Indus Towers: Inability of Vodafone Idea to Raise Funds May Hurt Finances

Indus Towers, in its report for FY21, has said that Vodafone Idea’s inability to raise funds will hurt its ability to pay for infrastructure services. Since the telco is one of Indus' largest customer, the company feels this might adversely affect its overall financial condition.

Indus Towers Worried About Vi's Financial Mess

Last week, Vi had said that it is trying to raise around ₹25,000 crore. However, poor sector health has so far had an adverse effect on those efforts, as per the telco.

Indus said, "our largest customers, Vi and Airtel, are raising or have raised substantial amounts to strengthen their balance sheets".

The company added, "since our business and growth prospects depend on demand from these (service) providers, any deterioration in their financial health due to increased competition or inability to raise further funds can affect their ability to pay for infrastructure services, which could adversely affect Indus’ revenues, cash flows and overall financial condition".

Indus Towers said "any further consolidation either in the number of telecom operators or their network footprint" could also cause significant reduction in its revenues and profitability. The company also said that the same can even even affect its incremental revenue potential from these operators.

Indus Towers said it has “long-term contracts with key customers along with exit charges to safeguard any unforeseen revenue fall".

However, it has said that any unfavorable terms such as lower pricing with customer are a risk. The company said in case of mass renewals, which are due in the next 1-2 years, risk is more profound.

Indus Towers, with 1,79,225 towers, reported a 1% on-year dip in its annual profit after tax (PAT) in fiscal FY21. Its PAT stood at ₹4,975.1 crore against annual revenues of ₹25,673 crore.

Vodafone Idea's Fundraising Efforts

Vodafone Idea has started talks with Apollo Global Management to raise up to $3 billion in funding over the next three months. The telco hopes to raise the money soon, however; it has ₹22,500 crore to pay between December 2021 and April 2022 towards AGR dues, regular debt and spectrum fees. So far, the telco has said that the "fundraising talks are progressing".