Indus Towers Limited continued to re­port strong fi­n­ancial performance during the quarter ended September 2021. The telecom tower company’s three critical metrics – revenue, earnings be­fo-re in­te­rest, taxes, depreciation and amortisation (EBITDA), and net profit – witnessed a strong year-on-year gro­wth during the quarter. Further, the company witnessed a rise in its telecom tower base and co-locations on the back of high data demand post the pandemic.

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

Rising net profit and revenue

Indus Towers Limited delivered a successful quarter with its consolidated net profit growing by 38 per cent year on year, from Rs 11.31 billion to Rs 15.59 billion. The co­nsolidated revenue from operations also marked a year-on-year increase of 8 per cent, from Rs 63.59 billion to Rs 68.77 billion. The EBITDA for the quarter ended September 2021 stood at Rs 36.41 billion, registering a year-on-year growth of 17 per cent from Rs 31.18 billion. The EBITDA margin also improved marginally from 49 per cent to 52.9 per cent.

The return on equity (pre-tax) inc­rea­sed to 40.9 per cent from 35.7 per cent in the quarter ended September 2020. Furth­er, the return on capital employed increa­sed to 23.8 per cent from 20.6 per cent. At Rs 21.09 billion, the operating free cash flow in the quarter ended September 2021 was up by a phenomenal 29 per cent over the previous year.

Strengthening tower portfolio

During the quarter, Indus Towers changed the method of reporting of towers and co-locations from a notice basis to an actual exit basis, with effect from July 1, 2021. In December 2018, Indus had adopted a conservative approach of reporting exits on the basis of notices received vis-à-vis the existing method of reporting on the basis of actual exits due to the ongoing consolidation in the telecom industry. Now, with the stabilisation of the industry and the declining trend of exits, the company has moved back to the earlier approach of re­porting churn based on actual exits to rep­resent actual colocations billed. This resulted in a one-time addition of 3,630 co-locations during the quarter ended Sep­tember 2021.

Further, Indus Towers witnessed the expansion of its telecom tower base during the quarter. The total number of towers de­ployed by the company increased from 172,094 during the quarter ended Sep­tember 2020 to 183,462 during the quarter ended September 2021, recording a year-on-year growth of 11,368 towers. More­ov­er, the company’s net co-locations increased by 3,566 during the quarter. Gross exits during the quarter stood at 18. If the company had adopted the earlier methodology, gross exits during the quarter would have been 179. Meanwhile, Indus had an average sharing factor of 1.81 per tower during the quarter ended September 2021.

Energy conservation measures

Indus continued its diesel reduction journey during the quarter. As of September 2021, Indus operates around 2,439 solar-powered and solar renewable energy service company sites across the network on a consolidated basis, which helps in reducing noise and emissions from diesel generator sets as well as the dependence on die­sel. The company also seems to be progressing well on its comprehensive programme to ensure zero diesel consumption at its tower sites. As of Septem­ber 2021, Indus operates around 67,436 green towers across its network.

Looking ahead

Following a healthy financial performance during the quarter ended September 2021, Indus Towers Limited maintains a positive outlook for the telecommunications sector as well as its own growth prospects. This may be attributed to the government’s mo­ve to launch a relief package for the telecom sector to extend some flexibility to tele­com companies for payment of their outstanding dues, as well as the initiatives taken to address some of the long-standing issues faced by telcos. According to Bimal Dayal, managing director and chief executive officer, Indus Towers Limited, “This was a significant quarter for the telecom industry in the backdrop of the announcement of major reforms, which have resulted in a sharp improvement in business sentiments. We welcome this vital step and are prepared to partner with our stakeholders in the journey towards Digital India.”

Further, the company’s growth pros­pec­ts remain bright in the near to medium term owing to its role in emerging doma­ins like small cells, data centres, smart cities, Wi-Fi, IoT, electric vehicle charging, energy management, in-building solutions and tower fiberisation, which are likely to open up new revenue streams for tower infrastructure providers.

By Kuhu Singh Abbhi