Indus Towers Ltd

NSE:INDUSTOWER

Good afternoon, ladies and gentlemen. I'm Michelle, the moderator for this conference. Welcome to Indus Towers Limited's Fourth Quarter and Full Year Ended March 31, 2025 Earnings Call. [Operator Instructions]

In case of a natural disaster, the conference call will be terminated post an announcement. Present with us on the call today is the senior leadership team of Indus Towers.

Before I hand over the call, I must remind you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face.

I now hand the conference over to the MD and CEO of Indus Towers, Mr. Prachur Sah. Thank you, and over to you, Mr. Sah.

Thank you, Michelle, and a very warm welcome to all participants. Joining me today are my colleagues, Mr. Vikas Poddar, CFO; Mr. Tejinder Kalra, COO; and Mr. Dheeraj Agarwal, Head of Investor Relations on the call.

I'm pleased to present our business performance for the quarter and year ended March 31, 2025. We're proud to have delivered another stellar year with our [indiscernible] tenancy additions being one of the highest in our history after having a record baking performance in FY '24. Our inherent strengths ensuring superior execution capabilities, have helped us maintain a major share in our customers' volumes. This in down has led to a significant tenancy accretion from our customers. In addition to the operational performance, we are also satisfied to see our persistent engagement with rewards, resulting in this customer clearing the entire very amount with INR 51 billion in this financial year on.

Additionally, in line with our strategy of expanding our portfolio, we executed a transaction to acquire about 12,600 towers from [indiscernible] during the year. Before moving on to the key aspects of our business. I would like to upload the exceptional commitment of our field teams who worked tirelessly amidst the backdrop of tough environmental and logistical challenges to ensure seamless connectivity. The quarter gone by saw a historic 45-day long a commitment, bringing together more than 616 million [indiscernible] and we are proud to have contributed to the brand spectacle by deploying 177 towers in collaboration with the government.

This not only showcases the capabilities of Indus Towers to manage the connectivity need of such a large communication but also reflects the greater agility of its people on the go. The field teams also braved adverse weather conditions to installed towers in Northeastern District of [indiscernible] and doing connectivity. On the regulatory front, the government continues to push a forms to support the swift development of telecom infrastructure, keeping certain timeline. To this end, the central government [indiscernible] follow the right-of-way 2024 since the start of the calendar year. These are aimed at resolving in definitional issues within the industry and ensuring efficient deployment of the communication infrastructure.

Furthermore, the green energy open access policy has been adopted by nearly 24 states, serving other important catalysts for accelerating the shift towards renewable energy and enhancing overall energy efficiency. Separately, the composite billing scheme, which was rolled out a few quarters ago, has now been operationalized in 11 states, including [indiscernible]. By consolidating multiple connection bills into a single invoice. The scheme simplifies billing, operations and streamline the management of large volume accounts.

When it comes to 5G, close to 40,000 5G base stations were rolled out in the industry in the last financial year, with a total base now standing at close to 475,000. While the pace of deployment has moderated, 5G-related loading continues to contribute meaningfully to our overall loading revenues. We anticipate that once 5G penetration leases further. There will be a national uptick in the support netlist. Given our expertise in investing infrastructure, we are well positioned to capture these emerging opportunities. Statistics mentioned in the [indiscernible] mobility report reiterates the rapid production of [indiscernible]

As per the report, global 5G subscriptions grew by INR 162 million in the December quarter to a total of INR 2.3 million, with 4G subscriptions [indiscernible]. Global 5G subscriptions are expected to reach over INR 6.3 billion by 2030, accounting for around 67% of the total subscriptions. In India, 5G subscriptions are expected to reach around INR 970 million by the end of 2030. As per the latest tri report, the total 5G [ substation males ] in India grew to INR 43 million at the end of Q3 FY '25, increasing by INR 25 million during the quarter. The data consumption story in the country continues to play out strongly, underpinned by the continuous valuation of users from 2G to 4G and the swift production of 5G. The average data consumed per user per month across the top 3 operators grew to 3% year-on-year to 27.5 GB for the quarter ended September 2024, with the total data consumed growing by 20% year-on-year.

