14 20 February 2001
Tracking the planet
After its groundbreaking IPO and successful ventures to date, David Lindsay spoke to Datatrak Chairman, Walter Bonnici, to learn more.
What were the founding concepts behind Datatrak and in what areas does it predominantly operate?
Datatrak has three main areas of operation: locating and tracking mobile units, telemetry and security systems.
However, our main business consists of locating and tracking mobile units, be they vehicles or human beings. From that short description one can visualise the concept of fleet management, where companies that have fleets of commercial vehicles, or maintenance and security personnel, that can be controlled and managed from a centralised office.
Then we extended into telemetry business - into the control of static units. For example, through our two-way wireless tracking system, we can control the takings of a particular gambling machine from a distance. Basically, a client with several machines spread over a wide area can control the takings of all machines.
The practical use of such control comes into play when the owners of such machines send employees to collect cash takings from the machines. Through Datatrak's system, management would know, from their offices, how much cash there is in every machine and they can tally that with what the collectors collect from the machines.
The same concept of telemetry also applies to machinery in factories, which can also be controlled from a distance, as the low frequency waves we utilise as part of our network penetrate buildings. The results are sent back to a central bureau, where everything is kept in memory, providing for the ready availability of backdated data at any time.
We also operate in the control of alarm systems and security for warehouses, retail outlets, or any other type of establishment susceptible to theft.
What does Datatrak's network consist of and how does it operate?
Datatrak's network uses both satellite and radio waves. Through the latter, Datatrak's network transmits low frequency and UHF radio waves. It's a terrestrial-based system whereby we throw a carpet over an area and anything that moves on that carpet, and has our device attached to it, sends messages back to our headquarters through our completely wireless network.
We recently augmented the system with satellite services, the first time it's been done anywhere in the world, and accordingly our devices can read messages sent from either the terrestrial or the satellite system. It simply chooses the best position at that particular moment and it sends back the optimum positioning at that moment. Accordingly, this gives our clients the best of both worlds because both systems have their inherent defects and advantages.
Satellites, for example, tend to lose a mobile unit being tracked or places that vehicle in an erroneous position when it gets into narrow streets.
If a unit is moving in an open area, satellites have no difficulties. However, satellite tracking becomes very difficult once units get into cities. That's where the terrestrial system comes into action. Our terrestrial system is based on low frequency waves, which penetrate virtually anything, even through buildings, covering areas unreachable by satellites.
With this new satellite-based system, we have in our hands a technology that no other company has.
This extends, for example, to countries that want to control their mobile assets but do not want that information exposed, as any satellite information gathered is basically knowledge to the owners of the satellites used.
There are certain mobile assets belonging to government entities whereby, with our system, they can control their fleet while at the same time, while retaining complete control of information through the ability to switch back and forth from satellite to terrestrial.
Another drawback attributable to satellite-based systems is that, in order to get a reading, three satellites have to be in the correct position at that particular time, a situation that does not present itself at any given time. Additionally, as is well known, because of the military use of satellites, satellite owners never allow for precise readings - except for military use.
While there are other systems that track mobile units, the advantage of Datatrak is that we have bypassed these problems found in satellite systems through our use of radio wave technology.
How did Datatrak originate?
Some seven months ago, Datatrak systems world wide was bought out by Siemens from Securicore Technology. The system had been developed by Securicore about nine years ago for their internal use for tracking cash in transit. Once the technology was developed and proven to be successful, Securicore saw the opportunity to enter the marketplace and sell the system to other entities.
They eventually sold the network to some eight countries, the last of which was Malta.
Then, seven months ago, Siemens bought Datatrak Systems world wide from Securicore and it became Siemens Datatrak.
Obviously, Siemens are now on our board and own shares in the Malta company. We had discussions with Siemens and we concluded an agreement whereby Siemens agreed to give the marketing of certain areas in the Middle East and North Africa to Datatrak Malta.
As a result, we're responsible for Libya, Tunisia and most of the Gulf states, which is quite a handful considering the fact that implementing a Datatrak system requires quite a hefty investment. Looking at Libya, for example, which is about four or five times the size of the UK, you can see what a massive investment it would be to cover the entire surface area of Libya. Saudi Arabia, as well, is an enormous country, so the potential for development is very promising.
