MUMBAI, NEW DELHI : Indus Towers expects Vodafone Concept to clear all its pending dues in a single go, the highest govt of the tower supplier mentioned on Tuesday, a day after the nation’s third-largest telecom operator mentioned that the proceeds of the ₹18,000-crore follow-on public supply (FPO) wouldn’t be used for paying vendor or authorities dues.
“We’re happy to see the optimistic developments on Vodafone Concept’s fundraise and count on that VI will clear over-dues of Indus in its entirety. We stay dedicated to supporting all our prospects of their progress plans and are greatest positioned to do the identical for VI,” Indus Towers’ managing director and chief govt Prachur Sah instructed Mint in response to queries.
Sah didn’t touch upon the continued cost agreements between the businesses foundation which Vodafone Concept has made funds prior to now quarters, or whether or not there could be any modifications made to those agreements.
Indus had collected ₹300 crore from VI on account of excellent previous dues along with 100% of the month-to-month assortment, within the quarter ended December 2023. In that quarter, it had an influence of ₹2,270 crore because of provision for uncertain money owed and ₹493 crore from an distinctive merchandise. Trade insiders peg Vodafone Concept’s dues to Indus Towers at about ₹7,000 crore.
Vodafone Concept chief govt Akshaya Moondra mentioned on the launch of the FPO that the fundraise shall be used primarily for capex necessities. “We can not use the funds for making any funds to promoter or promoter group corporations and that will be the governing issue,” Moondra had mentioned. Indus Towers’ promoters embody Vodafone Group Plc that can be one of many promoters of Vodafone Concept.
The provider has mentioned in its purple herring prospectus that it has negotiated prolonged credit score durations with some distributors to partially fulfil its contractual obligations, and that it was actively engaged in ongoing discussions with distributors to develop mutually agreeable cost plans to handle excellent dues.
Within the prospectus, Vodafone Concept has acknowledged that it had ‘vital quantity’ as excellent dues payable to distributors, and that these funds have been essential since non-payments to tower distributors and tools suppliers may have an opposed impact on its enterprise. As of December 31, 2023, commerce payables aggregated to ₹13,807 crore, payables for capital expenditure stood at ₹6,926 crore and lease liabilities have been at ₹36,712 crore.
Analysts have been, nevertheless, bullish on Indus, since VI indicated that it intends to arrange 26,000 new 4G websites, increase capability of 40,800 current 4G websites and arrange 22,000 new 5G websites within the subsequent two years. “Assuming 70%+ of this enterprise comes in the direction of Indus, our sensitivity evaluation signifies 15-18% EPS enchancment (assuming potential transaction is consummated). We’d therefore count on consensus upgrades additionally,” BofA analysts mentioned in a notice.
“Additional upside on Indus may probably be pushed by continued a number of re-rating at Indus, led by enhancing well being of its buyer VIL. We notice that Indus’ FY25E EV/EBITDA a number of has re-rated from 5X at begin of this 12 months to six.5X now. Nevertheless, it’s nonetheless buying and selling at low cost to international tower-co avg of 12X,” they added.
“Whereas we consider Indus’ inventory is already pricing in a bull-case end result, upcoming occasions which may help sentiment embody: a) reversal of previous write-offs associated to dues from VI, and b) resumption of dividend funds,” analysts at Macquarie mentioned in a notice.
“We reiterate our view that Indus Towers is a key beneficiary with nonetheless significant room for additional upside from present ranges,” analysts at Citi Analysis mentioned.
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Printed: 16 Apr 2024, 09:36 PM IST
Supply: Live Mint