JSE-listed Africa Cellular Towers (ACTowers) has shrugged off the global economic crisis, reporting strong results for the year ended 28 February, and anticipating its unprecedented bull-run to continue.
The telecoms turnkey solutions provider conducts tower design, manufacture and installation, and GSM site shelter manufacture, in Africa.
It reported a surge in revenue of 54.8%, to R505.4 million, compared to R326.6 million a year ago.
Headline earnings were up 13.6%, to R51.1 million (2008: R45 million), while headline earnings per share increase by 10.4%, to 19.5c (2008: 17.7c).
Gross profit was up 13%, from R88.2 million in 2008, to R99.6 million in 2009.
The company reported that EBITDA decreased by 2.2%, to R65 million (2008: R66.5 million) and EBITDA margins decreased to 12.9% (2008: 20.4%), mainly as a result of bad debt written-off to the amount of R10 million and an additional amount provided for doubtful debts of R18.7 million.
The other income line in the income statement mainly relates to foreign exchange gains of R35.5 million (2008: R13.5 million), of which R21 million is unrealised foreign exchange profits at year-end.
ACTowers chairman and CEO Chris Kruger says the company benefitted from the robust African cellular industry, which he describes as the “fastest-growing in the world”. However, Nigeria remains the company's biggest single market in Africa.
Eskom contracts
After a strong showing in the first part of 2008, with continued demand for cellular towers and equipment shelters, Kruger says the market slumped slightly in the latter half, as cellular operators took strain under the adverse economic conditions. This resulted in a decline in the number of orders from the company's main customers in Africa, as projects were delayed or cancelled. “But we have seen a large upturn since the beginning of this year,” he adds.
Similarly, Kruger says, local power utility Eskom has been holding back on contracts and tenders until after the general elections in SA, but is now ready to move ahead with planned projects. As a result, says Kruger, ACTowers has been shortlisted for several Eskom contracts on the continent.
He explains that the company has expanded into providing fibre-optic network solutions, and expects the 2010 World Cup to yield several solid opportunities for the group. ACTowers has also secured work from SA's main telecoms operators, which have all recently embarked on major fibre-optic network roll-out projects. However, Kruger says the company would like to increase its slice of this pie.
“We have always stated we will pursue opportunities for the group, which will be complementary to our existing product offering. We have, therefore, expanded our product offering into the optic fibre market by introducing services to install optic fibre links in SA and also in other Sub-Saharan countries.
“This division, which currently falls under the Cellular Towers division, is expected to be a major income contributor for the 2010 financial year, with a confirmed order book amounting to approximately R35 million.”
Steel price
Meanwhile, the company reported the price of steel, which contributes approximately 70% to 85% of the total input costs of cellular towers, peaked in the third quarter of 2008. The price has since decreased significantly by more than 30% from August 2008 to February 2009.
The impact of this fluctuation in the steel price, which the company has been able to pass on to its customers, still had a negative impact on the company's gross profit margin. Kruger says project losses on some African installation operations have further impacted gross profit negatively, but efforts are being made to address this issue.
Additionally, the company has secured a contract to roll out 1 000 new towers on the continent, which will translate into 1 000 tons of steel a month passing through ACTowers' manufacturing plant.
During the period under review, ACTowers also successfully concluded an empowerment deal with Tiso Telecom, a subsidiary of TisoGroup. The agreement saw Tiso Telecom acquire a 25.1% interest in the company, for a total consideration of R116 million.
Related stories:
Tiso takes 25.1% of ACTowers
ACTowers expects higher earnings
Share
