ACTowers bags R64m Eskom deal

Cape Town - AltX-listed telecoms and power infrastructure specialist Africa Cellular Towers appears to be successfully plugging into Eskom's infrastructure upgrading.

The company on Tuesday announced contracts worth R64m with the power utility - a development that had a beneficial effect on its languishing share price. By Tuesday afternoon, the stock had shifted up 18% to 33c on smallish volumes.

The new business - which will be undertaken by ACTower's fledgling Power Lines business - should be a welcome boost to top line in the financial year ahead, after the company reported a near halving of turnover to R227m in the year to end-February 2010.

Aside from the project to re-route distribution lines at the Komati power station (announced in February this year), ACTowers will also participate in two new Eskom projects.

The first will involve deviating power lines to bypass the Zeus substation in Mpumalanga, the second erecting 60km of distribution line from the Watershed substation in Lichtenberg to the Mmabatho substation in Mafikeng.

Both projects kick off in August, with the Zeus project set to run for five months and the Watershed project for 12 months.

ACTowers chairperson and CEO Chris Kruger said the additional Eskom contracts demonstrated the company had established its credentials with Eskom. "We are one step further to fulfilling our mission of becoming a leading player in the power line installation and supply industry."

Established in 2008, the company's power lines division is still a relatively small segment of ACTowers' business. In the year to end-February 2010, it generated R4.5m in turnover but showed an operating loss of R5.6m.

 - Fin24.com