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Johannesburg - Technology group Altron’s [JSE:AEL] failed Altech Node video business has cost the company millions, according to its half-year results.
Last month, the Johannesburg listed Altron announced that it was closing its Altech Node business with subscribers set to be switched off at the end of October.
The Altech Node - which launched in September 2014 - was a satellite-connected box that delivered video on demand content in high definition to subscribers. The Node also supported other features such as home security and internet calling.
But last month Altron said the uptake of the product and service had “not met expectations”.
And in the company’s interim results for the period ended August 2015, more detail was provided about the failed project.
“During the period intangible assets amounting to R44m were fully impaired, related to the closure of the Altech Node,” said the company on Wednesday.
In Altron’s segment analysis, it was further revealed that in terms of earnings before interest, tax, depreciation and amortisation (Ebitda), Altech Node registered a negative value of R75m for the six months ended August 31 2015.
For the 12 months to February 28, 2015, Altech Node generated revenue of R19m but a negative Ebitda of R114m.
“Unfavourable market conditions, such as the current economic environment creating pressure on the consumer, together with increased competition in the video-on-demand (VOD) environment resulted in insufficient subscribers for the business to be viable,” said Altron in its interim statement.
Meanwhile, the Altech Node’s failure is not Altron’s only business segment to shutter.
Altron has described Altech Autopage and Powertech Transformers as discontinued operations. The company is busy finalising a deal to sell Autopage's subscriber base.
Together with Altech Node, these businesses “showed a significant decline from the previous corresponding period with Ebitda dropping from a profit of R54m to a loss of R99m”.
Altron’s total operations were also hit hard as revenue for the period decreased by 7% to R13.3bn and Ebitda fell by 69% to R241m.
