Sell

Per media reports, the Supreme Court (SC) has permitted the Centre to reconsider the issue of reassessment for Vodafone Idea (VI)’s AGR dues. This allows the government (GoI) to grant significant relief on AGR dues to VI.

Vodafone Idea’s (Vi) reported EBITDA declined 1% QoQ (vs.3%/5% QoQ for Bharti India Wireless/RJio), ~1% above our estimates, as lower network opex (+1% QoQ) was offset by higher SG&A costs (+8% QoQ).

Railtel Corporation of India (Railtel) Q1FY26 adjusted net profit grew 2.8% YoY; and as expected revenue growth driven by projects business tends to drive profits slower.

Vodafone Idea’s (Vi) reported EBITDA declined 1% QoQ (vs.+2% QoQ for RJio/Bharti India wireless), which was above our estimates due to lower network opex (-2% QoQ, energy efficiencies) and SG&A costs (-1% QoQ).

Railtel Corporation of India’s (Railtel) Q4FY25 net profit grew 46.3% YoY; Q4, in general, exhibits lumpiness. Railtel delivered profit growth of 27.6% in FY25, in line with the guidance of 25–30%.

Indus Towers’ (Indus) Q4FY25 performance was good led by, excluding acquisition, tenancy addition of 8.2k, which was much better than tower net adds of 4.3k, implying a rising tenancy sharing ratio. Tenancy adds benefitted from network rollout by VIL; and 2) strong FCF in FY25, including provision reversals.

Indus Towers’ (Indus) Q2FY25 performance was good on two counts: 1) stable net tenancy addition at 4,308 with some benefit already showing from VIL/BSNL rollout; and 2) strong cash collection, including INR 10.8bn collected towards past overdue.

Railtel Corporation of India’s (Railtel) Q1FY25 net profit grew 27% YoY to INR 487mn which is within the company’s guidance of growth of 25–30%.

Indus Towers’ (Indus) Q1FY25 performance was good on two counts, Strong net tenancy addition, at 6,340, despite 310 exits and strong cash collection.

We met Vikas Poddar, CFO of Indus Towers (Indus) on 27 Jun’24. Takeaways: 1) Indus remains excited about growth in the tower industry driven by rural expansion by Bharti, and 4G rollout from VIL. It expects a fair share in VIL’s expansion, despite the risk of higher competitive intensity

Reported rental revenue up 7.7% YoY/2.2% QoQ to INR 45.8bn in Q4FY24.

Our valuation for Indus now bakes in the VIL capex. Our recalibrated model envisions Indus’ rental revenue/EBITDA/ net profit CAGRs of 9.3%/10.2%/14.4% over FY24–27E.

Indus Towers’ (Indus) Q1FY24 performance was good on two counts: 1) tenancy addition accelerated with a net add of 5,048 despite 518 exits; and 2) there was no provisioning that had marred EBITDA previously. We believe the high rate of tenancy addition is unlikely to sustain as Bharti is close to completing its rural 4G rollout; 5G rollout over the next 12 months will largely come as loading.

Despite deferment of AGR & spectrum dues, company's outlook increasingly looks uncertain. In the absence of a much needed capital infusion by the promoters, strengthening of subscriber base and substantial improvement in ARPUs is required in the coming months for the company to continue as a going concern. We downgrade our rating...

VIL remains the weakest private telco. AGR dues payment extension was only a short-term breather and its survival hinges on quick capital infusion and tariff hike/floor tariff implementation. The need for capitalisation is urgent mainly due to its upcoming payment commitments, lagging spends on network and continued relative market share loss. We maintain SELL rating with a DCF based target price of | 5/share (vs. | 6/share, earlier). We...

Overall churn rate moderates; post-paid base loss continues Some improvement was seen across KPIs. The subscriber base declined by ~2 million (mn) to 269.8 mn (much lower than last four quarter's run rate of ~9.8 mn decline), with churn rate reducing to 2.3% (vs. 2.6% in Q2FY21), which, we believe, is due to network integration completion. The 4G sub base saw a modest addition of ~3 mn QoQ to 109.7 million, albeit better than 1.5 mn addition in Q2. The post-paid sub base at 20.8 mn, however, was down by 0.4 mn QoQ. Similarly, capex at | 970 crore (vs. ~| 1040 crore...