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Analysts say Indus Towers may benefit from Vodafone Idea’s investment

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In Short:

Indus Towers could see an 8% growth in operating income from FY24-27 if Vodafone Idea (Vi) successfully raises Rs 45,000 crore as planned. Vi plans to raise Rs 18,000 crore through new shares and Rs 25,000 crore through debt. If Vi expands its network, it could lead to 40,000-45,000 tenancy additions for Indus. Airtel’s focus on rural expansion may also contribute to Indus’s growth.


Kolkata: Indus Towers, India’s leading tower company, is projected to achieve an 8% compound annual growth rate in operating income between FY24-27 if Vodafone Idea (Vi) successfully completes its anticipated Rs 45,000 crore fundraising and invests in network expansion, as per analysts.

Key Fundraising Plans by Vi:

Cash-strapped Vi announced plans to initiate a sale of new shares from April 18 to April 22 to raise up to Rs 18,000 crore. This will be followed by a debt fundraising of Rs 25,000 crore. The company has also approved a preferential share issue to raise Rs 2,075 crore from a promoter entity.

“…we are enthused by progress on the (Vi) fund raise and believe this should drive further upside for Indus Towers,” stated Citi Research in a recent report.

Potential Growth for Indus:

Analysts suggest that if Vi utilizes the funds to add around 75,000 sites in priority markets to enhance competitiveness against rivals like Reliance Jio and Bharti Airtel, it could result in 40,000-45,000 tenancy additions for Indus.

“If Vi expands its network, Indus’s growth outlook will improve. This could lead to a tower/tenancy CAGR of 6%/7% over FY24-27,” stated Jefferies in a research note.

Vi’s Fundraising Impact:

Vi’s fundraising plan aims to repay dues to vendors like Indus Towers, enhance 4G operations, and venture into 5G services to intensify competition in the market.

Recent Developments:

Vi has started clearing its dues to Indus Towers, boosting the tower company’s net profit for the December quarter. Citi Research estimates Vi’s total dues to Indus at Rs 5,700 crore.

Market Expectations:

Analysts anticipate continued momentum in Indus’s tower and tenancy rollouts in the March quarter, driven by Bharti Airtel’s focus on expanding 4G presence in rural India.

If Vi opts for a limited network expansion, most of Indus’s incremental tower/tenancy additions will be driven by Airtel, as per Jefferies.

Airtel’s ongoing deployment of sites in high-potential villages is expected to boost its 4G coverage, although the pace may moderate post rural expansion completion, potentially affecting Indus’s tower/tenancy growth.

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