Additionally, as per dry, 5G data consumption grew 18% quarter-on-quarter and contributed 26.5% of total data usage in Q3 FY '25 compared to 22.7% in Q2 FY '25. As data consumption continues to source and find new technology becomes more [indiscernible] the requirement for passive infrastructure is expected to increase consistently to handle initial capacity, and we believe that we have the expertise to meet the rising demand efficiently. Our operational performance continues to be strong as we recorded one of our highest new tenancy additions during the quarter. Additionally, we also acquired 12,600 towers, including [ lean ] from [indiscernible] further.

In Q4, we added 14,662 macro towers and 18,606 corresponding colocations, including this acquisition. Our total macro towers and colocations base stood at 249,305 and 405,435 growing by 13.5% and 10% year-on-year, respectively. On a full year basis, tower and co-location additions were at 29,500 and 36,800, respectively. Our industry-leading tenancy ratio stands at 1.63. In terms of lean towers, co-location additions were at 2,386 in Q4, including acquisition of about 2,200 towers from [indiscernible]. This resulted in the overall base increasing to 13,870 including [indiscernible], net colocation additions were at 21,000 in Q4 compared to 7,700 in Q3.

Following on from our operational performance, I would now like to provide an update on the progress we have made on each of our 4 key strategic fillers, namely market share, cost efficiency, network up time and sustainability. On market share, we are pleased to have consistently maintained the majority of the market share in the business of our major customers. Our [indiscernible] spend, focus on automation, speed of acquisition and construction while ensuring quality and safety remain the key reasons for us being our customers too. We also improved our market share through the consolidation as they acquired about 12,600 towers for meta. Single operator portfolio and offers the potential to sharing with towers with other operators.

During the year, we continued to make digital interventions across the value chain, strengthened our partner ecosystems and work towards improving operational turnaround times. We also leveraged the government priority to expand our reach across government lands. As witnessed in FY '25, we remain focused on gaining a significant share of tenancies from all our customers, which bodes well for our growth prospects. Our in-building solution, our IBS portfolio continues to show strong growth as we maintain a leadership position in new lots for our customers. We are pleased to see that our deployments in Q4 [indiscernible] which were the highest in our industry. We are confident of expanding this portfolio further.

Looking at cost efficiency, we continue to focus on optimizing both operating and capital expenditure through multiple initiatives. Energy remains a major OpEx driver, particularly diesel cost through electrification of non-electrified sites, deployment of Energy Storage Solutions and a continued expansion of our renewable energy portfolio. We further reduced the diesel corruption by 6% year-on-year in FY '25. We also added more than 15,000 [indiscernible] during the year, taking the total base close to 30,000. We are optimizing rental costs through targeted site prioritization, benchmarking landlord segmentation and leveraging the [indiscernible].

Furthermore, our continued efforts on technological interventions and resource efficiency is driving productivity improvement, which can be seen in other network costs. On the CapEx front, we are transitioning our banking portfolio to cost efficient demand metrics, offering faster charging and longer life. In [indiscernible] portfolio is perverting towards lighter tower variants, helping lower civil and material costs. We also implemented report monitoring technologies to enable real-time site oversight and data collection, supporting infrastructure rationalization and resource optimization to achieve cost savings. Collectively, these initiatives are reversing sustained improvements in both our operating and capital cost structures.

On network uptime, an important metric for our customer satisfaction and quality of service. We continue to maintain a very high uptime and delivered an industry-leading uptime of 98% in Q4 '25, similar to Q3. We were able to deliver these numbers despite heavy rains in [indiscernible] areas of Karnataka, which is a testament to the dedication and perseverance of our teams on the ground. Moving on to ESG, which remains central to our oriental priorities. On the environmental front, we are steadily advancing our efforts to [indiscernible] key focus area has been minimizing our reliance on fossil fuels by progressively shifting our energy consumption towards cleaner renewable sources. To that end, we added more than 15,000 sites during the year, taking the base close to 30,000 at the end of March. Supplementing this was a strategic investment in captive solar projects other than open access initiative.

As we entered into agreement with [indiscernible] for the fulfillment of solar power to [indiscernible] I would like to highlight that 2 years ago, we committed to net 0 emissions by 2050 in line with [indiscernible] science-based unit initiatives. We are pleased to see that our near term and [indiscernible] targets have now been validated and approved by SBTI. To drive responsible practices across our value chain, we connected ESG trading stations for more than 100 key partners to win greater awareness and alignment of sustainability standards. We continue to take initiatives to encourage the transition to restrict metals for the business travel needs for both our employees and partners.

