The telecom tower rollouts that halted during the last quarter, especially those of Bharti Airtel’s due to extreme weather conditions in most parts of the country, are expected to improve in the current quarter, said analysts.

According to various analysts reports, such improvement in the rollout of telecom sites, especially with Vodafone-Idea (VIL) and BSNL also rolling out new towers, would help the country’s largest tower company, Indus Towers, to improve its revenue and EBITDA in the coming quarters.

“Indus’s 3,700 tower addition in the second quarter (Q2) was lower than expected, potentially impacted by adverse weather in a few regions. Tenancy additions at 4,300 also missed estimates and were mainly led by tower additions implying limited tenancies from VIL in Q2. Tenancy additions are likely to pick up over the next few quarters led by VIL’s network expansion over FY25-26,” said Jefferies in its report.

However, it also cut its FY26/27 tower/tenancy estimates by two per cent to factor in the Q2 miss. It expects Indus to add 44,000 towers and 73,000 tenancies over FY24-27, implying a 6 per cent CAGR in tenancy.

“We expect the growth outlook for Indus Towers, one of India’s largest tower infrastructure providers, to improve in the near-term, and see merit for a higher multiple vs recent history. However, we see a disconnect between improvement in fundamentals and valuations. We believe VIL’s market share erosion and pressure on free cash flow (FCF) will continue, and see limited visibility on the medium/ long term growth outlook for Indus,” said Goldman Sachs in its report.

It said that Indus’s current share price implies a sustained 8-10 per cent EBITDA growth at least until FY30. “On a growth-adjusted basis, Indus’s multiples are at a significant premium to Bharti and Jio, which we view as unwarranted,” it added.

JP Morgan in its report said that VIL continued to pay around 100 per cent monthly payments, while past dues continue to be recovered.

“Monthly payments from Idea (VIL) remain at around 100 per cent while Idea  also continued to repay some of the past dues (₹1,020 crore ), which has brought down the provisions related to Idea’s past dues to ₹3,600 crore from ₹5,700 crore. Indus Towers is in discussions with Idea on recovering the past dues as soon as possible,” it said. 

Indus Towers on Tuesday reported a consolidated net profit of ₹2,223.5 crore for the Q2 ended September 30, a 72 per cent jump year-on-year (YoY) as compared with ₹1,294.7 crore in the corresponding quarter last year.

Consolidated revenue also grew 5 per cent YoY to ₹7,465.3 crore during the July-September quarter, compared with ₹7,132.5 crore in the same quarter last year.

Meanwhile, on the same day, the Competition Commission of India (CCI) gave its nod for Bharti Airtel’s shareholding increase in Indus Towers, following the latter’s recent buy-back of equity shares. Post the transaction, Indus Towers became a subsidiary of Bharti Airtel.

On account of the ₹2,640 crore buy-back issue, the shareholding of Bharti Airtel in Indus Towers had increased to just above 50 per cent. Prior to this, Bharti Airtel had 48.95 per cent stake in Indus Towers.

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