Despite shrinking revenue and a bottom line loss, African Cellular Towers (ACTowers) believes it is in the right markets with the right products.
ACTowers is moving into a consolidation phase after being hammered by the global meltdown, with the six months to August being the “most challenging” in its history, says FD Jacques de Villiers.
The company, which manufactures cellular towers and power lines, saw revenue slide 37.2%, from R238.5 million, in 2008, to R149.8 million. As a result, gross profit dropped 74.5%, to R19.2 million, and it made a net loss of R48 million, compared with last year's profit of R36.7 million.
De Villiers says the company has been hit by delayed contracts in the cellular industry, a lower steel price, a stronger rand, and difficulties in collecting outstanding money.
The company says “because suppliers of towers are experiencing pressure due to the amount of work available, supply terms have been dramatically adjusted by competitors, which has put pressure on ACTowers' supply terms”.
Right place
Despite the dismal six months, De Villiers is confident the company is targeting the right markets and offers products that are in demand.
He says the African Development Bank has earmarked funding for cellular, power and fibre-optic projects in Africa and the company is focusing on these areas.
ACTowers has invested in enabling it to secure opportunities in the cellular towers, power lines and fibre-optic divisions in future.
De Villiers explains that opportunities are opening up in Africa, as cellular companies ponder the possibility of sharing cellular tower sites with each other. In addition, fibre is in demand as the need for faster data transfer grows.
ACTowers is also looking at tendering for other power utilities in Africa, and has tendered for Eskom projects, although these are delayed due to Eskom not having the funding it requires, says De Villiers.
“We believe we are in the right markets, and we believe we are in the right industries,” says De Villiers.
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