During the year, we launched our future ARPU in partnership with which we aim to plant 1 million trees by 2027 in order to create a sizable [indiscernible] for our country. We were happy to see our efforts towards environment being recognized as transformation with the great Indian sustainable performance in energy efficiency award. We have plan to see our [indiscernible] increased from close to 12% at the beginning of the year to 16.2% by March 2025. Our efforts are geared towards enabling equal opportunities for women across the board, [indiscernible] field roles to the initial positions. To that time, we launched our women leadership development for [indiscernible] in collaboration with I have worked to equip our women employees with record skills and behavior needed to become leadership roles in the future.

Gender diversity across the value chain is also important to us. And to extent, we launched our success or focusing on mutual sharing of proven strategies, best practices and success stories with partners to drive promise. On the CSR front, we carried out relief activities relating to the floods in VR supporting over 2,000 lives. We are pleased to see our digital transformation an initiative aimed at educating and upscaling disadvantaged individuals, expanding to 9 states over the year. We were pleased to see our social initiatives being recognized by multiple bodies. During the year, we won the [indiscernible] 2024 for CSR SLS and Gold Award and the social Initiative category at [indiscernible] 2024.

Now as part of the company strategy, I along with the Board discussed the path forward for Indus given that now we have the backlog issue behind us. The strategy includes aggressively pursuing market share through both in organic and inorganic routes as demonstrated by our acquisition of Bharti's tours. In addition, the scale of Indus, we are working on transforming our site infrastructure and leveraging digital solutions and AI to create new benchmarks of performance. This will further encourage all our customers to move tenancies to Indus.

Furthermore, we're committed to distributing the cash to shareholders and considering the discussion, the Board has decided to appoint a subcommittee to comprehensively assess the modalities of distribution.

I would now request Vikas to take you through our financial performance for the quarter year ended March 31, 2025, and I look forward to your questions. Over to you, Vikas. Thank you.

Thank you, Prachur, and good afternoon, everyone. I'm pleased to present our financial results for the quarter and full year ended 31st March 2025. FY '25 was another strong year for us. We achieved substantial tower and tenancy additions, driven by our ability to capture a significant share of our customers' rollout plans. A key highlight of the year was the clearance of large portion of overdue receivables from a major customer, which positively impacted our cash flows and overall financial health.

Turning to the financial performance for quarter 4 FY '25. We reported gross revenues of INR 77.3 billion, a year-on-year growth of 7.4%. The core revenues from rental grew by 10% year-on-year to INR 50.4 billion, supported by robust tower and colocation additions. On a sequential basis, our reported gross revenues and core revenues grew by 2.4% and 4.6%, respectively. In terms of profitability, reported EBITDA for the quarter stood at INR 44.0 billion, representing a 7.1% increase year-on-year, but a 37.2% decline quarter-on-quarter. The EBITDA margin was largely flat year-on-year at 56.9%, but declined by 35.8 percentage points sequentially.

It is important to note that quarter 3 FY '25 included a onetime write-back of approximately INR 30 billion related to the collection of overdue receivables with significantly boosted EBITDA for that quarter. In quarter 4, we recorded a further write-back of INR 2.3 billion as the customer cleared additional dues. On the Airtel Tower acquisition, as you know, we completed the acquisition of approximately 12,600 towers with the asset transfer occurring in the last week of March. The acquisition is accounted as a common control transaction as per Indian accounting standards, which requires assets and liabilities to be recorded at carrying well. Accordingly, the difference of INR 18 billion between purchase consideration and carrying value is recognized as common control reserves.

Further, the common control business combination requires restatement of financial results from the date of common control, which is 19th of November 2024. Accordingly, the quarter 4 financials include net loss of INR 1.7 billion being operating expenses and depreciation from 19th November to 31st March 2025. This impact is largely noncash in nature as the towers were operated by Airtel during this period. Adjusted for the write-back and the accounting impact of the acquisition, our EBITDA grew 12.8% year-on-year and 7.6% quarter-on-quarter. Our reported energy margins were negative 5.2% in quarter 4, which includes accounting impact of common control transaction, as explained earlier.

Adjusted for this, energy margins improved to minus 2%, driven by seasonality and reduction in diesel consumption. We undertook initiatives such as deployment of solar sites and storage solutions to help us reduce our use of diesel. Profit after tax for quarter 4 stood at INR 17.8 billion, down by 4 percentage year-on-year and 55.6% quarter-on-quarter. Excluding the aforementioned one-offs, the normalized profit after tax grew 19% year-on-year and 15.3% sequentially.

