Indus Towers to pay dividends after Vi clears dues, boosts cash flows

With Vodafone Idea clearing its large overdues to Indus Towers, the tower company said it plans to aggressively expand its market share using both organic and acquisition means. This includes participating in customer rollouts to secure a substantial share in tower growth, whether it isnew towers or bringing more tenancies in existing sites, or through acquisitions.

Indus received Rs 5,100 crore from Vodafone Idea in the previous fiscal as payment of past overdues, leading to a substantial boost in free-cash-flow, which stood at Rs 3,872.6 crore in FY4Q, versus Rs 332.8 crore a year ago.

The Indus board has thus decided to appoint a subcommittee to comprehensively assess the modalities of distributing dividends to shareholders, its top management said at the company’s fiscal fourth quarter earnings call Thursday.

“Given that now we have the backlog issue behind us, the strategy includes aggressively pursuing market share through both organic and inorganic roots as demonstrated by our acquisition of towers,” Indus Towers CEO Prachur Sah said on the call.

This involves capturing a significant share in customer network rollouts, securing opportunities for tower growth, either through new towers or additional tenancies, Indus said. The company is also looking at opportunities for industry consolidation through acquisitions, as demonstrated by the purchase of around 12,600 towers from Bharti Airtel in the previous fiscal.

Indus said it continues to have a major share in network rollouts of its customers and has consistently maintained majority market share.

The company was also in talks with sister brand Bharti Hexacom to acquire another 3,400 telecom towers, but that deal has been put on hold, the management confirmed.

Indus on Wednesday reported a 4% fall in fourth-quarter net profit, hurt by an accounting impact from its acquisition of telecom towers from Bharti Airtel and higher net finance costs, despite writing back provisions made against doubtful receivables from Vodafone Idea.

The telecom tower company posted a net profit of Rs 1,779 crore for the quarter ended March 31. Revenue grew 7.4% from a year earlier to Rs 7,727 crore.

Thursday, Indus said that the recently acquired towers from Airtel are largely single-tenancy sites, and the company will be working to add incremental tenancies to these sites.

The Indus management said the company is working on creating new benchmarks for performance by transforming its site infrastructure and leveraging digital solutions and AI, which will encourage its customers to move tenancies to Indus.

With the generation of significant free cash flow in the previous fiscal, Indus is committed to distributing cash to shareholders, Sah said, adding that the subcommittee’s process is not expected to be a long-drawn one.

“The company has generated a significant amount of FCF for the year..This enabled us to return a part of it to the shareholders through the buyback during the year,” he said.