We have now formed a company called Datatrak MENA (Middle East North Africa), which is one of our subsidiaries. This company is responsible for marketing, installing and supporting Datatrak systems in these regions.
With assistance from Siemens, our Maltese personnel now have the capabilities to carry out the installation and support of the systems.
Simultaneously, we develop, internally, the software required in every particular client - since each and every company requires specific information from the network. So specialised applications need to be developed for each client.
We decided, rather than outsourcing application development, that we would build our own software - in house. Accordingly, we bought a software company called Geomed, which changed its name to Datatrak Information Technology, in which we have some 45 IT engineers already working in house. The sole purpose of this subsidiary, working here within our premises, is to develop applications that interface with our systems.
By doing so, we have managed to complete a triangle, whereby all our operations are self-contained and we do not depend on any outside factors in developing our business. This has been done under the guidance of Siemens, who now own the proprietary rights to the Datatrak network. With Siemens now in the equation, the possibilities for development are enormous. Accordingly, we are looking toward the future with optimism.
Being the first company on the MSE's Alternative Companies List, how was Datatrak's Initial Public Offering received?
We were the first company to be listed on the Alternative Companies List on the Malta Stock Exchange. This listing was result of a change in the MSE's bylaws, which made it possible for companies without a track record to carry out an IPO on the Exchange.
Until we came in, equities listed on the Exchange were comprised only of companies with at least a three or four year profitable track record prior to their launch on the Exchange. With this ACL, which is in a small way similar to NASDAQ, all Maltese companies were given the opportunity to launch an IPO. All we had behind us was just one year of operation when we decided to go public.
With the advent of the ACL, we saw an opportunity and we capitalised upon it. The launch was highly successful and was subject to a very heavy demand.
We were the first technology stock listed in Malta and we are still the only one. Additionally, we are still the only company on the ACL but it's still early days.
It's no mean feat to go public with a company without a good track record. You have to have a very good story to tell, or no investor would risk their money on a company without proven profitability.
However, it was greatly successful and we received the funds we needed for future development such as: the development of our IT business - an area that has developed very rapidly, and the MENA area in which one needs substantial funding to carry out the type of business that we have in mind.
I believe that in just one year of operation, we have come a long way. We formed Datatrak Information Technology, Datatrak MENA after coming to an agreement with Siemens - and issued an IPO as well. While we have accomplished all that, new things are happening every day.
What is Maltacom's and Siemens' relationship with Datatrak Malta?
To clarify a bit of confusion on the matter, Datatrak is not a subsidiary of Maltacom, Maltacom has shares in Datatrak, but that is where their involvement ends. Accordingly, Datatrak is not under the control of Maltacom and it is not a Maltacom subsidiary. We are a public, independent company utilising a network owned by Siemens.
I believe that the mixture is beneficial. We have a very good relationship with Siemens - a big, rapidly developing technology company that is respected world-wide.
Meanwhile, they have a very high regard for us and are impressed in the way that we are moving forward. We've moved faster than any other member of the network so far, while we've entered into various applications that the others hadn't thought of.
However, we had an advantage as Malta is a small country. Imagine developing the warden system in Germany or the UK, for example. You would have to have so many departments and databases coming together that the cost and the time to develop it would be so much higher.
The advantage of first implementing such a system in Malta is that we can use it as a pilot by developing the system here and then use it in another country. This is another area in which Siemens saw the advantage of Malta, as we can build applications quickly in a controlled environment, test them in a controlled environment and then use those systems in other countries on a larger scale.
However, here in Malta we need to be quick enough to seize these opportunities because, with these big companies, unless they see performance and fast capitalisation on ideas with positive results, they quickly let you go.
How is Malta's workforce geared up toward the IT sector?
I think we have good IT people in Malta and our workforce seems very adaptable to IT working skills. The only problem that I envisage for the future is that we might start seeing a shortage of these IT workers, as I have my doubts as to whether we are training enough individuals for this sector through our educational facilities. I think that's an area that the government must concentrate on in the early stages of education.
For Malta, being a small country with no raw materials, the only resource we have is our human resources. We need to start using them now, through these new technologies that are giving small countries like Malta a global reach. For example, there is absolutely no difference in sitting right here writing a software program or sitting in Houston writing one. There isn't even a question of freight cost in the sector, with the type of instant information transfer that we have today.
However, we must grasp these opportunities because competition is always just around the corner.