Fundraising from Vodafone Idea Limited (Vi) would better Indus Towers Limited’s chances of recovering its old debts, which are currently pegged at Rs 95 billion, as per a note by Kotak Institutional Equities. It would also prove incremental for the business for the 4G coverage expansion of Vi’s network. It added that with a promoter equity infusion of Rs 20 billion, and possible relief from lenders, Vi will survive till the second half of 2026.
Kotak estimated that Indus’ shortfall from Vi could bring a massive drop of Rs 5-10 billion cumulatively over the financial year 2024-25. Indus shares were up by 4.17 per cent to Rs 178.80. However, Vi rapidly needs a dose of funding, possibly over Rs 500 billion to expand its 4G coverage, fund its 5G rollout and garner enough cash flows to pay off, among other, statutory and vendor dues. The company’s current lenders and potential third-party equity investors have underlined the need for a faster infusion first which has been pending for several months.
Analysts at Kotak are optimistic about Vi’s survival chance, stating that with an improvement in collections and a change in business outlook, Indus could possibly commence dividend payments in the coming years. They also added that Indus’ share of Bharti Airtel’s new tower builds has declined significantly since Q2 FY22, as the latter likely installed leaner towers. But with the company’s increasing focus on leaner towers and the increasing rollout by Airtel, Indus’ share in the company might improve.