The tough economic conditions, which have contributed to JSE-listed African Cellular Towers (ACTowers) recording an interim headline loss of R48,3-million, were expected to prevail in the year ahead.

The company reported on Wednesday that the six months ended August 31, 2009, had been the most challenging period in its history, with the continued deterioration in the global and local economies, the strengthening of the rand against the dollar and the continued decline in the steel price, having negatively impacted on its results.

ACTowers had recorded headline earnings of R36,7-million for the first half of the 2009 financial year, and headline earnings of R51,3-million for the 2009 full year.

However, its revenues fell by 37,2% to R149,8-million in first-half of the 2010 financial year, compared with R238,5-million the year before, owing to fewer cellular contracts, the stronger rand and weaker steel prices.

Despite the demand for the supply of cellular towers remaining high in Africa cellular operators had delayed issuing contracts for new projects owing to the tightening of funding, the company said in a statement.

The roll-out of the anticipated Eskom projects had also been postponed, which had negatively impacted on ACTowers’ power lines division.

The company stated that it had experienced greater competition as a result of the project delays or cancellations, as suppliers of cellular towers were under pressure owing to the amount of work that was available, forcing them to adjust pricing and payment terms.

The increased competition had put ACTowers supply terms under pressure.

Meanwhile, the company reported that about 98% of the company’s revenues were still derived from exports into Africa.

A weaker rand at the end of the 2009 financial year, trading at about R10 to the dollar in February, had sheltered the group’s revenue against the decline in steel prices.

However, the rand had since strengthened, while steel prices had continued to decline, trading at about R6 500/t by the end of August, 39% lower than the R10 675/t achieved by end of August 2008.

The group noted that it had placed all capital expenditure on hold until market conditions improved.

It emphasised, however, that it was well-placed to benefit from any improvements in the telecommunications and power lines industries.

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