Kolkata: Indus Towers suffered a net loss of Rs 708 crore in the fiscal third quarter – compared to a net profit of Rs 1,571 crore a year ago – after being forced to make a solid provision of Rs 2,298.1 crore for doubtful debts in the period October-December after. a key customer believed to be Vodafone Idea (Vi) warned of likely challenges in meeting future payment obligations.
“The said customer’s (read: We) financing plan has also not materialized and although the committed installment until December (2022) has been received, the customer has indicated challenges in meeting higher payment plan in the future,” Indus said in its earnings statement.
As a result, India’s largest telecom tower company has followed a strict policy of taking a bad debt write-down on its overdue receivables. The additional provision of DKK 2,298.1 billion Rs for doubtful debts in the December quarter reflects a sequential jump of nearly 30%. The tower firm had made a provision of Rs 1,770.9 crore for doubtful debts in the second quarter of the financial year.
“Our financial performance continues to be impacted as we have adopted stringent accounting practices amid persistent shortfall in collections,” Indus MD Prachur Sah said in the earnings statement on Tuesday.
The company’s stock closed 1.3% lower at Rs 170.50 on BSE on Tuesday. Results were declared after market hours.
We recently gave a commitment to Indus to pay 100% of its current dues from January onwards and also clear its outstanding as per 31 December 2022 over seven months from this month. However, we have made the necessary partial payment until December 2022.
Brokerage firm Kotak recently estimated Vis’s total dues to Indus at Rs 7,500 crore. Industry leaders estimate that Vis monthly dues to the tower company are up to DKK 300 million. Rs.
Indus’ consolidated revenue for the October-December period was Rs 6,765 crore, down 2% from a year earlier, while consolidated earnings before interest, depreciation and amortization (EBITDA) plunged a whopping 68% on the year to Rs 1,186 crore, amid Vi’s continued challenges in meeting its charges. Free cash flow in the December quarter was negative Rs 621 crore.
In its earnings statement for the December quarter, Indus also warned that the potential loss of a “significant customer” if it does not continue as a going concern or Indus’ inability to acquire new customers could adversely affect the tower company’s business. of operations and financial conditions.
According to analysts, the health of loss-making Vi is critical to Indus’ financial stability, and in turn, Bharti Airtel’s stock. We account for over 40% of Indus’ revenue. Kotak estimates that as much as 10% of the tower company’s annual total revenue could be at risk due to Vi’s cash crunch.
But after the committed installment payment by Vi till December, Indus’ trade receivables have declined over 22% sequentially in the fiscal third quarter to Rs 5,062.4 crore.
In the fiscal third quarter, Indus added a net 1,466 towers in the quarter and 4,644 in the year across 22 telecom circles in India. Co-locations increased 1,307 sequentially and 4,329 year-on-year. Co-locations are points where a tower company installs mobile telecommunications antennas from multiple operators on a single structure.
Per As of December 31, Indus owned and operated 189,392 towers with 339,435 co-locations across India.
ET had reported in its January 6 edition that Vi could face strict action from Indus if it fails to meet the current payment deadlines starting from January. Industry leaders had said things could even escalate if Vi does not pay, and stronger measures to recover its dues may be discussed.
Show efforts to raise around Rs 20,000 crore via a mix of debt and equity have also been futile for over a year now. The telco had recently told banks to raise around Rs 7,000 crore to clear the bulk of Indus’ dues.
However, Vi’s lenders want clarity on the government’s potential stake in the telco in addition to its promoters’ plans to inject equity capital to boost investor confidence.