Indus Towers FY24: Profit Recovery Meets a Heavy Build-Out

Indus Towers ended FY24 with a clear split between improving profitability and intense investment. The Indian telecom infrastructure company reported consolidated revenue from operations of Rs 28,600.6 crore, up 0.8% from FY23. EBITDA, excluding other income, rose 50.4% to Rs 14,693.9 crore, while profit after tax nearly tripled to Rs 6,036.2 crore.

The March quarter was particularly strong on reported earnings. Revenue rose 6.5% year on year to Rs 7,193.2 crore, EBITDA increased 19.0% to Rs 4,102.6 crore, and profit after tax grew 32.4% to Rs 1,853.1 crore. EBITDA margin reached 57.0%, versus 51.0% a year earlier.

That recovery needs context. FY23 included an exceptional impairment of the revenue equalisation reserve for a large customer. FY24 also benefited from a sharp decline in other expenses. In the March quarter, other expenses were negative Rs 138.3 crore, including a Rs 366.8 crore net allowance reversal for doubtful receivables and advances. The operational picture is positive, but investors should distinguish recurring tower economics from these accounting movements.

A larger network, but lower sharing intensity

The company’s core business is leasing passive telecom infrastructure to wireless operators under long-term master service agreements. At March 31, 2024, it operated 219,736 macro towers and 368,588 macro co-locations across India’s 22 telecom circles.

The physical expansion was substantial. Macro towers increased by 26,862 during FY24 and macro co-locations increased by 25,757. In the March quarter alone, net macro co-location additions were 7,909. Lean co-locations, used for densification and targeted coverage, rose to 10,686 from 6,918 a year earlier.

But the increase in towers outpaced sharing intensity. The closing macro sharing factor fell to 1.68 from 1.78 at March 2023. Sharing revenue per macro tower per month declined 4.9% year on year to Rs 70,027. Revenue per sharing operator was steadier, increasing 0.5% to Rs 41,435 per month. This distinction matters: Indus has built more sites, but each macro site on average carries fewer operators than a year earlier.

Capex has become the near-term trade-off

The FY24 network build required Rs 9,697.5 crore of capital expenditure, more than double the prior year’s Rs 4,121 crore. As a result, operating free cash flow declined to Rs 1,823 crore from Rs 2,618.2 crore. Free cash flow fell to Rs 181.7 crore from Rs 1,400.1 crore.

Adjusted funds from operations were stronger at Rs 10,290.8 crore, up 75.1%. This measure deducts maintenance and general corporate capital expenditure from adjusted EBITDA, rather than the full expansion capital expenditure. It shows that cash earnings before growth investment improved, but it does not remove the funding requirement of the company’s large rollout.

Cumulative investments rose to Rs 67,389.4 crore at March 2024 from Rs 59,838.2 crore a year earlier. Property, plant and equipment increased to Rs 26,649.3 crore. The key investor question is whether co-location additions, future 5G densification and tariff escalations will generate adequate returns from this enlarged asset base.

Energy efficiency supports margins

Power and fuel remains the largest operating cost. It represented 86% of March-quarter operating expenses, even as the company’s energy cost per tower per month fell to Rs 41,289 from Rs 44,639 a year earlier. The company reported about 14,731 operational solar-powered sites and about 80,984 low-diesel-consumption sites.

Indus is also deploying a lithium and valve-regulated lead-acid battery combination, enhancing electrification and evaluating alternative solutions such as fuel cells, wind turbines and gas generator sets. It plans to pilot an aluminium-air energy-generation solution at high-diesel-consumption sites. These measures are relevant because they can reduce exposure to diesel use and support unit-cost control as the network expands.

India’s telecom market provides the broader demand case. The company cited government data showing more than 435,000 5G base transceiver stations deployed. It also cited industry projections that Indian 5G subscribers could increase from 131 million in 2023 to about 575 million by 2026. More data usage and denser networks can create demand for macro and lean infrastructure, though the timing of co-location demand remains dependent on customer rollout decisions.

Balance sheet and revenue visibility

Net debt including lease liabilities was Rs 20,467.9 crore at March 2024, up from Rs 18,886.9 crore a year earlier. Yet the leverage ratio improved because EBITDA rose faster: net debt including lease liabilities to last-twelve-month EBITDA declined to 1.39 times from 1.93 times. Interest coverage improved to 19.98 times from 6.72 times.

The contracted base remains an important stabiliser. The weighted average remaining term of service contracts was 6.34 years, and future minimum lease payment receivables were Rs 105,619.1 crore. These agreements include annual escalation clauses and offer better revenue visibility than a purely transaction-driven business.

FY24 therefore carried two messages. Indus Towers restored profitability, expanded its national asset base and improved leverage coverage. At the same time, the scale of capital expenditure constrained reported free cash flow, and lower sharing per tower shows that productivity must catch up with deployment. The next phase will depend on whether India’s 5G build-out translates into more tenants per site and stronger cash conversion from the expanded network.