Altron disclosed on Wednesday that it has fully impaired intangible assets related to the failed Altech Node set-top box and home automation system to the tune of R44m in the six months ended 31 August 2015.
TechCentral first reported last month that Altron had decided to pull the plug on the service after failing to sell the business to a third party. Altron subsidiary Altech launched the Node to great fanfare in 2014, but sales proved to be disappointing.
Now Altron has revealed for the first time just how much the Node has impacted on its financial performance.
In the six months to end-August, the Altech Node brought in just R1m in revenue, yet reported negative earnings before interest, tax, depreciation and amortisation (Ebitda) of R75m. For the full year ended February 2015, the Node generated R19m in revenue and generated an Ebitda loss of R114m.
In notes accompanying Altron’s interim results on Wednesday, the group said: “On 31 August 2015, the decision was taken to close the Altech Node operation and it was classified as a discontinued operation. 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.”
Together, Altron’s discontinued operators — Altech Autopage, Altech Node and Powertech Transformers — showed a significant decline in earnings from the same six months a year ago, with Ebitda falling from R54m to a loss of R99m. “This reflects the significant challenges each of these operations faced during the current reporting period.”
Altron said it has made the decision to close the Altech Node business and cease services to subscribers with effect from 31 October 2015. “Although the technology will remain within the group, no further operational costs, including the cost of content will continue from that date.”
In July, the group said it had decided to sell the Node and was in the advanced stages of discussions with an unnamed third party to dispose of the product. But it later confirmed it would instead shut down the business, with those who bought the Node set to receive a refund.
“We overestimated the readiness of the South African market for such a pioneering service, combining both VOD and smart home services,” Altron CEO Robbie Venter said recently. “The technology in the Altech Node is highly innovative and world class and will continue to be owned by Altron.”
Subscribers will be refunded an amount of R1 999 per Altech Node device in November 2015. — © 2015 NewsCentral Media
