Africa Cellular pins last hope on restructure

Africa Cellular Towers, which operates in African cellular and power-line markets, said macroeconomic factors and continued depressed trading conditions hit its interim results for the six months ended August.
Despite a slight improvement on the same period last year, the manufacturer, supplier and installer of cellular lattice towers said if steps to restructure the business failed the company may cease to be a going concern.

The company implemented a turnaround strategy in May last year after substantial losses in the previous financial year because of reduced infrastructure spending from telecommunications operators in Africa. Revenue increased 6,3% to R109m, mainly on new power-line contracts and third- party work through its manufacturing plant.

The company’s gross loss fell to R18,4m from R23,4m previously, but losses were mainly attributable to overall low revenue throughput compared to fixed overhead cost structures. The trading loss of R47,6m compared to a R70,6m trading loss in the period last year was reduced as a result of cost-cutting initiatives and closing its fibreoptic and equipment shelters divisions.

The group has undertaken an extensive turnaround process since May last year, and in March received R99m in debt funding from the Industrial Development Corporation.

ACT said its focus on developing the power lines division into its core business was more challenging than expected, partly because of its dependency on Eskom to award timeous tenders. It said the cellular towers division had secured some contracts in SA and Ghana in the period, but not at previous levels.

However, the group’s manufacturing operation came in above expectations, having secured lucrative third-party work in the past six months.

The company said its trade debt fell slightly to R43m, and that no additional doubtful debt provision was raised for the interim period.

Net tangible assets per share fell 38,8% from the 37,9c reported at the end of February.

ACT said as a result of its working capital requirements, the group was in discussions with the Industrial Development Corporation and its bankers regarding the renegotiation of existing and further funding facilities.

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