Tower infrastructure firm Indus Towers stands to gain the most from Vodafone Idea’s improved cash flow, following the government’s decision to convert telecom firm's spectrum dues into equity.
By easing Vi’s financial burden, the move enables the telco to secure Rs 25,000 crore ($3 billion) in debt funding, which will fuel its network expansion. This, in turn, is expected to drive higher tenancy growth and higher margins for Indus Towers, making the development a materially positive event for the company.
The company has already announced a three-year capex plan of $6.6 billion, which is directed towards expanding the 4G population coverage from 1.03 billion to 1.2 billion, launching 5G in critical markets, and expanding 4G network capacity. It has already launched 5G in Mumbai and will soon launch 5G in Delhi, Bengaluru, Chandigarh, Patna and Chennai.
“While Vi has cash to carry out capex in 2025, we expect it to use proceeds of debt fundraising to continue network investments. Benefits from the same have started to reflect, with 13 circles seeing VLR subscriber growth in December 2025. We expect Vi to end FY28 with 311,000 towers, enabling Indus to improve its tenancy,” brokerage Ambit noted in a research report reviewed by Moneycontrol.
Vi ended 2024 with just 58 percent of Bharti Airtel’s tower count, despite having a larger tower footprint than Airtel in FY19. Indus Towers’ tenancy ratio dropped from 1.87x in FY19 to 1.68x in FY24, reflecting Vi’s financial struggles. However, analysts believe the situation is set to improve.
IIFL Securities stated that Vi’s improved cash flow outlook and stronger government backing increase the likelihood of the telco securing the full Rs 25,000 crore debt funding, which in turn enhances its ability to execute its Rs 55,000 crore ($6.6 billion) capex program—a major positive for Indus Towers.
Motilal Oswal described Vi’s cash flow relief as a “materially positive event” for Indus Towers, noting that the government appears committed to preserving a three-player private telecom market. However, it maintained a Neutral rating on Indus, citing that a sustained re-rating would depend on Vi’s long-term revival and operational improvements.
As Vi, which contributes 35-40 percent of Indus’ revenue, expands its 4G network and 5G rollout across 17 priority circles, analysts expect Indus to see a notable uptick in tenancy growth and margins.
In January, Indus Towers management said it was expecting a robust order book for towers and co-location requirements from operators to drive its future growth. Vodafone Idea significantly resumed its network expansion in the December quarter.
"The resumption of network expansion by a major customer (Vodafone Idea) bodes well for us. Similar to Q3FY25, we are well-placed to capture a meaningful share of its tenancy additions in the coming quarters,” said Prachur Sah, Managing Director and CEO of Indus Towers, during the earnings call on January 24.
Indus then said there is clear visibility regarding tower and colocation additions from private telecom operators for the next three to four quarters.
Sah noted that Indus Towers is well-positioned to capitalize on tenancy growth, particularly with Vodafone Idea. “...We are in a prime position to monetize towers currently hosting a single tenant as Vodafone Idea scales its network expansion. This broad strategy enables us to remain ahead in terms of network readiness and tenancy opportunities,” he added.
Jefferies added that the government’s backing will ease concerns about payment delays and receivables, which is “good for Indus’ free cash flow (FCF) conversion” and should be seen positively for the company.
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