Indus Towers Ltd Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Aditya Suresh - Macquarie - Analyst : Hey, thank you and good afternoon. I just had one question actually. So can you help us understand the competitive dynamics as we speak, in particular, given the consolidation of the two, three players? The real question is, I mean, are we seeing any changes, whether it be in the rental terms or migration of tenancies from Jio or Vodafone into that consolidation?

Question: Aditya Suresh - Macquarie - Analyst : Maybe just as a follow-up, if I could ask. As your rental contracts coming up for renewal, what discounts are we seeing here right now?

Question: Sanjesh Jain - ICICI Securities - Analyst : Good afternoon. Thanks for taking my questions. I've got two of them. First, on the tenancy growth, this is one quarter where probably after many quarters the tenancy growth is materially higher than the tower growth, which indicates that we are getting some additional tenancy from BSNL and Vodafone. Would this continue in the next few quarters?

Question: Sanjesh Jain - ICICI Securities - Analyst : So I was telling this is one of those quarters after many quarters where tenancy growth has materially higher than the tower growth, which indicates that we are getting additional tenancies from the VI and BSNL rollout. This trend is fair to assume will continue for next few quarters?

Question: Sanjesh Jain - ICICI Securities - Analyst : Got it. And incremental rollout of these two telcos who are being aggressively rolling out network, will we retain our market share 60%, 70% market share, what we have today in VI and some amount of incremental tenancy from BSNL? Are we confident about that?

Question: Sanjesh Jain - ICICI Securities - Analyst : Second question is on the CapEx side. Reliance Jio has already announced their results, and it appears that in the first half. Their CapEx intensity from last year has halved. And you just also guided of slowing or decelerating CapEx. Do you think the growth from the aggressive players historically can materially reduce in the next two years?

Question: Sanjesh Jain - ICICI Securities - Analyst : Can you say we continue the momentum we are referring to power growth or tenancy growth here?

Question: Arun Prasath - Avendus Spark - Analyst : The first question is on this tower built number this quarter, can you just share ballpark indicate how much of the deployment reduction can be attributable to the weather. Is it better, is it substantial? Is it due to a reduction in (technical difficulty) telco activities?

Question: Arun Prasath - Avendus Spark - Analyst : All right, fair enough. Secondly, we are already seeing this new tower addition is picking up speed. But how much of the loading, in terms of loading activities is the second customer has started. So is it just started? Or is that -- some color would be very helpful.

Question: Arun Prasath - Avendus Spark - Analyst : And this is even for your largest customer, this 4G to 4G that is fairly done or what kind of momentum we can expect the largest customer?

Question: Kunal Vora - BNP Paribas - Analyst : Thanks for the opportunity. I have a few questions. Firstly, if you can share your thoughts on the GST notice that you received? What is your stances? What is the industry practice regarding the import tax credit?

Question: Kunal Vora - BNP Paribas - Analyst : Understood. What is the next step? When do you think, this can get resolved?

Question: Kunal Vora - BNP Paribas - Analyst : Second is the negative energy margin. This last couple of quarters has been weaker compared to what we've seen historically. So how should we project them going forward?

Question: Kunal Vora - BNP Paribas - Analyst : Understood. Third one is for the new tenancies from Vodafone Idea, do you negotiate at all? I mean, is there any scope for that, especially if competition offers bulk discount. Can you respond or (technical difficulty) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 9:00AM, INUS.NS - Q2 2025 Indus Towers Ltd Earnings Call

Question: Kunal Vora - BNP Paribas - Analyst : And can you share your thoughts on dividend payment in the coming quarters with improved cash collection and lower CapEx?

Question: Kunal Vora - BNP Paribas - Analyst : And just one last question. How should we look at the finance cost going forward, the number has increased in the recent quarter?

Question: Kunal Vora - BNP Paribas - Analyst : I was referring to the net finance cost which is elevated now compared to the recent quarter. So the recent quarters, the numbers which you've seen, are these are sustainable numbers or would they come down?

Question: Sachin Salgaonkar - Bank of America - Analyst : Hi. Thanks for the opportunity. My first question is I just wanted to understand a bit of your view on one of your earlier comments you did mention about loading increasing from 4G to 5G. But when I look at the reported average rent pertaining to that matter, even the normalized one, it's actually not showing a meaningful increase. I presume there are other factors which is leading this entire loading not get fully reflected into the numbers. Can you throw some color on that?

Question: Sachin Salgaonkar - Bank of America - Analyst : It was very clear. But is it fair to say that whenever we see the second anchor customer coming using a lot of towers as a second tenant, we should see an increase in ARPT, right? --

Question: Sachin Salgaonkar - Bank of America - Analyst : Okay. From a loading perspective. That is very clear. Second question is Voda Idea recently concluded a [3.6 billion] deal with multiple vendors. Is it fair to assume that there's not much of a contribution from that deal come into the numbers and in subsequent quarters, we should see that flowing through? And any timeline you could give from that perspective?

Question: Sachin Salgaonkar - Bank of America - Analyst : And my last question is has anything changed for you from a Vodafone Idea perspective after the recent AGR verdict? And I'm asking that because there was this one school of thought that whenever Idea finishes their trade, they may look to give a lump-sum amount in terms of whatever payables is remaining. Does that change? Or should we expect quarterly [INR7 billion to INR8 billion] kind of a payment, what we see every quarter?

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Yeah. Thank you for the opportunity. Further to an earlier participant's query on the show cost notice that you've received, I also note that your contingent liabilities recorded in FY24, they include some income tax claims again connected to the treatment of network equipment, passive infrastructure assets. I just wanted to understand, I know this matter is sub judice the one that you recorded in (inaudible) but does this verdict have any bearing on the way the income tax liabilities for which you've recorded [INR41 billion] contingent claim, does that have any ramification on the income tax case? That's question one.

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : I was just wondering if they are linked or are they very different? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 9:00AM, INUS.NS - Q2 2025 Indus Towers Ltd Earnings Call

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Okay. So you are confirming that if even if there is an adverse verdict in respect to the AGR claims for which you received the show cause notice, doesn't rub the income tax liabilities the wrong way. I mean, it doesn't mean that you will inherit -- automatically inherit the income tax liability?

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Sure. That's very clear. Thank you. The second question is as far as your maintenance CapEx expenditure is concerned. Is there any lumpiness in this regard as well? Because when I look at the maintenance CapEx trajectory, I mean, when the merger had happened, it was around INR600 crore to INR700 crore. Now it has more than doubled in the last four years. So does this mean that the maintenance CapEx levels will remain elevated because the network has become bigger? Or how to think about the maintenance CapEx aspect?

Question: Vivekanand Subbaraman - Ambit Capital Pvt Ltd - Analyst : Okay. I am calculating maintenance CapEx as the overall CapEx minus growth CapEx. I do understand that the number of towers has gone up. But even otherwise, the maintenance CapEx per tower or maintenance CapEx per tenant that has moved up. That is why I was asking this question.