Indus Towers on Thursday reported a weak financial performance for the September quarter which can be attributed to collection challenges faced by the company from its clients.
In the September quarter, the company’s consolidated net profit fell 44% year-on-year to Rs 872 crore, whereas its revenue from operations rose 16% y-o-y to Rs 7,967 crore. Sequentially, the company’s net profit rose 83%, whereas revenue rose 15.5%.
On a y-o-y basis, the fall in net profit was due to provision of doubtful debts amounting to Rs 1,771 crore made by the company during the quarter. While the company did not name the company for which it has created the bad debt provision, it is likely for one of its key customers — Vodafone Idea — which owes it about 7,000 crore. In the preceding quarter too, the company made a one-time provision for doubtful debts worth1,230 crore. Vodafone Idea has also asked Indus Towers for softer payment terms and proposed to pay part of the amount to be billed till December 31, 2022, and 100% of the said amounts billed from January 2023.
“Post discussions, the company has agreed to accept the part payment till December 2022,” Indus Towers said in its earnings statement for the September quarter. The remaining dues outstanding till December 2022 will be paid by Vodafone Idea between January and July 2023.
Recently, Indus Towers has also asked Vodafone Idea to either clear its dues or lose access to towers by November.
Also Read| Indus Towers, Dabur India, Zee, SBI Cards, Tata Chemicals, Route Mobile stocks in focus on 27 October 2022
The company’s Ebitda margins fell by 17.6 percentage points y-o-y to 35.3%. The margins expanded by 160 basis points sequentially, which can be attributed to increase in revenues. Owing to weak collections from the clients, operating cash flows in the September quarter fell 39% y-o-y to `1,277 crore.
In its board meeting, the company also approved raising of up to Rs 2,000 crore by way of issuance of non-convertible debentures (NCDs) in one or more tranches on private placement basis, it said.
“We have delivered a strong operational performance during the quarter, underpinned by good demand for products across our portfolio. Our financial performance continues to be impacted by the collection challenges we face from one of our customers,” said N Kumar, chairman and independent director of the company.
“The launch of 5G services by two major operators within three months of spectrum auction underlines the strong role of infrastructure players in providing 5G-ready sites at speed. At Indus Towers, we stay excited and prepared to capitalise on the 5G opportunity,” he said.
On the operational front, the average rent paid by a customer to Indus Towers for using towers rose 10% y-o-y and 12% q-o-q to `47,093 per installation per month in the September quarter.
During the quarter, Indus Towers added 4,464 towers and 5,577 co-locations on a year-on-year basis. In comparison to previous quarter, the company added 1,452 tower and 1,746 co-locations.
As of September end, its total towers were at 187,926, and the number of co-locations was 338,128. Any increase in tower additions and co-locations indicate spending by telecom companies to improve their network.
