Indus Towers on Tuesday said it was making a provision of doubtful debts for an amount of Rs 2,298.1 crore even as it reported a loss of Rs 708 crore in Q3FY23. While not naming the customer, Indus said the provisions were being made as it faced collection challenges. Vodafone Idea is among Indus Towers’ key customer and owes the tower company about Rs 7,000 crore.
“During the current quarter, the funding plan of the said customer has not materialised and although the committed part payment till December has been received, the customer has indicated challenges in complying with the higher payment plan in the future,” Indus Towers said.
The company had made a one-time provision for doubtful debts worth Rs 1,771 crore in the preceding quarter, and Rs 1,230 crore in the April-June quarter. The total provision of doubtful debts made against its key client is now over Rs 5,000 crore. Vodafone Idea had 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.
Due to weak collections, the company’s revenue from operations fell 2.3% y-o-y and 15.1% sequentially to Rs 6,765 crore. During the quarter, the company did not recognise revenue of Rs 66.3 crore due to uncertainty of collections from its client in the future.
Also read: Video: Mindset for growth most important for MSMEs to scale-up, says MSMEx founder Amit Kumar
“Loss reflects adoption of stringent accounting practices amid persistent shortfall in collections,” the company said.
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.
Owing to weak revenues and higher expenses, the company’s Ebitda margins fell by 36 percentage points y-o-y to 17.5%. Sequentially, the margins contracted by nearly 18 percentage points. Free cash flow for the quarter was a negative Rs 621 crore.
“Our strong business fundamentals have enabled us to deliver a steady operational performance during the quarter. Our financial performance remains impacted as we have adopted stringent accounting practices amid persistent shortfall in collections,” said Prachur Sah, managing director and CEO of the tower company.
“The rapid rollout of 5G services across the country marks an exciting phase for the telecom sector. Indus being the leading tower infrastructure company, stands to benefit from this opportunity and continues to participate in this journey,” Sah added.
On operational front, the average rent paid by a customer to Indus Towers for using towers fell 7% y-o-y and 13.3% q-o-q to Rs 40,810 per installation per month in the December quarter.
Also read: CGTMSE’s complexities need simplification, overhaul to boost MSME credit: SBI’s Soumya Kanti Ghosh
During the quarter, Indus Towers added 4,644 towers and 4,329 co-locations on a y-o-y basis. In comparison to previous quarter, the company added 1,466 towers and 1,307 co-locations.
As of December end, the total towers count stood at 189,392, and the number of co-locations was 339,435. Any increase in tower additions and co-locations indicate spending by telecom companies to improve their network.