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Another factor is that after the 2G scam, the number of telecom service providers fell from seven-eight in each round to just three — Reliance Jio, Bharti Airtel and Vodafone Idea — in 22 rounds. “India is a two-and-a-half-carrier market that will not change.” Overall, there is now limited scope for growth in the tower sharing business,” says a telecom analyst. As a result, the occupancy ratio (number of operators per tower) fell from a high of 2.34 in FY17 to 1.81 in FY22. There is little chance that this number will increase in the next few years.
Data usage will increase as 5G becomes prevalent by 2027. By then, there would be 500 million 5G subscribers, accounting for 39% of the country’s mobile subscriber base. “Expansion of 5G services will prove to be positive for Indus going forward,” says a telecom analyst.
Although Ind Towers has done well in the last fiscal, there are a lot of uncertainties that it has to sort out in the near future. For starters, the company is currently operating without an executive director, after Bimal Dayal left to join as CEO of Adani Transmission in mid-September. Until his vacancy is filled, Chief Operating Officer Tejinder Kalra is responsible for the running of the company under the guidance of the board.
Next is the issue of dues that Vodafone Idea has to pay to Indus. In the July-September quarter, Indus Towers accepted Vodafone’s proposal for lenient terms for repayment of dues. By the end of September, the company’s total receivables from customers stood at £6,499 million. Under the new plan, Vodafone Idea will pay a portion of the monthly bill until December 31, 2022. From then on, it will pay the full amount every month. In addition, Vodafone Idea will pay the outstanding dues by December 31, 2022 between January and July 2023. It remains to be seen whether Vodafone Idea will be in a position to honor its obligations.
Overall, while Indus Towers is in a good place right now, the next few years could be bumpy. It all depends on how well the administration manages the treacherous waters ahead.
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