Indus Towers in talks with Voda Idea to expedite past dues, current payment plan to continue in FY24
3 min read 27 Apr 2023, 10:09 PM IST- Top executives at the tower company said that the agreement between Vodafone Idea and Indus Towers to pay the latter in installments would continue in FY24 and no fresh payment plan was under discussions
PremiumNEW DELHI : India’s largest mobile phone tower provider said that it had received a significant portion of dues from Vodafone Idea for the January-March quarter, even as it was engaged with the third largest carrier for recovering dues dating prior December 2022 according to an ongoing payment plan.
Top executives at the tower company said that the agreement between Vodafone Idea and Indus Towers to pay the latter in installments would continue in FY24 and no fresh payment plan was under discussions.
“On the collections from one of our major customers, we’re pleased to see progress on that front and collections from this customer have improved during the quarter and were close to the invoicing amount," said managing director and chief executive officer Prachur Sah in the Q4FY23 earnings call on Thursday.
In December 2022, Vodafone Idea sought easier payment terms from Indus Towers, including additional time and partial payment of its outstanding dues, since its plans to raise funds of over ₹20,000 crore did not materialise. Vodafone Idea had said that a funding plan was under discussion with its lenders and it had agreed to a payment plan with Indus to pay part of the monthly billing till December 2022 and 100% of the amounts billed from January 2023 onwards, which will be adjusted against the outstanding trade receivables. The dues outstanding as on December 31, 2022, Vodafone Idea agreed to pay the dues between January 2023 and July 2023.
“We are constantly engaging with the customer to also clear the past outstanding amount. The government's decision to convert the interest dues into equity is also a positive step and is expected to help ease the financial burden of the customer. We are closely monitoring development on the customers fund raise plans," he added, referring to the government taking up over 31% equity in the No 3 carrier in lieu of interest on dues amounting to ₹16,000 crore that the telco owes to the government in spectrum and adjusted gross revenue dues.
In response to questions from analysts, he said that the company was in active discussions to address outstanding dues and intends that the telco expedites the payment of pending dues. He said that the management will continue to engage with Vodafone Idea to protect shareholders’ interests.
Indus Towers reported a 23% fall in profit for the quarter ended March 2023 to ₹1,399 crore versus ₹1,828 crore in the same quarter in the previous financial year, while revenues declined by 5% in the period to ₹6,752 crore from ₹7,116 crore. The tower company provisioned for ₹5453 crore against doubtful debt and advances for FY23 and ₹43.4 crore for the quarter ended March 2023. Vodafone Idea owes over ₹7000 crore to Indus Towers.
For the full year ended March 2023, profit fell sharply, by 67% to ₹2,759 crore from ₹8,430 crore in the previous year, as it took on exceptional charge of ₹492 crore as it took impairment of revenue equalization reserve up to September 30, 2022 for a large customer. It did not name Vodafone Idea in its results.
Sah said that pending payments from the carrier had affected free cash flows and earnings before interest, taxation, depreciation and amortisation. For the quarter ended March 31, 2023, EBITDA was at ₹3446 crore, down by 15.3% on-year, and EBITDA margin stood at 51%. Operating free cash flow during the quarter fell by 58% on-year to ₹1155 crore and adjusted fund from operations fell by 23% on-year to ₹2464 crore.