Indus Towers Ltd (INDUSTOWER) Q2FY27 Concall Transcript - Sep-2026 Qtr
Michelle: Good afternoon, ladies and gentlemen. I am Michelle, the moderator for this conference. Welcome to Indus Towers Limited second quarter ended September 30th, 2026 earnings call. For the duration of the presentation, all participant lines will be in the listen-only mode. After the presentation, the question-and-answer session will be conducted for all participants on this call. In the 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. 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 the conference over to Mr. Prachur Sah. Thank you, and over to you, sir.
Prachur Sah (Indus Towers Ltd): Thank you, Michelle, and a very warm welcome to everyone joining us today. I have Abhishek Maheshwari, our Chief Financial Officer, and Dheeraj Agarwal, our Head of Investor Relations, on the call. Today, I will take you through our operational and financial performance for the quarter ended September 30, 2026. We are happy to share that we recorded a strong growth in co-location additions in Q2. This has translated into an improvement in our tenancy ratio from 1.62 to 1.63, following a period of stability. Growth during the quarter was driven by continued network expansion from our customers alongside a pickup in rollouts by a major customer. With healthy healthy order book visibility and accelerating rollout activity, we expect the growth momentum to continue. Importantly, we continue to be the preferred infrastructure partner for our key customers, capturing a substantial share of their incremental rollouts. Our extensive footprint, superior network management capabilities, stringent SLA commitments, and collaborative approach continue to reinforce customer trust and position us well to capture the next phase of industry growth. Our consistent performance and strong customer trust are underpinned by deep sense of ownership of our frontline teams. During the quarter, our teams across Northeast, Bihar and Jharkhand, and UP East once again demonstrated exceptional
Prachur Sah (Indus Towers Ltd): in the face of severe floods that disrupted network operations, restricted site access, and caused prolonged power outages. Despite these challenges, our team responsive responded with agility, proactive planning, and close local coordination to accelerate restoration efforts and ensure service continuity across most of the affected networks. Their dedication in such challenging circumstances reflects the strength of our execution culture and our commitment to delivering reliable services to customers. The favorable regulatory environment has been supporting the seamless deployment of telecom infrastructure. Government support for smart meter deployment on telecom towers has further reinforced telecom infrastructure as a priority consumer category. Over the last 3 years, we have deployed smart meters on approximately 140,000 sites. This development provides improved visibility of consumption patterns and creates opportunities for energy optimization, operational efficiency, and data-driven decision-making. Coming to the 5G networks, according to the recent TRAI data, India's 5G subscriber base grew by 38 million in the first quarter, exceeding 463 million subscribers. The secular demand curve is driving sustained operator investment in coverage and capacity, with the industry adding approximately 30,000 5G BTSs during the second quarter, taking the total installed base to around 593,000. As these networks mature, deployment focus is shifting towards network densification to support higher traffic loads and emerging digital use cases. Given our comprehensive portfolio and strength of customer relationships, we are structurally well-positioned to support this steady infrastructure expansion. Infrastructure expansion and sustained 5G adoption trends are validated by robust consumption trends. In Q1, total data volume increased by 30% year-on-year, supported by an 18% rise in average monthly usage per subscriber. Notably, 5G networks are accelerating this trend, there be 5G usage alone growing 79% year-on-year, representing 44% of total data consumption, up from 32% in the prior year. This ongoing shift highlights the necessity for sustained investments in network capacity, which supports long-term utilization rates and tenancy growth on our passive shared infrastructure. Our operational performance witnessed strong order bookings led by sustained customer rollouts and increased network expansion by a major customer. We added approximately 2,900 macro towers and a robust co-locations of 7,900, marking year-on-year growth of 5.6% in towers and 5.9% in co-locations. Our total macro tower and co-location base reached approximately 270,500 and 440 200, respectively. Our industry-leading tenancy ratio has also improved from 1.62 to 1.63, driven by substantial rollouts through sharing of our existing towers. Including leaner sites, we concluded the quarter with approximately 454,200 co-locations, reinforcing our market-leading operational scale. We remain committed to supporting our customer's network expansion through our shared portfolio. We are actively collaborating with one of our major customers to facilitate its planned network rollouts, which is reflected in our consistent performance. Given our steady to deploy asset base, optimized geographical footprints, and competitive