Indus Towers optimistic for higher earnings as Vi launches 4G/5G

Indus Towers, one of the country's telecom infrastructure businesses, believes that Vodafone Idea's 4G and 5G rollout will boost its earnings in the near- to medium-term. Vodafone Idea (Vi) is the largest Indus Towers customer. Vi had previously been unable to make timely payments to Indus due to a cash shortage. However, after raising several billion dollars, Vi is now in a lot stronger position to raise capex while also paying off its debts.

According to Indus, Vi has been making on-time monthly payments and there isn't a default. The telco is also taking care of the earlier dues. As of September 2024, the company's doubtful receivables had decreased from Rs 5,386 crore at the end of March 2024 to Rs 3,548 crore. This is as a result of Vi's gradual payment of past dues.

"I think this growth will continue as our key customers keep coming in. As you can see from a robust tower deployment over the past 1.5 years, we will continue to be the front-runner to ensure that we capitalise on this expansion," stated Vikas Poddar, Chief Financial Officer at Indus Towers.

Vodafone Idea has also made quick bank payments. In order to reach its debt-raising goal of Rs 25,000 crore, the telco has been searching for a new loan from banks and other organisations.

Currently, the Department of Telecommunications (DoT) is trying to figure out whether there is a situation in which telcos could be released from paying bank guarantees (BGs). In that case, Vi would be even better positioned to pay its debts and make more investments in its networks.

Telecom companies can use bank guarantees to make sure they pay for airwaves on a yearly basis. Prior to 2022, telcos were required to provide a bank guarantee for each yearly spectrum installment they bought. Companies that purchased airwaves after 2022, however, are exempt from having to offer bank guarantees.

Bank guarantees for spectrum acquired prior to 2022 may be waived, according to the Department of Telecommunications (DoT). Bharti Airtel, Reliance Jio, and Vodafone Idea may profit from this.  

Indus anticipates substantially higher earnings soon since Vi plans to put out new networks for both 4G and 5G.