Now on to the full year performance for FY '25. Our reported gross revenues grew 5.3% year-on-year to INR 301 billion and core revenues were up 8.3% year-on-year to INR 192 billion. Reported EBITDA was $208.4 billion, up 41.9% year-on-year and profit after tax stood at INR 99.3 billion, an increase of 64.5% year-on-year. On a normalized basis, excluding one-offs, EBITDA and PAT grew 8.5% and 10.1%, respectively. We delivered strong returns with a reported pretax return on capital employed of 29.1% and a post-tax return on equity of 33.4% over the past 12 months. Our free cash flow generation remained robust at INR 38.7 billion for quarter 4 and INR 98.5 billion for the full year.

Improvement in cash flow was driven by the continued business momentum and the collection of overdue receivables which also led to a INR 25.5 billion reduction in trade receivables during the quarter. In summary, FY '25 was a year of strong operational and financial performance. We achieved significant tower and tenancy growth, driven by our customers' network expansion and strengthened by the full clearance of our overdues. Looking ahead, we are well positioned to benefit from ongoing 5G rollouts rising data consumption and industry consolidation opportunities.

So with that, I'll now hand it back to the moderator to open the floor for questions.

[Operator Instructions] The first question comes from Mr. Sachin from Bank of America.

I have 2 questions. First question is on dividend. There was a general expectation that once backlog from Vodafone Idea is cleared, your company will start giving dividends? Wanted to know the reasons for dividend being not declared and a committee being constituted. And any general thoughts that what would be a time line when we could see your decision either on dividend or buyback coming? .

Related question to that is we are acquiring Batista 12,600 towers. So the amount, roughly INR 20-odd billion what you're paying to acquire these towers. Will that also be constituted when you guys consider paying dividends? So that's question number one.

So for both the questions, I'll take the first one, and maybe we can take the second one, Vikas. So as I explained in my opening remarks, I think -- the company has generated a significant amount of FCF for the year, which was also aided in the past years. This enabled us to return a part of it to the shareholders through the buyback during the year. And as I discussed, the company's strategy with the Board was to pursue growth, both organic and inorganic, some of the [indiscernible] saw in the results as well.

And also to see how we can drive transformation on our side in construction and leverage retail solutions. And as I said earlier, I remain committed to rewarding the shareholders and implementing our strategy. Considering this, the Board has formed a committee to comprehensively assess various viable options and placed before the Board for its final approval. Now as far as the time line is concerned, I think since the mid announced yesterday, I don't believe it's going to be a long-run process. And we'll make a suitable disclosure once we have an update on this one as far as the [indiscernible]

Yes. So Sachin, on the question about the amount, which was paid to party Airtel for the [indiscernible] of towers, that will obviously be factored in by the committee in deciding whatever distribution is decided later on.

Okay. And sorry, just to be clear that the committee is not going to take too much time to within 3 months, a decision should be then by the time you end up reporting your 12 numbers before that, we should get a visibility on dividend or buyback, right?

Sachin, as I said, I'm not giving your time line in months or weeks and what I'm expecting is it's not going to be a long-term process, and we'll keep [indiscernible]

My second question is I just wanted to understand when should we start seeing tenancy improvement? Now I understand the incremental towers which have acquired this tower has dipped a bit of a tenancy but from the business which is coming from Vodafone Idea ideally should lead to a tenancy improvement, which we are not seeing in the numbers. So wanted to understand, should tenancy remain range bound in the range of 1.63 to 1.65 or we should directly see that moving up going ahead? .

I mean, Sachin, I'm not sure what you mean by that because if you remove the Tower acquisition in Q4, we have deployed 4,200 towers or 4,300 new towers and the total tenancy has increased by more than 8,800. So I think there's a significant tenancy addition that we have seen in Q4 like we saw in Q3 as well. So maybe because of the addition of 3 towers, you're not seeing the tenancy impact, but I believe the tenancy growth has been impact a record growth in this quarter compared to what has happened in the last years.

And that momentum should continue going ahead future?

I think we'll work with the customers to make sure that if [indiscernible] plans will continue to grow the maximum share. .

The next question comes from Sanjesh Jain from ICICI Securities.

