Indus Towers Fortune Dependency on Prospects of Vodafone Idea Ltd.

Indus Towers Ltd publishes its Q4FY21…Learn more…

Wednesday, 28th April 2021

Indus Towers Ltd, formerly Bharti Infratel Ltd, the company that offers tower and such other related infrastructure sharing services to telecom service providers, recently declared their Q4FY21 results which, although was satisfactory, were not very impressive. It is believed, the company’s health is closely associated with the wellbeing of its major client, Vodafone Idea Ltd (VIL).

In a recently released note, analysts from Ambit Capital said, “The company’s fate depends on VIL’s survival.” They added, “Gross additions continue to slowly inch up but remain range-bound, and should only recover once VIL embarks on coverage expansion.”

As per this premise, VIL’s long-term financial health prospects remain a key factor for the shares of Indus Towers despite the latter’s assurances of coming up with 5G opportunities and growth momentum as laid out by their management.

Emkay Global Financial Services Ltd’s analysts said, “We continue to highlight that VIL’s fundraise or any respite to telcos regarding the adjusted gross revenues penalty will be crucial for a re-rating in the stock.”

Others such as Motilal Oswal Institutional Equities have also pointed out in reference to the Indus Towers financial results, revenue stays on the line while improving tenancy additions.

It said, “The management continues to reiterate that 5G and fiber opportunities would continue to drive growth in the future as dependency on strong telecom infrastructure remains. Tenancy additions have also improved in the past three quarters…which signifies demand for new towers.”

On the other hand, it observed, Vodafone Idea continues to be a large client for Indus Towers and the tower sharing business has a very restricted business case for single tenancy operations.

In the note, Motilal Oswal also stated that VIL is currently faced with “severe liquidity risk due to its huge cash obligations.” Hence their long-term business concerns continue to remain a nagging concern for Indus Towers.

A group of analysts is also worried about the impact that might be suffered by them as a consequence of the increased focus of Reliance Jio on tower infrastructure.

Indus Towers essentially focuses on acquiring, building, owning, operating, and maintaining towers and other related infrastructure. They serve all wireless telecommunication service providers in the country giving them tower access on a shared basis under long-term contracts.

The News Talkie Bureau

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