value proposition, we remain confident in our ability to serve as a key long-term infrastructure partner for their network deployment plans. Our strategy of operating a low cost, shared infrastructure model provides the best solution to customers and Indus by the way of improving asset productivity. With a large portfolio of towers designed to support multiple tenants, Indus remains the preferred partner for operators seeking rapid network expansion at an efficient cost. The company is equally well-positioned to support existing customers in strategically important locations where finding alternative infrastructure options may be difficult or less economical, particularly for a second and a third tenant. As a result, we remain confident to expand and retain co-locations at Indus from all the major customers. In addition, we remain committed to serving our customers
Prachur Sah (Indus Towers Ltd): Indus continues to create bespoke solutions that provide customers with options to offer connectivity in public infrastructure, such as airports, metros, tunnels, etcetera. During the quarter, Indus provided solutions for India Mobile Congress and enabled connectivity at Vizag airport and it is actively participating in similar projects. Supported by a specialized team focused on design and execution, the company has led incremental market share gains in new IBS deployments for two consecutive years and remains focused on expanding its presence in this segment while enhancing the end-user connectivity experience. I would like to highlight that a determination to deliver superior service delivery resulted in a sequential network improvement in our network uptime from 99.955 to 99.97%. Despite challenging seasonal weather, continuous technology deployments have enhanced our real-time network visibility, driving superior diagnostic and preventive capabilities that help keep our customers seamlessly seamlessly connected. Let me now provide an update on our energy management measures and the progress we have made. Our energy margin performance was driven by an 11% year-on-year reduction in diesel consumption. Our efforts for enabling digital energy management at our sites through remote connectivity, system-driven diesel planning, installation of fuel sensors, and smart meters have started yielding positive results, while we believe there is still a long way to go. We optimized energy costs by deploying solar solutions across approximately 3,000 sites during Q2, increasing the solar site portfolio to 49,000 sites. Our plan transition from diesel to lithium-ion battery storage is progressing well, and we are on track to meaningfully reduce dependence on diesel. Our ongoing digital transformation remains a key enabler for network reliability and operating efficiency. Deployment of AI-native digital solutions is enhancing field productivity and analytics. Implementation of AI-led image analytics is strengthening governance, vendor accountability, and maintenance quality. Furthermore, office digitalization through a combination of automated energy billing, digital twin capabilities, and real-time dashboards is streamlining decision-making and reducing manual effort. These strategic initiatives are successfully transitioning Indus Towers towards a predictive, data-driven operating model, continuously improving organizational efficiency and customer experience. Our commitment to sustainable growth to drive meaningful ESG and value-chain outcomes. In environmental stewardship, we accelerated our decarbonization journey, expanding our renewable energy footprint to an installed solar capacity of 297 megawatt in Q2 from 259 megawatt in Q1. Safety remains the core priority. During the quarter, we launched Safety Shield Awards to recognize exemplary safety performance across our teams and partners, further strengthening our culture of safety and accountability. Through our flagship CSR initiatives Saksham and Pragati, we positively positively impacted over 11 million lives this quarter, while actively supporting communities affected by natural disasters and humanitarian challenges in Assam, Arunachal Pradesh, and UP. Our ESG assessments and capability-building initiatives continue to strengthen a more resi- resilient value chain. During the quarter, ESG maturity assessments across 70 partners resulted in an 8% improvement in average ESG maturity scores. We are pleased to report that our CRISIL ESG rating improved from 57 to 63, complemented by recognition at Mahatma Awards and BW Sustainable World Awards. Together, these milestones underscore our focus on creating long-term value through responsible and resilient operations. Coming to Africa, our Africa foray is gaining strong traction, proving the competitiveness and the cost leadership of Indus' operating model. By achieving considerable CapEx savings per tower compared to competitors, we are delivering low- lower-cost solutions for our anchor customer. Rollouts have successfully commenced with initial tower deployments as planned are scheduled to ramp up in H2. We have also initiated engagements beyond our anchor customer to leverage our tenancy-led business model. Africa expansion is a long-term strategy, and we strongly believe we have a right to win. I will now request Abhishek to take you through our financial performance, and I look forward to your questions. Thank you, and over to you, Abhishek.