I have a couple of them. First, starting with the dividend. The dividend policy remains intact, right? 85% of the free cash flow will be distributed to the investors. Does the method of repaying the cash is to be decided or even the dividend policy is being retained by the committee?

No. I think what the company is -- we're going to focus on the modality of the distribution of the cash, right? And if there is any discussion that is going to come up on the policy as well, they will look at it. But the primary aim of the subcommittee is to look at the modalities of distribution of the cash to shareowners.

And number two, we still have some debt on the book. What will be the priority in terms of cash distribution from the capital allocation perspective is to first go net debt free and distribute the remaining cash to the investor? Or we are okay with the small leverage on the balance sheet?

Again, Sanjesh, I don't want to preempt what the committee will decide. But what I know for a fact that, as I told you earlier, I think the multiple elements here, you said that in addition, what we have to look at is still the growth ahead of us in terms of what is the CapEx requirements for the growth in the times to come. And this is that the committee will make a call on how the cash has to be distributed.

Clear, clear. My next question is on the growth. Again, Prachur, you mentioned in your opening remarks that we will look at both organic and inorganic options to drive the acceleration in the growth. What do we really looking at in the next 2 years in terms of in acquisitions if we have anything in the line? And from an organic perspective, anything in the mind apart from the normal business of passive infrastructure?

No. I think our target is -- when I'm talking about the growth, I'm talking about towers, no other towers in IBS is a growth -- so inorganic, when I said inorganic comment, if there is any opportunity available to do the consolidation we will do like we did for the 80 towers in this quarter. As far as the inorganic growth is concerned, while all our customers continue to roll out our talent at different speeds, different quantities. And our idea is to make sure that we capture every single opportunity that is out there, whether it's a new tower or whether if there's an opportunity to bring more tenancies from other companies to our site.

So I think we'll remain. So when I'm talking about growth, focusing on the tower growth, which we have seen substantial growth over the last 2 years, and we want to make the -- keep the momentum going in the coming year as well.

We'll take the next question from Mr. Vivekanand Subbaraman from AMBIT Capital.

At the time of announcing the purchase of towers from Airtel, you had mentioned that you will take loans to fund this transaction. Just to understand this better, in your balance sheet, I see that the borrowings are flat on a sequential basis. Does this mean that the transaction has not been funded with debt? That is question one.

And secondly, I think to Sachin's question on dividends. I think Vikas, you said that the Airtel transaction will also be a consideration for payment of dividend. Why is that the case? Because it seems to contradict what you said in the press release when you announced the purchase of towers.

So Vivekanand to answer that, broadly, the intent is to fund the tower acquisition through borrowing. But because we have substantial collection in this year, we used that to basically purchase the towers, but it should be seen more as a timing issue. So as and when the distribution decision is made whatever is required will be done at that point of time in terms of borrowing.

Okay. And on my second question, which pertains to dividends. Will the amount that was paid out to Airtel, will it be available? Or has it already been earmarked for that purchase, so now it is not available for distribution? Just to clarify that. I know the company is still evaluating it, but because you had specifically called out that this production will be debt funded. We thought that this money is available for dividend distribution. .

But I think as Vikas mentioned earlier, I think it will be -- it's purely a timing issue. The intent is to fund the transaction to borrowing. So it's only a cash management [indiscernible]

We'll take the next question from the line of Mr. Aditya Suresh from Macquarie.

Two questions. First is, can you give us an update on the industry structure in [indiscernible] be curious to see what you're seeing on the ground with Summit and ETC combining operations. .

To be honest, I answered this question earlier in the previous calls as well. I mean, I don't think it impacts as much because the structure remains the same with the entity that has changed. So from [indiscernible], I don't see much change. I think -- and I can speak for Indus. I think our focus remains to make sure that we remain in the market in terms of having the market share that is out there. But from an industry structure point of view, we don't feel any change per se. I mean this it.

There's no migration which you're seeing, is that a fair understanding?

Yes, we only see positive migration towards in this.

Okay. The second question is on the tower rentals per operator, which you're liking right? So despite the increased 5G loading, despite the inflation embedded in the contracts, we've seen moderate, right? So in the context of kind of what you said about this aggressive market share capture plans, plus noting that kind of appreciate that if a second update kind of comes into these towers, all operators get correct discount. How should we directly thinking about your rental revenues per operator trending?

