Netstar focuses on taking back market share in vehicle tracking and telematics

Altron is banking on a new strategy to take back market share in vehicle tracking and telematics. The group has also taken a strong position in financial technology (fintech), which is now a R1bn business. 

Altron has shifted its focus over the past few years — including selling ATM hardware and support business units in 2023 as part of a series of disposals to streamline operations — to growth areas such as the cloud, data analytics, the internet of things, and security.

Its Netstar unit, a once-dominant player in its sector, has lost ground to competitors such as MiX Telematics and Cartrack (owned by Karooooo). 

While Cartrack, founded in 2004, is gearing up to surpass 2-million customers in the current financial year, Netstar has lagged behind with 1.3-million subscribers, despite having entered the local market first. 

To deal with Netstar’s headwinds, Grant Fraser — a former COO of MiX Telematics — was appointed MD on January 1 to implement a strategy to increase profit.

“Netstar lost focus on both our customers and our business, which has resulted in lost market share and margin erosion,” Fraser told investors on Monday as the group reported full-year earnings.

“We have an opportunity to claw back our market share by refocusing on the basics, making sure we put the customers at the centre of our operations and extracting efficiencies across Netstar’s business.”

The company has signed a number of deals, which it hopes will help increase growth. 

“In our OEM (manufacturer) segment the partnership we launched with WeTaxi has the potential to reach 48,000 connected taxis, on which we make revenue on the ads and also when we fit a device,” he said. 

In 2019, Altron signed a separate deal to have all new Toyota and Lexus models sold in SA fitted with in-car Wi-Fi connectivity, with Vodacom. Altron would provide the Wi-Fi device and vehicle monitoring would be done via Vodacom’s data network, helping to boosting sales.

By consolidating the customer’s onboarding and fitment planning process, the Netstar has pushed up the number of devices fitted to vehicles. “In January, we were fitting around 700 devices a day and now we are fitting around 1,100 devices a day.”

“Netstar is a household name as the first company to launch stolen vehicle recovery technology into SA 27 years ago. We were led by our customers into Southeast Asia and Australia where the market is growing and penetration remains low with legislation driving the adoption of telematics,” said Fraser. 

This comes as the group reported that Altron FinTech has become a billion-rand business with R1.04bn in revenue and with earnings before interest, depreciation and amortisation (ebitda) increasing by 22% to R271m.

Revenue generated by its integrated transaction solutions division increased 85% due to higher hardware sales following a migration of clients from Linux to Android operating system terminals, together with an increase in volumes and values processed through the division’s platform. 

Group revenue from continuing operations was up 19% to R9.5bn, driven by all segments being able to grow their top line. 

Ebitda was down 4% to R1.1bn, after being negatively affected by one-off costs during the period. 

In 2023 ASI and Netstar were affected by one-off adjustments that hampered group earnings such as the auditor-general identifying material uncertainties in the City of Tshwane’s 2022 financial statements, resulting in Altron’s management taking a conservative approach and providing R134m for Altron Nexus’s exposure to the metro.

This relates to a long-running dispute over a contract worth R1.2bn awarded by the city to Thobela Telecoms in 2015, in which Altron is a minority shareholder. The constitutional court ruled in 2021 that the contract was lawful but both parties signed an arbitration agreement in April and the process started on Wednesday.

Free cash flow increased by R163m to R412m for the period. 

The former Venter family business is barely recognisable, having staked its future on a relationship with software giant Microsoft, the growth of cloud services and partnerships in the automotive sector.

gavazam@businesslive.co.za