TECHNOLOGY group ConvergeNet, which reported a loss in earnings for the year to August, will expand its activities into 12 countries in Africa as part of its five year growth strategy, it said on Friday.

During the year under review, ConvergeNet established Simat Management Company, which focuses on providing maintenance services to mobile operators on the continent. Simat, which started operating in March, has in turn established wholly owned entities in Mauritius, Gabon and Congo Brazzaville. ConvergeNet plans to take its services such as cellphone infrastructure maintenance into Malawi by next year.

It is also evaluating opportunities in Nigeria, said CEO Sandile Swana.

Revenue for the year to August decreased slightly by 1% from R1.029bn to R1.017bn. Operating expenditure, including the cost of establishing Simat, increased by 29.8% to R286.6m compared to R220.8m last year. As a result of the increase in operating expenses, the group made an operating loss of R7.1m compared to an operating profit of R27.3m last year.

ConvergeNet's loss for the year to August was R46.3m from a profit of R30.9m that was reported last year. The basic loss per ordinary share was 4.92c from basic earnings per share of 2.66c last year. The headline loss per ordinary share was 5.01c from headline earnings per share of 2.70c last year.

The losses were mainly attributed to once off impairments related to acquisitions. ConvergeNet said it expected its performance to improve in the "next year and beyond and through growing our African footprint, new innovative service offerings, strong sales force and proven technical abilities."

The company is targeting revenue growth of 30% in the 2013 financial year.

Mr Swana said the company would continue to "prudently invest" in identified strategic growth areas such as a cloud computing and data hosting. It would also strengthen its top management team and seek opportunities in the internet service market and telephony related solutions.

In September, ConvergeNet sold its remaining 15% interest in Future Cell for R40m to Pepkor.

The proceeds of the Future Cell transaction was partially used to fund ConvergeNet's buy back of a 7.759% stake held by Titan, an associate of Pepkor, for R21.2m.

The balance of the sale proceeds will be used for general corporate purposes, including expansions.

BusinessDay Live
  by Thabiso Mochiko

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