I'll take that. So see, as far as the ARPT is concerned, like we have -- while we report this in the KPI but we have always maintained that there are several variables that impact this KPI. I just -- maybe as a reminder, talk about some variables. First of all, there is a product mix there are towers which are traditional towers, which are more expensive in terms of rental, there are towers which are less costly then there is also the other thing, other variable, which is the standard escalation that kicks in every year. There are loading like 5G, 4G, et cetera, which are different on each tower.

There's a renewal discount. There's also sharing discount. So as and when, let's say, you will see the colocation increasing or the sharing increasing, which was the case in with a lot of the VL rollouts. There's obviously a sharing discount that kicks in, right, in the intra business that we are. So all that basically impacts the ARPT. The other technical point that you need to keep in mind is the acquisition that happened was in the -- pretty much in the -- towards the end of the year, right, in the last week of March. So while that sits in the tower numbers and the tenancy numbers, but when it comes to ARP, obviously, that has a bearing in terms of the mathematical calculation, right?

So that dilutes the ARPT simply by virtue of being there in the denominator. I think broadly, I mean, while this metric does indicate the trend, but with several moving parts, it's very difficult to really try to reconcile this with the revenue growth. Does that help, Aditya?

Thank you for the clarification. .

The next question comes from Mr. Arun Prasath from Avendus Spark.

In your opening remarks, you mentioned that there is roughly 40,000 5G towers added during the year in the industry. Can you talk about more qualitatively on these -- where this was done and what kind of towers was done and a similar kind of attributes in these 5G towers? .

See when I talked about the 40,000 numbers, it was not tower, it was base stations. So I think it's not -- 5G comes in form of loading at our towers as additional technology. So the addition is actually more on the technology side on an existing tower, not a separate tower.

Okay. Okay. So as such, there is the infill towers for 5G, it's not started on a broad basis? .

No, I don't think -- it's not started yet. So once -- first, the operators still need to have a full 5G coverage and then depending upon the data capacity needs we'll see. I mean, it happened in the 4G times, probably we'll see in the 5G time as well.

Okay, understood. Is there any instances where operators have felt consisted in certain clusters and adding in filter was -- is that started in certain [indiscernible] it's largely they are having lower utilization in the cluster level?

See, we would not be able to comment on the utilization of per cluster for the operators. We certainly see data growing and obviously, that's the reason why coverage and capacity in credit sites are continuing to grow. But of course, as the operators feel congested in any cluster, they certainly would come back and ask us to put up by the new towers or they'll roll out more capacity on the same site but that's a continuous thing that is yet happening.

Okay. Actually, I'll just rephrase the question. So as and when the certain clusters grids congested, is it the tendency to put more say, equipments in the existing towers? Or are they reached a situation where they are thinking about the new infill towers?

I think it's a combination. I think I can't -- we can't comment from an overall strategy for each operator. But I think it's a combination, wherever possible, they would add on the same tower. And wherever there is -- like last year or the year before last, there was a significant additions of lean towers. And that probably serve the buffers of infill next year.

The next question comes from Mr. Saurabh Handa from Citigroup.

I had 2 questions. Firstly, again, just to clarify on the dividend bit, so your free cash flow in the fourth quarter was INR 39 billion. This obviously does not include the consideration for the Tower acquisition, which was INR 18 billion. So if I take I mean what would be the number you would consider for dividend payout? Would you take INR 39 million? Or would you take INR 39 billion minus INR 18 billion, which is INR 20 billion. So I assume your policy remains to pay out 100% of free cash flow.

Just wanted some clarification because I think I've been a bit confused because previously, you had said that the acquisition would be completely debt funded and therefore, not have a bearing on shareholder returns.

Sorry if I take that question, I think this pretty much we tried to address and explain in the first on itself when Sachin raised a very similar point. So while from a cash management perspective and because we have generated a very healthy cash in quarter 4 as well as on a full year basis, we have used that cash to fund the acquisition which obviously will lead to long-term growth and all that. And like I said, the -- obviously, the committee will take into consideration all these things, they will obviously look at the free cash flow generation and then decide the distribution modalities and the amount, et cetera.

And like I said, the fact that any acquisition, et cetera, or any inorganic growth needs to be funded through debt or leverage is basically more like a timing thing because there was surplus available, we use that, but we are open to sort of leverage in future depending on whatever addition gets taken.

