Telecom infrastructure provider Indus Towers has reported a 23% decline in its net profit for the fiscal fourth quarter, citing doubtful dues from its largest customer, Vodafone Idea. The tower company’s profit for the January-March quarter was Rs 1,399 crore, compared to Rs 1,829 crore in the same period last year. Its revenue for the quarter was Rs 6,753 crore, down 5% from the same period in 2022.
Indus Towers has made an incremental provision of Rs 43.4 crore towards doubtful debt in the January-March period after Vodafone Idea warned of likely challenges in meeting future payment commitments. This brings the cumulative allowance for doubtful receivables as on March 31 to Rs 5,453.3 crore. The company stated that the funding plan of Vodafone Idea has not materialised, and the telco indicated challenges in making the committed payments to the outstanding dues as of December 31, 2022.
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However, Indus Towers added that Vodafone Idea has been paying an amount equivalent to monthly billing since January 2023, and hence the company will continue to recognise revenue from operations relating to the said customer for services rendered. Industry executives estimate Vodafone Idea’s total dues to Indus Towers at around Rs 7,000 crore, with the cash-strapped telco’s recurring monthly dues to the tower company at upwards of Rs 500 crore.
Despite the challenges, Indus Towers' managing director and chief executive, Prachur Sah, remains optimistic about the future of the tower business. “The renewal of co-locations with our major customers during the year has secured our business over the long run,” he said. “Furthermore, the rapid pace of 5G rollouts and new tower rollouts supported by our major customer’s focus on expansion are expected to act as strong levers of growth for the foreseeable future.”
Indus Towers’ consolidated earnings before interest tax depreciation & amortisation (EBITDA) fell 15% on-year to Rs 3,447 crore due to Vodafone Idea’s continuing challenges in meeting its dues. The company's stock closed at Rs 143, up 3.62% at the end of the day's trading on Wednesday. The fiscal results were announced after market hours.
