue. But in our view, prices will decline steadily as competition and the use of more efficient technology ramps up.
Basel 2 Accord is positive news for IT players in the storage space. It is also good news for Idion's high availability products, particularly in Africa.
Datatec's Westcon makes new appointments in Europe. Good news for Datatec.
Friday 8 August 2003
Global mobile handset sales for Q2 (April-June03) up 20% y-o-y to 118mln units. Nokia still leads with 35% market share. Motorola was 2nd with 13% and Samsung 3rd with 10%. This is good news for mobile operators worldwide.
NTT DoCoMo posts good results citing 3G growth and good ARPU.
Thursday 7 August 2003
Idion interim results. We saw management yesterday. Company is performing well. One to watch for the future. More detailed report coming soon.
MTN conference call for period 31Mar03 to 30Jun03: No surprises. All on track. Nigeria analyst visit coming up.
Some Telkom ADSL users are frustrated with service. Not good news for Telkom. See MYADSL.CO.ZA
Telkom's "secure and stable" network was one of the reasons @Lantic chose Telkom for its 3 year deal.
Wednesday 6 August 2003
Apply for a homeloan and get a telephone line installed at the same time. From ABSA and Telkom .
Gartner agrees that our banks underplay themselves technologically.
I eventually got through to Kulula.com. Their server is still very busy though. Yippee, now I can fly ;-)
Tiscali feels there is still more growth in the SA mobile market. Interesting.
Well done TELKOM for winning the @Lantic deal!
Q2 global chip sales up on previous quarter. Good news.
Tuesday 5 August 2003
Encouraging to see MTN equipping 10 KZN schools with PC's.
Security is still an issue with handheld devices.
International analysts becoming more positive on CISCO
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