Okay. Sure. Sure. And just my question, you spoke about the ARPT being impacted by the denominator, which makes sense. So in fiscal the ARPD, which was INR 40,856 what would be the number if you hadn't adjusted for the acquisition? I'm just trying to get a sense of, say, compared to the previous financial year, I think the number you declared was [ 41,198 ]. So what would that number be now?

See, the number that you see is roughly a 1.1% growth sequentially that probably without the acquisition would have been something like a 2.5% growth sequentially.

Okay. So even the ARPD of that INR 41, 893 million includes the acquisition.

Yes, that includes the acquisition because, like I said, we included those sites in our overall portfolio in the last week of March. So as on 31st March, that was sitting in the portfolio and hence, the calculation.

I'm sorry, you said that would be how much without it, 2.5%?

3%, 2.5%, Saurabh.

We'll take the next question from Vivekanand Subbaraman AMBIT Capital.

Yes, I have a couple of follow-ups. So number one is on the new composite billing scheme that you have rolled out. Earlier, you were mentioning about a very different kind of energy contract model, fixed energy model versus reimbursement. Is this composite billing in the nature of the fixed energy model. Can you please elaborate on how this could potentially influence your energy margins in the long term. That is question one. Secondly, based on your conversations with telcos, how is the fiscal '26 CapEx outlook looking like for you? .

So on the first question, I would like to clarify when I was talking about composite billing, it was not composite billing for billing to our customers. It was a composite billing from discounts for our sites because we have distributed assets, we get billed for individual towers. So what we had been trying with the government to see if we can get a composite bill in a given state that make the transaction a bit hear and much simpler to manage. The composite wing was not from our customer point of view. It was -- it is a government initiative to provide composite billing to large users so that they can have the billing settlements and things easier to do. So that's the clarification of the composite billing. What's the second question?

Outlook, FY '26. .

See, I think as to FY '26, I think we remain confident that FY '26 will also corrective a strong year of growth. While I can't comment specifically on what the operator plans are. But I believe our order book is quite strong that I'm seeing currently. .

Yes. Just on that, one small follow-up. We saw that the CapEx has declined by around 24% in fiscal '25 versus '24. And this trend has been pretty much intact through the quarters. So should we take fiscal '25 as a new normal for CapEx? Or will it further go down from here?

Again, I don't want to specifically talk about any numbers. If you -- this year, we had a significant tower rollout and tenancy rollouts as well. Obviously, higher the tenancy is lower, the tenancy is not the same cost as putting a new tower. So I don't want to say what specific trend you will see. But all I can say, the tower in tenancy growth will remain strong in the coming year.

The next question comes from Mr. Kunal Vora from BNP Paribas. .

First is maintenance CapEx seems a little higher this quarter. Any reason for that?

Yes. I mean, if I can answer. So typically, if you see quarter 4 is the time where we are setting ourselves for monsoon as well. So I think typically, the maintenance CapEx every year, Q4 sees a little bit of a jump because we are -- this is the time post monsoon. In fact, Q3 and both Q4 and Q1 typically sees a higher number than the mid 2 quarters because post rain is when you can start seeing to go to the site and start deploying the infrastructure to get ready for monsoon or do whatever replace you have to do. So it's not Q4 specifically. It's generally how the maintenance happens.

Understood. Energy margins, what I understood is there is a one-off impact because of budget looks higher, but otherwise normalized it's 2%. How are you looking at it going forward around 2% range or...

Well, Kunal, I think -- so I mean, if you look at our energy cost, the energy cost is being managed pretty well. We have been running various initiatives like solar deployment, reducing diesel consumption, et cetera, even batteries, as we mentioned earlier in the discussion today, replacing our old batteries with new lithium-ion batteries, which are more energy efficient and so on. So you see a lot of control on the cost. However, there are basically reconciliation issues and recovery issues, which is something that we are trying to sort out. .

And hopefully -- and the other thing is, of course, the Q4 number should not be seen as a benchmark simply because there is always a lot of seasonality in the energy business, right? So somewhere we will try to improve this going forward, but it's very difficult to put a number to this.

And on rental revenue on the wheel forward, how do we look at it? Like fourth quarter new tower rental revenue did not come in, right? Or at least like it came a very small proportion of that would have come. So in June, we should see a full reflection of the new tower?

Yes, you're right. So that's how it works. I mean typically, whatever rollouts happen in the quarter, the full quarterly impact of that is visible only in the following quarters...

I was talking about acquire towers and not the...

