Dues from Vi results in Rs 1,570 crore free cash flow for Indus Towers in June quarter
has said that most of the backlog receivables from
Vodafone Idea
has been collected in FY25, which has partly resulted in generating a free cash flow of Rs 1,570 crore in the quarter ended June. But the passive telecom infrastructure company has decided to conserve cash for the short term.
With the cash-strapped telco clearing most of its past overdues to Indus, its trade receivables have come down by Rs 406.4 crore during the June quarter to Rs 4361.1 crore, after the telco paid back Rs 88 crore in Q1 FY26, Indus Towers CEO Prachur Sah during an earnings call Thursday.
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'We have collected most of the backlog receivables. As part of our cash management, instead of keeping the cash idle, we have either reduced our debt or used it for a very strategic acquisition,' Sah said.
However, the Indus board has considered conserving cash in the short term. This decision was made taking into account various contextual factors, including the evolving industry landscape, the stability of their customers, the elevated capital expenditure (capex) for the company, and inorganic growth opportunities, Sah said.
Vodafone Idea's auditors have reported material uncertainty in its March quarter results, adding that Vi's ability to settle its liabilities is dependent on support from the Department of Telecommunications regarding the adjusted gross revenue (AGR) matter, fund raise through equity and debt, and generation of free cash flow from operations.
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'The Board will continue to monitor the evolving situation closely and reassess its decision by the end of the financial year. The Board remains fully committed to creating value for the shareholders, including by way of earliest possible reinstatement of distributions basis the above factors,' Indus said in an exchange filing late Wednesday.
Indus management clarified that the decision to conserve cash was a conscious call by the board, and not a policy shift.
'The policy requires the board to consider certain predefined parameters including future cash requirement of the company before distributing it free cash,' Sah said, adding that free cash flow generated in the previous and current fiscal years will be available for dividend payment once the board decides to reinstate distributions.
The company cited elevated capex outlook as a reason for conserving cash in the short term., adding that capex will be allocated for further growth in its tower business, replacing aging infrastructure, and preparing its towers for higher tenancy.
Indus reported maintenance capex of Rs 1190 crore in the first half of calendar year 2025, which is nearly equal to the company's capex for the whole of 2024.
Beyond tower additions, the company expects investments in solar sites, replacing and upgrading batteries to lithium-ion and adding more diesel generators.
'These are upgrades that incur capex but do not always add to the tower count,' Sah said, adding that maintenance capex is expected to remain elevated for the next 3-4 years as it continues to upgrade its aging infrastructure.
Indus Towers said the total number of 5G base stations marginally increased to 487,000 in the June quarter, adding that while 5G deployment momentum has slowed, its contributions remain a meaningful driver for revenues.
As 5G adoption deepens, there is an expectation for a natural rise in demand for additional sites to ease network congestion. Indus said the first quarter's rollouts were also seasonally affected, and will show up as rollouts in subsequent quarters.
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