Indus Towers Limited reported yet another strong financial performance during the quarter ended June 2021. The telecom infrastructure company recorded a double-digit year-on-year growth in revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) as well as net profit during the quarter. Further, it reported the highest tower additions for the second consecutive quarter, with its telecom tower base in the country extending beyond 180,000.

A look at the towerco’s financial results for the quarter ended June 2021…

Surge in net profit and revenue

Indus Towers Limited delivered a successful quarter with its consolidated net profit growing by 26 per cent year on year from Rs 11.21 billion to Rs 14.15 billion. The consolidated revenue from operations also marked a year-on-year increase of 12 per cent, from Rs 60.86 billion to Rs 67.97 billion. Further, the EBITDA for the quarter ended June 2021 stood at Rs 35.29 billion, registering a year-on-year growth of 13 per cent from Rs 31.19 billion during the quarter ended June 2020. The EBITDA margin also improved marginally from 51.2 per cent to 51.9 per cent.

The return on equity (pre-tax) increased to 40.5 per cent as against 37.7 per cent in the quarter ended June 2020. Further, the return on capital employed increased to 22.9 per cent from 21.1 per cent. However, at Rs 20.41 billion, the operating free cash flow in the quarter ended June 2021 was down 4 per cent from the previous year.

Additions in the tower portfolio

Indus Towers Limited also witnessed the widening of its telecom tower base during the quarter. The total number of telecom towers deployed by the company increased from 169,630 during the quarter ended June 2020 to 180,997 during the quarter ended June 2021, witnessing a year-on-year growth of 11,367 towers. The total number of co-locations also increased from 310,627 to 325,355, marking a growth of 14,728 on a year-on-year basis. Meanwhile, the company continues on its diesel reduction journey and has achieved a 20 per cent reduction in diesel consumed per kilowatt of energy over the past two years. As of June 2021, Indus operates around 2,861 solar-powered sites across the network on a consolidated basis to reduce its diesel usage.

Opportunities galore, but challenges remain

Following a healthy financial performance during the quarter ended June 2021, Indus Towers Limited continues to maintain a positive outlook for the telecommunications sector in general as well as its own growth prospects. According to the company, the future rides on the surge in data demand and the need for a better connected nation in the post-Covid-19 scenario.

In fact, the company is exploring several opportunities in the neutral host fibre-to-the-x, small cells, data centres, smart cities, Wi-Fi, internet of things (IoT), electric vehicle (EV) charging, energy management and backup, in-building solutions and tower fiberisation domains,  which may open up new revenue streams in the near-to-medium term. The uptake of next-generation technologies such as 5G, IoT, cloud computing, artificial intelligence, robotics and machine-to-machine communications will further expand the role of infrastructure players such as Indus Towers Limited. According to Bimal Dayal, managing director and chief executive officer, Indus Towers Limited, “The imminent introduction and expansion of next-generation technologies such as 5G, IoT and smart cities, and the need for an even better network post-Covid-19 augurs well for the long-term potential of the telecom sector and thus, the tower industry.”

However, the deteriorating financial health of key players such as Vodafone Idea Limited (Vi) may act as a roadblock and adversely affect the financial condition of the company. Being one of the company’s major customers for infrastructure services, Vi’s ailing financial health and inability to raise funds could dampen future prospects for Indus Towers Limited. According to the company, any further deterioration in Vi’s finances could put Indus Towers’ revenue stream, cash flows and financial performance at risk. Therefore, while the company remains bullish about leveraging emerging opportunities in the telecom space, the fear of further consolidation among telecom operators and the industry’s transition to a duopoly still looms on its future growth prospects.