Indus Towers Experiences Delays and Cost Pressures Amid Tightened LPG Supplies in West Asia

Indus Towers Flags Supply Risks Due to West Asia Conflict

New Delhi: Indus Towers, a subsidiary of Bharti Airtel, has raised concerns about potential supply risks due to the ongoing conflict in West Asia, which may impact tower production, delay rollouts, and increase costs. The company's managing director and chief executive officer, Prachur Sah, stated that the situation has created a "tightness in the market in terms of tower supplies" due to the unavailability of liquefied petroleum gas (LPG), a key manufacturing input.

LPG is essential for tower production as it is used to heat steel parts, allowing them to be coated with zinc to prevent rust and extend tower life. Any disruption in LPG supply can slow production and, in turn, delay network rollouts. Additionally, mobile towers rely on diesel-based generator sets during power outages, and an increase in diesel prices can raise operating costs. However, these costs are largely passed on to telecom operators such as Airtel, Jio, and Vodafone Idea.

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The company's revenue from operations rose 4.8% year-on-year (YoY) to ₹8,101 crore in the December quarter, while net profit stood at ₹1,793 crore, up 0.8% YoY. Indus Towers added 4,892 towers sequentially and 15,209 towers on a YoY basis, taking its total to 264,514 as of March end. The portfolio tenancy ratio, or average tenants per tower, was 1.62 during the quarter.

Concerns Over Jio's Tenancy Renewal

Macquarie, a brokerage house, had earlier expressed concerns over Indus Towers' growth, stating that the company remains below consensus and faces a risk of Jio migrating tenancies to Altius. However, Prachur Sah assured that even for Jio, which has certain tenancies that have expired, very minor percentages have been churned.

Africa Expansion Progress

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Indus Towers has made significant progress in its Africa expansion. The company has secured an operating license in Zambia and is advancing on ground execution. In Uganda and Nigeria, regulatory approvals are in the final stages. Commercial frameworks have been established with primary customers, and initial orders are in place. The company is also setting up a supply chain ecosystem and strengthening operational engineers, positioning it well for efficient and scalable deployment.

With full-scale operations in Africa, Indus Towers' capital expenditure could reach $200–300 million, with a balanced mix of debt and equity. The company's trade receivables stood at ₹4,939 crore as of March end, with Vodafone Idea constituting a significant portion of outstanding receivables and unbilled revenue.