Indus Towers awaits AGR clarity before unlocking dividend

New Delhi: Indus Towers said the continuing lack of clarity over Vodafone Idea's (Vi) adjusted gross revenue (AGR) dues has been a major constraint in distributing dividends despite strong cash flows.

The tower firm's management on Tuesday said the Supreme Court's decision allowing the government to re-examine Vi's AGR dues is a positive development for the industry. The company remains committed to distributing dividends by the end of the current fiscal year.

"What has happened (the SC's latest ruling on AGR) is a good development for the industry, and we welcome the support. Once clarity emerges, it will help us make the right decisions. The board will consider and is committed to distributing cash to shareholders, with the timing likely before the end of the financial year in Q4," said CEO Prachur Sah during the earnings call on Tuesday.


Indus said, apart from the AGR issue, capex spending on growth has also influenced its decision to defer dividend distribution. However, the delay is unrelated to its planned Africa expansion, which will be financed through a mix of debt and equity, Sah clarified.

The company on Monday reported a 17% year-on-year fall in net profit to ₹1,839.3 crore for the September quarter, impacted by a large write-back in receivables from cash-strapped Vi in the year-ago period.

Adjusted for that write-back, net profit rose 18.6% year-on-year, Indus said. This came despite challenging weather conditions - including a prolonged monsoon and floods - which pushed fuel expenses up 3% on-year and weighed on energy margins.

In the September quarter, Vi cleared past dues of ₹210 crore, Indus said. The company added that there would be no further write-backs after taking a ₹195 crore charge in provisions for doubtful receivables in Q2, indicating that all past dues from Vi have now been collected.

Indus plans to begin its Africa expansion with Nigeria, Uganda, and Zambia within the next three to six months, subject to administrative approvals. The expansion aims to tap growth opportunities supported by Bharti Airtel, one of its anchor customers.

Sah said the company will start modestly by building new towers to understand local operations before considering inorganic growth if valuations are favourable. "Our expansion comes at a critical juncture to leverage strong growth drivers, Bharti's deep-rooted presence across these markets, and the visibility of an anchor customer from day one," he added.