Indus Towers expects Vi to stick to payment plan cleared by its board

has said it hasn’t considered the model where cash-strapped (Vi) is clearing dues of rival telecom tower company American Tower Corp (ATC) by issuing convertible debentures. It, instead, expects Vi to clear its dues based on the payment plan recently approved by the Indus board.

At its quarterly earnings call on Friday, the Indus management also asserted that the company does not expect any write-offs as it expects Vi to fully clear its dues estimated at Rs 7,000 crore.

Last week, Vi’s board cleared the issue of rupee-denominated, optionally convertible, unsecured, unrated and unlisted debentures (OCDs) to ATC Telecom Infrastructure Pvt. Ltd (ATC) to raise Rs 1,600 crore, which the loss-making telco would use to repay dues to the US tower company.

“We haven’t considered convertible debentures as an option…there is already a payment plan proposed by Vi that has been accepted by the Indus board to temporarily support it, and we are working with Vi to ensure execution of the payment plan,” Indus chief operating officer Tejinder Kalra said at the tower company’s earnings call.

He added that Indus’s management remained vigilant about recovering its dues from Vi and is closely monitoring the situation to assess exposure levels.

Kalra expects Vi’s dues to peak out by end-December 2022 and start reducing progressively from January 2023 onwards. This is since Vi would have to pay its dues outstanding as of December 31, 2022, over a seven-month period between January 2023 and July 2023 and 100% of its dues from January 2023 onwards.

The Indus COO added that he expected some payments from Vi to materialise soon as the telco had given fresh assurances about closing its long pending fundraise shortly. His optimism also stemmed from Vi’s purchase of 5G airwaves in the recent auction and that it’s also investing in the business.

Kalra was speaking a day after Indus reported a 44% on-year fall in its September quarter net profit to Rs 872 crore, stung largely by a provision of Rs 1,770.9 crore towards doubtful debt in the September quarter, related to the company’s receivables from Vi.

Indus’s trade receivables rose 4% sequentially in the July-September to Rs 6,499 crore, largely due to delayed payments by Vi.

Indus shares closed around 1.9% lower at Rs 187.40 on BSE Friday.

ICICI Direct said it remains cautious on Indus’ overall prospects till there is improvement in dues collections from Vi. “For the near term monitorable, we seek clarity on dues from Vi and Indus’s measures to collect it,” it said in a note.

Vi’s efforts to raise Rs 20,000 crore via a mix of debt and equity have been unsuccessful for over a year now. The loss-making telco urgently needs cash to not just invest in 4G capex but also to tie up vendor contracts for its pending 5G rollout, for which it’s under increasing pressure to clear dues.

Vi needs cash to repay large vendors such as Indus, ATC, Nokia and Ericsson among others invest in network capex and rein in heavy customer losses to rivals Jio and Airtel.

Indus had earlier reportedly warned Vi of cutting access to its towers, unless its dues are paid.

Separately, Indus’s management said that the targeted Rs 2,000 crore being raised through issuance of non-convertible debentures (NCDs) in multiple tranches on a private placement basis would be used to meet the tower’s company’s future capex and growth needs, especially as the company may need to boost its electrical infrastructure to support Bharti Airtel and Reliance Jio’s pan-India 5G rollouts over the next 18-to-24 months.

Indus, though, expects initial 5G rollouts to happen mainly via loading, which means telcos would mount 5G network gear on existing tower sites.

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