Indus Towers, which has rental dues from Vodafone Idea, on Wednesday said its provision of doubtful debts as of March 31, 2023, was at Rs 5,453.3 crore.

The company, however, reported a net profit of Rs 1,399.1 crore during the January-March quarter against a loss of Rs 708 crore in the preceding quarter.

Without naming the customer, Indus said it has made provisions for doubtful debts worth Rs 43.4 crore during the March quarter as it faced collection challenges from the customer.

Also Read: Vodafone Idea loses market share in 17 out of 22 circles

Owing to weakness in collections, Indus Towers’ revenue from operations fell marginally quarter-on-quarter to Rs 6,752.9 crore. On a year-on-year basis, the company’s revenue fell 5%, while net profit fell 23%.

“During the quarter, the funding plan of the said customer did not materialise and the said customer indicated challenges in making the committed payments pertaining to the outstanding amount due as on December 31, 2022,” Indus Towers said.

“However, the said customer has been paying an amount equivalent to monthly billing from January 2023, hence, the group continues to recognise revenue from operations relating to the said customer for the services rendered,” the company added.

The said customer, which is Vodafone Idea, has been struggling to raise funds even after the government converted its outstanding dues into equity. With regard to its dues payable to Indus Towers, it had agreed to repay them between January 2023 and July 2023.

During the quarter, Indus Towers did not recognise revenue of Rs 77 crore due to uncertainty of collections from its client in the future.

According to Indus Towers, the company has a secondary pledge over Vodafone Idea promoters’ remaining shares but the same will not be enough to cover its total outstanding dues.

Also Read: Telcos recorded Rs 4.17 lakh crore debt in 2021-22

Owing to fall in expenses largely on account of a fall in bad debts provision, the company’s Ebitda margins expanded by 33.5 percentage points sequentially to 51%. On a y-o-y basis, the margins contracted by nearly 6 percentage points. Free cash flow for the quarter was at Rs 1,155 crore.

“We ended the year on a positive note with a robust operational performance and improvement in collections during the last quarter. The renewal of co-locations with our major customers during the year has secured our business over the long run,” said Prachur Sah, managing director and CEO of the tower company.

“The rapid pace of 5G rollouts and new tower rollouts supported by our major customer’s focus on expansion are expected to act as strong levers of growth for the foreseeable future,” Sah added.

On operational front, the average rent paid by a customer to Indus Towers for using towers rose 1% q-o-q and fell 12.6% y-o-y to Rs 41,201 per installation per month in the January-March quarter.

During the quarter, Indus Towers added 7,427 towers and 7,040 co-locations on a y-o-y basis. In comparison to previous quarter, the company added 3,482 towers and 3,396 co-locations.

As of March end, the total towers count stood at 192,874, and the number of co-locations was 342,831. Any increase in tower additions and co-locations indicate spending by telecom companies to improve their network.