Indus Towers on Wednesday said the company’s cash flow position may improve in the current financial year as it is confident of recovering its past dues from Vodafone Idea after its successful Rs 18,000-crore follow-on public offer (FPO).

Indus Towers is engaging with Vodafone Idea for a revised payment plan to clear the outstanding dues of Rs 5,385 crore on which the former created a provision of doubtful debt as on March 31, 2024. The payment plan may also include the amount recorded as trade receivables (which also includes interest on past dues) from Vodafone Idea in the books of Indus Towers.

As on March 31, Indus Towers’ total trade receivables stood at Rs 6,451 crore. This is over and above the Rs 5,385-crore provision created on doubtful debts. The company, however, did not share a break-up of its trade receivables and how much of it is attributed to Vodafone Idea.

“We are currently working with the customer to define how it (payment plan of outstanding dues) is going to work, but we expect our dues to be cleared,” Prachur Sah, managing director & CEO of Indus Towers, said during an earnings call. “As dues are getting cleared and network expansion activities will happen, we expect tenancies to go up positively,” he added.

Indus Towers in April collected Rs 360 crore from Vodafone Idea which formed part of its outstanding dues on which the former created a bad debt provision. Based on the collection, the tower company reduced Vodafone Idea’s provision of doubtful debts to Rs 5,385 crore from Rs 5,700 crore in the October-December quarter.

Payment by Vodafone Idea for its part past dues was in addition to its monthly bills, Indus Towers said, without naming the telecom operator.

Vodafone Idea has said it will spend the funds raised from its Rs 18,000-crore FPO on network expansion and 5G rollout.

Analysts say the telco is expected to clear the outstanding dues of Indus Towers only after it raises Rs 25,000 crore in debt from banks.

Owing to higher capital expenditure for the 5G rollout of another customer, Bharti Airtel, Indus Towers generated a free cash flow of Rs 333 crore in the January-March quarter, down from `870 crore in the preceding quarter. For FY24, the company’s free cash flow was at Rs 182 crore, down from Rs 1,400 crore in FY23.

“I think this year has been a year of low cash flow. We are engaging with the customer (Vodafone Idea) after their good development on the fundraise. There is a possibility that our cash flow position might improve in FY25,” Vikas Poddar, chief financial officer at Indus Towers, said.

In FY24, the company’s capex was at Rs 9,698 crore against Rs 4,121 crore in FY23. “We have seen almost three-to-four quarters of very strong tower rollouts. The momentum has not slowed down. We expect it to continue for a few more months and quarters. There will be a high capex phase for some more time,” he said.

“We expect the rural expansion of a major customer and the 5G rollout to continue to be significant levers of near-term growth,” Poddar added.

The tower company has largely been benefiting from the network rollout by Bharti Airtel, especially on the back of the telecom operator’s rural expansion plans and 5G rollout. Owing to Airtel’s network, the company witnessed a record tower addition during the year, surpassing the 200,000-tower milestone.

“The order book remains strong for the remaining part of the year. FY25 still remains a high rollout year for us in terms of towers,” Sah said.

During the quarter, Indus Towers added 7,961 towers, taking the total macro towers to 219,736. Co-locations rose by 7,909 to 368,588. The company also added 692 leaner sites, taking total leaner sites to 10,686.

The average rent paid by a customer to Indus Towers for using towers was flat quarter-on-quarter at Rs 41,435 per installation per month in the quarter.

The company’s net profit rose 20% q-o-q Rs 1,853 crore in the January-March quarter, while its revenue from operations fell marginally to Rs 7,193 crore.