African Cellular Towers' shares lost half their value on the JSE yesterday, after the company issued a negative trading update and said it was in talks over its ability to continue as a going concern.
The company, listed on the JSE's alternative exchange, says it will report a loss and headline loss per share for the first half of the year. This will be the fifth consecutive period it will not have made a profit.
African Cellular Towers was established in 1999 and has three business units: power lines, cellular towers and equipment shelters.
It told shareholders the loss and headline loss per share will be between 14c and 18c compared to the first half of last year, when it reported a basic per share loss of 23.5c and a headline loss per share of 21.4c.
African Cellular Towers also cautioned shareholders that it was in “strategic discussions regarding its going concern prospects, as well as funding requirements”.
When it published its year-end results, directors said the group is “solvent” and starting to reap the rewards of a turnaround strategy. The company said it had been “restructured” and additional funding had been secured to enable it to perform on current and future contracts.
Absa Investments analyst Chris Gilmour says discussions about its going concern status do not sound good. “My interpretation is that it is in deep trouble and may struggle to keep going.”
The company's shares slumped 50% on the news to close at 4c, a new 52-week low. Its 52-week high was 20c, which it hit on 23 November last year.
Its results are expected to be published by month-end.
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