Motilal Oswal Institutional Equities in its recent note on Indus Towers’ financial results said revenue remains in line, amid improving tenancy additions.
“The management continues to reiterate that 5G and fibre opportunities would continue to drive growth in the future as dependency on strong telecom infrastructure remains. Tenancy additions have also improved in the past three quarters…which signifies demand for new towers,” it said.
However, Vodafone Idea remains a large client for Indus Towers and the tower sharing business has limited business case for single tenancy operations, it observed.
“VIL is facing a severe liquidity risk due to its huge cash obligations. Its long-term business concerns still remain an overhang for Indus Towers,” the note added.
Motilal Oswal has maintained a neutral call on Indus Towers. Indus Towers on Friday said the race towards 5G would make infrastructure space “even more relevant”, and had noted that the market is poised for three robust and sound telecom operators competing with each other.
The top management of Indus Towers, during an investor call, had said that the demand environment looked strong “with heavy data growth”.
The tower infrastructure company is of the firm belief that there will be a three-player market.
“I am completely aware that struggles which, let’s say VIL (Vodafone Idea) is facing currently as well, but chronology tells us where they are and where they were around last year, they have managed to do quite a lot of things, and from a tower company perspective, we certainly believe it will be a three-player market,” Bimal Dayal, Managing Director and CEO of Indus Towers Limited (formerly Bharti Infratel) had said.
Indus Towers recently reported a 38 per cent rise in consolidated net profit to 1,364 crore for the fourth quarter of FY21 and said digital transformation across sectors is driving new opportunities for shared infrastructure providers to usher in the next growth phase.
The consolidated revenues of the telecom infrastructure player stood at Rs 6,492 crore for the March 2021 quarter, up three per cent year-on-year.
For the full year ended March 31, 2021, consolidated profit after tax was Rs 4,975 crore, a dip of one per cent year-on-year, while revenues at Rs 25,673 crore was marginal 0.4 per cent higher.
The merger of Bharti Infratel and Indus Towers to create a mega tower juggernaut was completed in November last year. Following the merger, Indus Towers is one of the largest tower infrastructure providers in the country and globally.
The business of Indus Towers is to acquire, build, own, operate and maintain tower and related infrastructure. Indus provides towers access primarily to wireless telecommunications service providers on a shared basis, under long-term contracts, and caters to all wireless telecommunication service providers in India.
Indus has a nationwide presence with operations in all 22 telecom circles in India, and as of March 31, 2021, it owned and operated 1,79,225 towers.