African Drive Pays Dividends for ACTowers

Mergers, Acquisitions and Financial Results

Buyoant conditions in the cellular market and the eager pursuit of opportunities in Africa have paid off spectacularly for African Cellular Towers (ACTowers), which constructs cellular masts and exports them.

In the six months to August, the AltX-listed company's sales grew 148% to R176,1m, supported by greater production capacity and the inclusion of JK Shelters, which it bought in March. Earnings before interest, tax, depreciation and amortisation (Ebitda) rose 116% to R39.5m. Ebitda margins, however, declined to 22.3% (from the previous corresponding period's 25.6%), mainly because of a reduction in exchange profits.

Headline earnings were up 40% to 11.3c per share, compared with 8,1c per share previously. ACTowers operates in 28 African countries. The company said demand for installation of cellular towers exceeded its expectations, and it secured new contracts in Madagascar, Republic of Congo and Chad. Growth was set to rise sharply with a plant in Ghana's free zone expected to become operational by next April. ACTowers will occupy the zone as soon as infrastructure services are completed.

This is the first large firm to set up shop in the Ghana free zone -- akin to Dubai's famous free zones -- and it negotiated favourable terms with Ghana's government, including a five-year tax holiday. Ghana is a member of the Economic Community of West African States, so the plant will give ACTowers a springboard into that region, chairman and MD Chris Kruger said. He expected growth of up to 20% in the first year, and further increases as the company expanded its footprint in the region.

Business Day