Monthly payment from Vodafone Idea to continue: Indus Towers

Indus Towers, India's largest mobile tower company, has expressed its expectation that one of its major clients, Vodafone Idea, will continue to meet its monthly payment obligations. Although not directly mentioning Vodafone Idea, Indus Towers is actively engaged with the telecom operator to establish a "time-bound" plan for settling past dues.

Prachur Sah, MD and CEO of Indus Towers, made these remarks during the July-September earnings call, highlighting that despite challenges faced by the customer (Vodafone Idea) in the previous quarter, the monthly payment was received in October. The company's intention is to uphold the master services agreement (MSA) rates and work collaboratively with the client to develop a structured plan for recovering outstanding payments.

This statement holds significance as Vodafone Idea currently owes Indus Towers approximately Rs 5,653 crore as of the end of September. For this outstanding amount, Indus Towers has made provisions for doubtful debts. It is crucial for Indus Towers to recover these past dues, especially as it has increased its capital expenditure to support tower and tenancy expansions.

In the September quarter, Indus Towers observed a sequential rise of 16.6% in trade receivables, amounting to Rs 6,186 crore. During the same period, the company established a net provision for doubtful debt of Rs 1,335 crore, including a minor provision of Rs 130 crore related to Vodafone Idea.

Vikas Poddar, CFO of Indus Towers, emphasized that no dues from the customer (Vodafone Idea) have been written off, and they anticipate receiving 100% or near 100% of the payment to continue. He also noted that any settlement of past dues by the telecom operator would depend on their fundraising efforts.

Due to increased capital expenditures, Indus Towers experienced a negative cash flow of Rs 1,027 crore in the September quarter. Prachur Sah mentioned that with Bharti Airtel's robust expansion in rural areas and the rollout of 5G, elevated capital expenditures will persist.

Analysts revealed that Indus Towers incurred a capital expenditure of Rs 2,300 crore in the September quarter, up from Rs 2,200 crore in the previous quarter.

During the quarter, Indus Towers added 5,928 towers, bringing the total macro towers to 204,212. Additionally, the company's co-locations increased by 5,583 to a total of 353,462.

Sah remarked, "The quarter marked Indus Towers reaching a milestone of 200,000 macro towers, reaffirming its leadership position."

Indus Towers reported a 0.8% quarter-on-quarter increase in revenue from operations, reaching Rs 7,132.5 crore. However, the company's net profit decreased by 4% quarter-on-quarter, amounting to Rs 1,295 crore in the July-September quarter.