Indus’ profit for the January-March quarter was Rs 1,399 crore compared to Rs 1,829 crore in the same period last year. Its revenue for the March quarter was Rs 6,753 crore, down 5% from the March 2022 quarter (Rs 7,116 crore).
The tower company made an incremental provision of Rs 43.4 crore towards doubtful debt in January-March period, after Vodafone Idea (Vi) warned of likely challenges in meeting future payment commitments. This brings the cumulative allowance for doubtful receivables as on March 31 to Rs 5,453.3 crore.
“..the funding plan of the said customer (read: Vi) has not materialised, and the said customer indicated challenges in making the committed payments to the outstanding dues as on December 31, 2022,” Indus said in its earnings statement Wednesday.
However, the company added, the customer (read: Vi) has been paying an amount equivalent to monthly billing from January 2023, and hence, “the Group continue(s) to recognise revenue from operations relating to the said customer for services rendered”.
Vi’s total dues to Indus are estimated at around Rs 7,000 crore, with industry executives pegging the cash-strapped telco’s recurring monthly dues to the tower company at upwards of Rs 500 crore.
The company’s stock closed at Rs 143, up 3.62% at the end of the day’s trading Wednesday. The financial results were announced after market hours.“The renewal of co-locations with our major customers during the year has secured our business over the long run,” Indus Towers managing director and chief executive, Prachur Sah said in the earnings release.
“Furthermore, the rapid pace of 5G rollouts and new tower rollouts supported by our major customer’s focus on expansion is expected to act as strong levers of growth for the foreseeable future,” he added.
Indus’ consolidated earnings before interest tax depreciation & amortization (EBITDA) fell 15% on-year to Rs 3, 447 crore, amid Vi’s continuing challenges in meeting its dues.
For the full fiscal 2023, the company’s revenue from operations was Rs 28, 381.8 crore, up 2.4% on year from Rs 27, 717.2 crore in FY22. Net profit was down 68.5% at Rs 2, 040 crore, on provisioning for Vi’s dues.
In its earnings notes, Indus also said that it has listed an impairment charge of Rs 492.8 crore relating to revenue equalisation of assets up to September 2022 as an exceptional item.
Additionally, the revenue of Rs 66.3 for the December 2022 quarter and Rs 77 crore for the March 2023 quarter on account of the straight-lining of lease rentals is not recognised in the revenue from operations due to uncertainty of collections.
In its earnings statement for the March quarter, Indus also warned that the potential loss of the said customer if it fails to continue as a going concern or Indus’s failure to get new clients could have an adverse effect on the tower company’s business, results of operations and financial conditions.
Indus’ trade receivables for the March quarter shrunk sequentially to Rs 4, 868.7 crore from Rs 5, 062.4 in the December 2022 quarter indicating Vi could have made part of the committed payments in the quarter.
The health of loss-making Vi is vital for Indus’ long-term financial stability since the telco accounts for over 40% of the tower company’s revenue. Brokerage Kotak had estimated that as much as 10% of Indus’s annual revenue could be at risk due to Vi’s cash shortfall.
Vi ended the December quarter of FY23 with a loss of Rs 7,990 crore, dragged by higher finance and operating costs while it continued to see heavy subscriber losses. It reported a Rs 2.22 lakh-crore net debt and a cash balance of Rs 160 crore. Debt from banks and financial institutions stood at Rs 13,190 crore, while trade payables—reflecting arrears to vendors such as tower companies and gear suppliers—was at Rs 14,728.6 crore.
In the fiscal fourth quarter, Indus added net 3, 482 towers on-quarter and 7, 427 on-year across 22 telecom circles in India. Co-locations increased 3, 396 sequentially and 7, 040 year-on-year. Co-locations are points where a tower company deploys mobile telecom antennae of multiple carriers on a single structure.
As of March 31, Indus owned and operated 1, 92,874 towers with 3, 42,831 co-locations across India.
