Indus Towers pushes Vi to clear dues, may not allow any new payment plan

Indus Towers is now pushing Vodafone Idea (Vi) to clear its past outstandings and has ruled out any further relaxation in the payment plan that was thrashed out earlier this year with its key, cash-strapped telco customer.

At its fiscal fourth quarter earnings call Thursday, Indus’ top management said that while Vi has started clearing 90-100% of current dues, the tower company is closely monitoring the telco’s payment patterns and its funding situation to recover its accumulated past dues as per the agreed schedule.

Indus, though, signalled that it won’t reduce its services or cut Vi’s access to its towers so long as the telco regularly pays its current dues.


“The collections situation from this specific customer (read: Vi) has improved and it has paid around 90-100% of Q4 dues, but there will be no fresh payment plan for them in FY24, and we are in active talks with the client to clear the past outstandings,” Indus Towers CFO Vikas Poddar said at the tower company’s earnings call.

Shares of Indus closed 1.22% higher at Rs 144.75 on the BSE Thursday.

Under the existing payment plan, Vi has committed to clear 100% of its current dues to Indus from January 2023 onwards, and also pay its past accumulated outstandings as of December 31, 2022, over a seven month period, starting January as part of the agreed higher payment plan.

However, in the third quarter of FY23, Vi had cited challenges in complying with higher payment plan. The telco's efforts to raise around Rs 20,000 crore via a mix of debt and equity have also been unsuccessful for well over a year.

“There may be some challenges, but we are working with Vi and hope to solve the issue as per the agreed payment plan,” Poddar added.

The health of loss-making Vi is vital for Indus’ long-term financial stability. This is since Vi accounts for over 40% of Indus revenue. Vi’s total dues to Indus are estimated at around Rs 7,000 crore.

Separately, Indus’ management said the tower company could consider dividend payouts only after the working capital situation is more comfortable. “We need to see our free cash flows (FCF) for some more quarters…a lot hinges on Vi’s funding situation, and any dividend distribution can be considered only once the stress levels in the working capital situation ease,” said Poddar.

Brokerage Jefferies said while Indus’s FCF generation at Rs 700 crore in the March quarter was a positive surprise, the board's decision not to announce any dividend in FY23 suggested uncertainties around Vi’s future payments are far from over.

Analysts, though, said the sequential fall in Indus’ trade receivables in the fiscal fourth quarter indicated that Vi had cleared almost its entire dues for January-March. The tower company’s Q4 trade receivables fell sequentially to Rs 4,868.7 crore from Rs 5,062.4 in the October-December period.

Analysts added that Indus' tower and tenancy additions of 3.5K/3.4K were the highest in 6-8 quarters, possibly driven by customer Bharti Airtel's rural network expansion. “We expect this to continue driving growth in FY24,” Jefferies said.

Indus reported a 23% on-year fall in its fourth quarter net profit to Rs 1,399 crore as the telecoms infrastructure provider continued to provide towards doubtful dues from Vi. It made an incremental provision of Rs 43.4 crore towards doubtful debt in the January-March period after Vi warned of likely challenges in meeting future payment commitments.