Abhishek Maheshwari (Indus Towers Ltd): Thank you, Prachur. Good afternoon, everyone. I am pleased to present our financial results for the quarter ended September 30th, 2024. We witnessed a strong addition of co-location during the quarter on the back of continued network expansion by our customers. The operation momentum has supported state
Abhishek Maheshwari (Indus Towers Ltd): revenue growth and robust cash generation, reinforcing the strength of our infrastructure sharing model. Talking about financial performance for quarter two, revenue for the company grew at 1% quarter-on-quarter, and the revenue absolute value stands at 85.2 billion INR. Core revenue for the rental is up by 1.3% quarter-on-quarter, stands at 54.5 billion INR driven by steady co-location addition and asset loading. This was further supported by accelerating of network rollout by major customer during the quarter. On year-on-year performance, our reported revenue and core revenue grew by 4% and 3.9% respectively. Moving on profitability, reported EBITDA increased by 2.5% quarter-on-quarter and stands at 46.3 billion for the quarter. Our EBITDA margin also improved by 80 basis point quarter-on-quarter and stands at 54.4% for the quarter. Please note that, quarter two of last fiscal year included write-backs of approximately 2 billion INR relating to collection of overdue receivables from a major customer. Adjusting this to one-off, our EBITDA grew at 5.2% in YoY. Our energy margin was negative 3.6% in quarter two compared to negative of 4.6% in quarter one and 4.8% in the corresponding quarter of last year, reflecting a significant improvement during the reported quarter. Our structured energy efficiency measures are yielding positive results and diesel consumption is further reduced by 11% year-on-year. Our continued focus on technology-led energy management, including diesel optimization, enhanced visibility into electricity consumption, and adoption of advanced battery solutions, is lowering energy cost while strengthening our competitive position and energy performance. Profit after tax was up by 2.7% quarter-on-quarter and stands at 17.9 billion, driven by significant growth in EBITDA. Adjusting to the earlier mentioned write-back, PAT for the company grew at 6.4% YoY. Our capital productivity remains very efficient. From the trailing 12 months, we delivered a pre-tax return on capital employed of 25.3% and post-tax return on equity of 19.2%. The capital efficiency is reflected in our cash generation, with the free cash flow remaining robust at 14 billion for the quarter. The liquidity profile provides us with financial flexibility to support sustainable value-accretive capital expenditure. Turning on Africa, we have successfully deployed tower in Zambia and Uganda in quarter two and also started generating revenue. In line with our phased rollout plan, we are set to begin deployment in Nigeria during the current quarter and our early CapEx performance per tower remain within the plan, validating our cost model during the initial phases. As the portfolio reaches to a more representative scale, we intend to share more details on operational and financial metrics in subsequent quarters. By leveraging our disciplined and cost-efficient shared infrastructure model and robust network management, we are confident in our ability to become credible player and actively support Africa long-term digital infrastructure demand. To conclude, our quarter two performance underscored the resilience of our business model, underpinned by healthy order book and sustained customer rollout. Looking ahead, our focus on operating efficiency, structured energy cost optimization, and technology integration will continue to support profitably. Further, our expansion into Africa progresses on schedule, representing a matched extension of our core competency. We remain committed to executing profitable growth opportunity and driving sustainable long-term value for shareholder. With that, now I hand it back to Michelle to open the floor for questions.
Michelle: Thank you very much, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions may please press star and one on their touch-
Michelle: If you wish to withdraw yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sachin Salgaonkar from Bank of America. Please go ahead.
Sachin Salgaonkar (Bank of America): Hi. Thank you for the opportunity. I have first question. Question number one, wanted to understand the mix of a tenancy growth. Now Prachur, in your opening remarks you did mention that there is a good amount of 5G tenancy which has come in. And there's also mention about one customer who is incrementally started to rollout. So I tried, were trying to understand the mix going ahead, you know how should we think about 5G growth versus growth coming from this customer which may not necessarily be all 5G tenancies?
Prachur Sah (Indus Towers Ltd): Yeah. So Sachin, I would just clarify. So, maybe So, 5G was a reference of the 5G network for India. So, whenever we talk about towers and tenancies are not referring to 5G or 4G. It is actually a tower and tenancy for us. It may be a 4G or 5G. So, for 5G is actually eventual loading on the same tower. So, I think the question that you're trying to ask is the mix of tower and tenancies. So, actually this quarter we added 2,900 towers and 1,700 tenancies, which is basically a second tenant on an existing site when we talk about a tenancy. So, I think the the mix will depend on the order book as we said. And as I said the major customer, the the second customer on our site is rolling out, is doing its network expansion. So, I believe the the ratio of tenancy would con- continue to be considerably meaningful. And what will be the ratio between towers and tenancy, that is to be seen on a quarter quarter to quarter basis. But I believe that ratio will remain quite healthy given the nature of expan- -sion, given the fact that we have a large 1T tower base that that is available for a second tenant to come.
Sachin Salgaonkar (Bank of America): Got it. Second question, just wanted to understand one of your towers, you know, agreement has expired. Did we hear back in terms of any incremental update? And one of your other customers, you know basis public info, is looking to raise some money, particularly debt from banks. Looks like we don't have, you know, any incremental update on that. So, I'm trying to understand the kind of the business what you will get. So, irrespective of whether this entity raises that or not, how should one think about the incremental business coming to you guys?
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