INDUSTOWER — earnings call
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Prepared remarks
CORPORATE CALL PARTICIPANTS · Mr. Sanjesh Jain
Mr. Sanjesh Jain
ICICI Securities, Mumbai · Mr. Kunal Vora
Mr. Kunal Vora
BNP Paribas, Mumbai · Mr. Mitul Shah
Mr. Mitul Shah
Reliance Securities, Mumbai · Mr. Arun Prasath
Mr. Arun Prasath
Avendus Spark, Chennai · Mr. Nikhil Deshpande
Mr. Nikhil Deshpande
Axis Bank, Mumbai · Mr. Vivekanand S
Mr. Vivekanand S
Ambit Capital, Mumbai · PRESENTATION
PRESENTATION
Vandana – Moderator · Good afternoon, ladies and gentlemen. I am Vandana, the moderator for this conference. Welcome to the Indus Towers Limited
Good afternoon, ladies and gentlemen.
I am Vandana, the moderator for this conference.
Welcome to the Indus Towers Limited fourth quarter and year ended March 31, 2023 Earnings Call.
For the duration of the presentation, all participants’ lines will be in the listen-only mode.
After the presentation, the question-and-answer session will be conducted for all the participants on this call.
In case of a natural disaster, the conference call will be terminated post an announcement.
Present with us on the call today is the senior leadership team of Indus Towers, Mr. Prachur Sah, MD and CEO; Mr. Vikas Poddar, CFO; Mr. Tejinder Kalra, COO and Mr. Dheeraj Agarwal, Head Investor Relations.
Before I hand over the call, I must remind you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face.
I now hand over the call to our first speaker of the day, Mr. Prachur Sah.
Thank you and over to you, Mr. Sah.
Prachur Sah — Managing Director & Chief Executive Officer — Indus Towers Limited Thank you Vandana and a very warm welcome to all participants on the call.
I am pleased to present our business performance for the quarter and the year ended March 31, 2023.
Joining me today are my colleagues Vikas Poddar, CFO; Mr. Tejinder Kalra, COO, and Mr. Dheeraj Agarwal, Head Investor Relations.
In my first full quarter at Indus, I am delighted to see the 5G and new tower roll outs occurring in full swing, which bodes well for the telecom space as a whole and is in line with the Government’s drive towards digitalization.
Before I begin our agenda today, I would like to reiterate Indus Towers’ commitment towards enabling Pan India connectivity including some of the most challenging and remote locations.
Our team of bravehearts installed four mobile towers in Gurez Valley in Jammu and Kashmir which is located at an altitude of 8,460 feet.
Working in the extremely harsh weather conditions in the
Thank you very much Mr. Sanjesh.
The next question comes from Mr. Kunal Vora from BNP Paribas, Mumbai.
Mr. Vora, you may ask your question now.
Kunal Vora - BNP Paribas- Mumbai
Questions and answers
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Transcript of Indus Towers Limited Fourth Quarter and Year Ended March 31, 2023 Earnings Conference Call Republished with permission.
No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 5 - Free cash flow for the year was Rs.14 billion, which was impacted by the shortfall in collections during the year from a major customer.
In the Q4, our collections from the customer saw an improvement thereby resulting in a muted impact of provisions for doubtful debts on Q4 financials.
We had adopted and continued to follow a stringent ECL computation and accordingly carry a provision for doubtful debts of Rs.54.5 billion relating to the said customer to de-risk our balance sheet.
We continue to be in active discussions with the customer to improve the collections further to adjust the past outstanding and are committed to protect the interest of the shareholders.
Our reported pre-tax return on capital employed and post-tax return on equity for the past 12 months were at 11.0% and 9.4% respectively.
The return ratios have been impacted by the provision for doubtful debts and impairment of revenue equalization assets during the year.
In summary, we are pleased with the operational performance we delivered during the quarter and it is a testament to our strengths as a leading player in the towerco space.
Our financial performance reflects both our strong operating numbers and improved collection.
Our customer’s focus on expanding its coverage in rural market and the ongoing fast-paced 5G rollout make us optimistic about the demand outlook in the near to medium term.
So with this I would request the moderator to open the floor for questions and answers please.
Thank you.
Vandana – Moderator · Good afternoon, ladies and gentlemen. I am Vandana, the moderator for this conference. Welcome to the Indus Towers Limited
Thank you very much sir.
We will now begin the Q&A interactive session for all the participants who are connected to the audio conference service from Airtel.
Due to time constraint, we would request if you could limit the number of questions to two to enable more participation.
Hence, the management will take only two questions per participant to ensure maximum participation.
Participants who wish to ask questions may please press “*” “1” on their touchtone enabled telephone keypad.
On pressing “*” “1” participants will get a chance to present their questions on a first-in-line basis.
To ask a question, participants may please press “*” “1” now.
The first question comes from Mr. Sanjesh from ICICI Securities, Mumbai.
Mr. Sanjesh, you may ask your question now.
Sanjesh Jain — ICICI Securities - Mumbai Sir, good afternoon and thanks for taking my questions.
First on the 5G rollout and the loading revenue can you give us some direction what is the loading revenue as a percentage of rentals we get on the 5G and how much can it really drive in terms of ARPT growth say over the next few years because this is where we should be banking most of our growth over the next two to three years and considering that the weight of the equipment on the 5G has now significantly come down from 40kg to now about 18kg odd the opportunity on the loading reduces, is that the right assessment?
Vikas Poddar — Chief Financial Officer – Indus Towers Limited Thanks for the question Sanjesh.
I will take the first question and then may be Tejinder take the second part of the question.
So in terms of loading revenue, I think we shared earlier that the 5G loading revenue drives roughly anywhere between 5% to 10% growth in the ARPT depending on which towers we are rolling out and who is rolling out because in case of 5G roll out in the two bands the loading is a bit higher than rolling out 5G on a single band.
So anywhere between 5% to 10% is the sort of the growth that we see because of the 5G loading.
Tejinder Kalra — Chief Operating Officer – Indus Tower Limited Sanjesh, just to answer your question on the second portion that yes, the weight of radios on the towers in case of 5G has come down, yes 18kg to 20kg depending upon which is the vendor for the equipment.
So from tower loading perspective we are fairly covered.
I do not think we will have any issue in terms of accommodating our customers’ 5G equipment on our sites.
This actually helps us in terms of any additional loading also that may come up, so we are quite secured from that perspective.
Sanjesh Jain — ICICI Securities - Mumbai My second question is on the 5G rollout.
India is in a bright spot probably there but apart from India if you look at what Ericsson and Nokia forecast, it does not look like the world is really sharing this 5G rollout at such an accelerated pace.
Do we see any risk of