After approving Vodafone Idea’s proposal for softer payment terms, Indus Towers is confident that the new payment plan will work out. In its post-quarter earnings call, the towers company told analysts it expects the trade receivables to come down from January on the basis of the payment plan.

According to Indus Towers, factors such as the reform package announced by the government for the telecom sector, Vodafone Idea’s participation in the 5G auctions, and continuous investment in its network, makes it believe that one of its largest clients will be able to clear its pending dues.

Further, indication from Vodafone Idea that it would finalise its fundraising plan soon also makes Indus Towers confident about the telecom operator’s ability to repay outstanding dues, the towers company said during the call.

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The company, however, did not share details about the pending dues of Vodafone Idea, which leases several towers and rooftop locations from Indus Towers to run its network. As of September-end, the company’s total trade receivables were Rs 6,499 crore, higher than `6,250 crore at the end of June.

In the September quarter, Indus Towers accepted a proposal from the telecom operator for softer payment terms to clear its dues. As per the new payment term, Vodafone Idea will pay part of the monthly billing till December 31, and 100% of the amounts billed thereafter.

“Post discussions, during the quarter, the company has agreed to accept the part payment till December 2022,” Indus Towers said. The remaining dues outstanding till December 31 will be paid by Vodafone Idea between January and July 2023.

When asked whether Indus Towers would accept convertible debentures from Vodafone Idea like its competitor American Tower Corporation (ATC), the management said it is currently focused on settling dues in cash.

On talks around restricting tower access for Vodafone Idea, Tejinder Kalra, chief operating officer, Indus Towers, said, “We have not mentioned this anywhere or made any statement, that is speculation.”

Indus Towers has been facing cash flow issues owing to challenges in collecting dues from its clients. Its operating cash flows in the September quarter fell 39% y-o-y to Rs 1,277 crore. During the quarter, the company has also created a provision for doubtful debts worth Rs 1,771 crore, which also affected its net profit for July-September.

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Barring the financial challenges, the company is bullish on the 5G opportunity and sees a huge revenue potential with increased loading on the existing tower sites, demand for leaner tower sites, need for 5G standalone sites once the usage of 5G increases.

“As operators begin rollout of 5G services, we are seeing good amount of orders coming in from them,” Kalra told analysts during the earnings call. According to Kalra, operators would need to make 50-60% sites 5G ready to cover most parts of the country with 5G in the next 18 months.

On Thursday, the board of Indus Towers also approved raising up to Rs 2,000 crore by way of issuance of non-convertible debentures (NCDs) in one or more tranches on private placement basis. The company will raise the funds in tranches and utilize it towards investment in growth initiatives, and capital expenditure related to network rollouts, it said.