Africa Cellular Towers intends increasing its local manufacturing capacity and stock holdings in emerging markets in order to expand its market share on the continent and in the Gulf.
The company, which will list on the JSE's Alternative Exchange (AltX) on 29 November, says diversifying its customer base as a result of expansion will "shift reliance away from Celtel as its major customer and provide more opportunities to expand its business".
It told prospective shareholders this morning, in an abridged prospectus, that it intends raising R50 million before listing. Its revenue to end-February was R129 million, while its gross profit was R47.9 million.
The company forecasts revenue of R157 million by the end of the next financial year, while gross profit is expected to move up to R53 million. By February 2008, it expects revenue of R191 million and gross profit of R68.8 million.
AltX currently has 33 companies listed and the manufacturing firm will become the 35th. Established three years ago, AltX has a market capitalisation of R6.3 billion. In its first year, it saw 10 companies list and had a market capitalisation of R1 billion.
Africa Cellular Towers manufactures steel communication towers, portal factories, steel fencing, diesel and water tanks, solar structures and general steel engineering.
It is also involved in the management of telecommunications network projects, including GSM, fixed wireless and VSAT technology. It provides solutions or tower parts in Africa and other emerging markets, such as the Gulf States and India.
Growth opportunities
The company added that, as part of the listing process, it aims to identify suitable black economic empowerment (BEE) investors that will participate in the private placement.
"While this is not a critical factor for operating in the emerging markets outside of SA, a BEE partner will position the company favourably when tendering for the large parastatal contracts in SA," it said.
The firm is present in 24 African countries out of the 53 on the continent and is also in discussion with other Gulf State countries. It is already operational in Kuwait, and is in discussion with Indian parties to manufacture and supply materials for the construction of cellular towers.
It aims to expand its current product offering and looks to offer more flexible solutions, such as low-cost rapid-deployment towers and cost-efficient products.
The company aims to earn annuity income from existing towers and also seeks to buy out other firms that fit into its supply chain, which will lead to higher margins.
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