Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indus Towers Ltd (BOM:534816, Financial) achieved its highest ever yearly tower additions, surpassing the milestone of 200,000 towers in its portfolio.
- The company maintained 100% collection against billing from a major customer and made progress on past dues collections.
- The rollout of 5G services by top operators has significantly contributed to loading revenue and strong growth.
- Indus Towers Ltd (BOM:534816) improved its network uptime to 99.97%, despite adverse weather conditions.
- The company has made substantial progress in its ESG initiatives, including a tenfold increase in its solar portfolio and a reduction in diesel consumption by 7%.
Negative Points
- The company's CapEx remained elevated due to accelerated rollouts by a major customer, impacting free cash flow.
- There is uncertainty regarding the timing and structure of overdue payments from a major customer.
- The ARPT (Average Revenue Per Tenant) has remained flat due to a mix of lower rental new rollouts and renewal discounts.
- The company's trade receivables increased by INR 4.3 billion due to timing differences in collections.
- Indus Towers Ltd (BOM:534816) faces ongoing challenges in balancing the rollout of macro towers and leaner towers, impacting overall CapEx and operational focus.
Q & A Highlights
Q: Can you provide an update on the outlook for tenancies and rentals, especially in light of a major customer raising funds?
A: We are currently working with the customer to define how the dues will be cleared. We expect our dues to be cleared and anticipate positive growth in tenancies as expansion activities continue. However, it is too early to comment on specific numbers. (Prachur Sah, CEO)
Q: What is the outlook for CapEx and dividends?
A: We expect the momentum of strong tower rollouts to continue for a few more months and quarters, leading to a high CapEx phase. Regarding dividends, our free cash flow performance has been low due to elevated CapEx, but we anticipate an improvement in FY25, which could positively impact dividend considerations. (Vikas Poddar, CFO)
Q: Can you clarify the increase in receivables and the collection process?
A: The increase in receivables is mainly due to timing differences, as collections against past dues were made in April. We have collected more than 100% of average monthly billing, resulting in a write-back of provisions for doubtful debt. (Vikas Poddar, CFO)
Q: What is the market share increase attributed to? Is it specific to one customer or industry-wide?
A: The market share increase pertains to the entire market, driven primarily by one major customer. We have taken a larger portion of the new build rollout market share. (Prachur Sah, CEO)
Q: What is the impact of the MOU with NTPC on renewable energy projects?
A: The MOU aligns with our goals of increasing the renewable portfolio and improving cost efficiency. It is in the early stages, and the financial implications will be clearer as we progress. (Prachur Sah, CEO)
Q: How should we think about the average rental per tenant (ARPT) for FY25?
A: ARPT is expected to remain stable, with minor movements due to the mix of tower designs and contractual escalations. The new rollouts are leaning towards lower rental designs, but overall, ARPT should be stable. (Vikas Poddar, CFO)
Q: What is the visibility for CapEx in FY25 compared to FY24?
A: We have strong visibility for the remaining part of the year, and CapEx will remain elevated for the next few quarters. We hope to see stronger rollout momentum in FY25. (Prachur Sah, CEO)
Q: How are the overdue amounts from a major customer being managed?
A: We are engaged with the customer to clear the overdues, but the exact structure and timing are still being discussed. We are confident in recovering the full amount. (Prachur Sah, CEO)
Q: What is the strategy for new business introductions?
A: We continue to explore new business opportunities and are discussing a couple of them with the Board. However, the current focus remains on capturing market share in the tower business. (Prachur Sah, CEO)
Q: What is the impact of lean towers and small cells on your portfolio?
A: We have seen significant rollout of lean towers and expect to continue this trend. Small cells and indoor positions are also part of our strategy, and we aim to remain aggressive in these areas. (Prachur Sah, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
