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Informist, Wednesday, Oct. 23, 2024

By Jahanvi Kothari

MUMBAI – Indus Towers Ltd.'s management said in a post-earnings call Wednesday that the momentum seen in 2023-24 (Apr-Mar) may not be repeated every year, but FY25 looks good so far. On the dividend policy of the company, the management said the free cash Indus Towers had generated in Apr-Sept has already been used for a share buy-back. The board of the company will evaluate the dividend policy again at the end of the current financial year based on collections and the cash flow situation, it added.

The company's management said it had successfully completed the buyback of 56.77 million of its shares at a price of INR 465 per share during the September quarter. Post this, Indus Towers became a subsidiary of Bharti Airtel, whose shareholding in the company increased to more than 50%.

The management said profitability was aided by "collections against the past overdue from a major customer in addition to collection of 100% of the monthly billing amount continue in this quarter resulting in write-back of provisions for doubtful debt". The company's earnings before interest, taxes, depreciation, and amortisation rose 8% sequentially and the EBITDA margin rose 410 basis points over the previous quarter to 65.7%. 

The company said in addition to the rollouts, it is "anticipating" incremental tenancies to flow through from one of the major customers in the near term, and it would act as a pivot to the telecom company's growth.

Indus Towers said it was able to record a meaningful number of towers and tenancy additions, despite the weather disturbances seen during the quarter. The company also said network expansion and the fifth generation rollouts would continue to act as levers of growth. It had an average sharing factor of 1.66 times per tower in the September quarter, against 1.67 times in the previous quarter. As of Sept. 30, Indus Towers owned and operated 379,236 co-locations in all 22 telecommunication circles in India. It also owned and operated 229,658 towers as of Sept. 30.

The company in the call said that its diesel consumption had reduced in the latest quarter on a year-on-year basis. This, according to the company's management, was mainly on account of seasonality in terms of lower fuel consumption. This is in line with Indus Towers' initiative to reduce operating and capital expenses for cost efficiency.

The company said its renewable energy portfolio continues to expand as the solar site count has increased to more than 25,000. Among expenses, Indus Towers' largest expense during Jul-Sept was power and fuel expenses at INR 28.93 billion. The company's total expenses fell drastically on account of allowances for doubtful receivables being negative to the tune of INR 10.77 billion this quarter. This dragged its other expenses for the quarter into the negative, which came in at INR 9.25 billion.

The company said the net finance cost looks elevated this quarter as it is dependent on financial income, which is the interest the company collects on its overdues, but at the gross level the finance cost is pretty stable. The finance cost of the company rose 1.2% on quarter to INR 4.61 billion.

On elevated maintenance capital expenditure, the company said there is no lumpiness in maintenance capex, despite some quarterly fluctuations, and overall it is stable. The company incurred capital expenditure of INR 15.18 billion in the reporting quarter, down 19.4% from INR 18.82 billion in Apr-Jun. The capital expenditure for Apr-Sept was INR 34 billion against INR 96.98 billion in FY24 and INR 41.21 billion in FY23.

Indus Tower's revenue comes from rentals from its co-locations and energy billings of towers and co-locations. The company said that owing to addition of co-towers in the latest quarter, the revenue from operations increased 1.1% sequentially to INR 74.65 billion. The company's sharing revenue increased 1.5% on year to INR 47.08 billion and revenue from energy reimbursements was down 1.3% at INR 27.58 billion.

The company's lean co-location count, which is a type of co-location, rose 182 from the last quarter to 11,360 in Jul-Sept. The sharing revenue per sharing operator per month rose 0.8% on quarter to INR 16,431. The company said profitability was also aided by a 6.7% on-quarter decline in repair and maintenance costs at INR 3.83 billion, which made up 15% of the total expenses.

On Wednesday, shares of Indus Towers closed at INR 357.10 on the National Stock Exchange, down 2.6%.  End

Edited by Tanima Banerjee

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