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Informist, Monday, Jan. 20, 2025

By Rajesh Gajra

NEW DELHI – The continued expansion-led rollout by Vodafone Idea Ltd. and the continued rural rollout and network decongestion efforts by Bharti Airtel Ltd., Indus Towers Ltd.'s two major customers, will likely help the telecom infrastructure company report a notable sequential pickup in revenues and operating profit for the December quarter. Such a pickup was also seen in the preceding two quarters, which had followed after three consecutive quarters of flat or marginal sequential growth till the March quarter.

In the December quarter, the company's consolidated net profit will likely be in a range of INR 19.12 billion to INR 24.0 billion, according to the estimates by three brokerage firms. The consolidated revenue is seen up 2.7% sequentially to INR 76.65 billion, according to the average of estimates by four brokerage firms. The revenue estimates range from INR 75.76 billion to INR 77.58 billion. Compared to the year-ago quarter, the revenue in the December quarter is estimated to be up 6.5%.

In the September quarter, the consolidated revenue of Indus Towers had risen 1.1% on quarter and 4.7% on year to INR 74.7 billion. The company's consolidated net profit had risen 15.5% sequentially and 72% on year to INR 22.2 billion.

In an earnings call after the September quarter results, Managing Director and Chief Executive Officer Prachur Sah had told analysts that the company sees its "major customers continue to roll out... (and) because of our strong tower rollout, we will remain the prime candidate to... capture this growth" over the next few quarters. Indus Towers was also "anticipating incremental tenancies to flow through from other major customers... in the near term," Sah had said.

According to Centrum Broking, Indus Towers would see around 1.8% sequential revenue growth in the December quarter on account of "increasing number of co-locations led by growing demand from Airtel/VIL (Bharti Airtel and Vodafone India) as they focus on expanding coverage/capacity." Kotak Securities' institutional equities team projects Indus Towers' net tower additions to be around 6,000 and net tenancy additions of 8,000 in the December quarter "driven mainly by Bharti's continued rural rollouts". For a telecom towers network company, 'tenancy' refers to the number of clients who have taken on lease vertical spaces on the cell towers managed by it.

Analysts expect the company's operating profit, in terms of earnings before interest, tax, depreciation, and amortisation, to rise in the December quarter on the back of the revenue boost and control on costs. Excluding provisions-related and one-off items, Indus Towers' net profit will likely rise 4% sequentially due to multiple factors, according to Motilal Oswal Financial Services. The brokerage said the company will likely benefit sequentially from "lower energy under-recoveries". This will have the effect of propping up the revenue from energy reimbursements. Energy reimbursements accounted for 37% of the company's total revenue in the September quarter.

Indus Towers will announce its earnings for the December quarter Thursday. Post the announcement, "management commentary on receivables from VIL (Vodafone Idea) would be the key thing to watch out for," Centrum Broking said. Analysts will also track margins from energy reimbursements which, the company's management said in October, will likely recover in the December and March quarters.

Analysts and investors will also keenly watch for updates on the sustainability of the momentum of rollouts by its two major customers, Bharti Airtel and Vodafone Idea. Bharti Airtel is the main promoter of Indus Towers with a 50% stake as of Sep 30.

At 1110 IST, shares of Indus Towers traded 3% higher at INR 373.95 on the National Stock Exchange.

Following are the Oct-Dec consolidated earnings estimates for Indus Towers based on reports from four brokerage firms in descending order by the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Namrata Rao

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