Yes, acquired towers has a few days of revenue in this quarter, but of course, the next quarter will reflect the full quarter revenue.

Understood. But in that piece, what is the driver of rental revenue this quarter, 4.5% quarter-on-quarter in the [indiscernible] number?

So broadly, I would say 2 drivers, Kunal. One is, of course, the healthy tower and tenancy or colocation additions that we have done. So that, of course, will keep driving. The other important driver is also whatever loading growth we get through 5G, et cetera, plus the annual escalations. So all these are basically driving. And then, of course, quarter 4 being end of the year, there are also some reconciliation benefits that are there sitting in the quarterly numbers. So all this has basically driven the roughly 4%, 4.5% top line or the core revenue growth that you see.

Any part of that would have been gone off? And how do we think about that?

There is a one-off, which is roughly, let's say, 2.1 percentage points sequentially. So that is basically, like I said, the year-end reconciliation benefits that are reflected in this quarter. .

The next question comes from Mr. Kishan Mundhra from DAM Capital.

I just have one question. So in the previous quarter, you had announced your [indiscernible] EV charging infrastructure. So just wanted to understand if you have firmed up any plans on that front? And what is your CapEx that you expect to put into this business over the next 2 years?

Kishan, I think as I explained in the last earnings call as well, what we started to look at is the commercial pilot for the EV business. And based on the pilot results and if it gives us scale, then we would consider whether we want to expand or it's something that we'll hold back. So I think currently, we're evaluating that pilot. And if we take some scale, then we'll have a discussion. But if not, I think our focus will remain on the tower. So we'll keep you posted on any decision on that front. .

The next question comes from [indiscernible] from Systematic Shares and Stock Limited.

So my question regarding the potential partnership between the stale and the telecom [indiscernible]. The question is that what is the role of the future on the traditional towers? Would this collaboration render the tower [indiscernible]

To be honest, I think it's -- it's a question -- a good question. But however, as of now, based on our discussions with the telecom operators and in general, I think there are limitations and commercial constraints as far as the satellite technology is concerned. So we don't see that risk for a terrestrial network in the foreseeable future, right? And I don't expect that impacting to us anytime soon.

The next question comes from Mr. [indiscernible] from Antique Limited.

At one point in time, discussed about the possibility of entering into infrastructure like data centers. Is there any kind of a discussion on that? Do you see something like that happening in the future?

So honestly speaking, [ Mitesh ], I don't think we ever discussed -- I don't think -- sorry, I don't think we discussed data center from our side. There was some speculation on in media. So from -- so I think that was a very speculative article that will come out. So I don't think we have discussed that as an option currently because our focus remains on the tower growth primarily. So as of now, data center is not in the competition.

We'll take the next question from Mr. Sanjesh Jain from ICICI Securities.

Yes, Vikas, I got just one clarification. There is a line item in the cash flow which talks about the consideration paid for the acquisition of passive infrastructure of INR 1,800 crores. This, I thought is a payment for the towers report, correct? .

That's right, Sanjesh.

Because in many instances, we told that we haven't paid this consideration. I saw that it's been paid, right? There's nothing pending to be paid to [indiscernible] from this perspective, right? Only Hexacom deal had to be consummated. Is that understanding right?

That's right. That's right. Yes.

Got it. That's one. Second, Prachur, I was just asking a question before I got disconnected. So if you look at the growth on the data side, it has materially decelerated despite FWA, one of the largest operator has reported under 20% growth on the data, the data consumption really showing pattern of saturating and minded this is despite 5G being unlimited today. Once it cap, I think things may get only lower on the growth side. Do you think the demand for tower itself see a material decline and now that we have created so much of capacity on 5G? Do you think that the growth -- because again, if you look at industry wide, the tenancy addition has materially slowed down in last 1 year, any reason to believe that the growth will continue on the tenancy addition, apart from Vodafone helping to up the coverage on 4G and 5G?

Obviously, ACS I mean our business is infinite. But if you see for the last 2 years, last year, we added what 35,000-odd tenancies. This year, we are writing another 35,000 odd tenancies or somewhere around that number. So from a year-on-year basis, our tenancy has remained elevated for the last 2 years. Now of course, this cannot be a permanent status. But as the urban periphery expands as the rural areas get more and we -- for us, also our opportunity is to create lower cost solutions for the customer so that some of the towers, which may not be viable in the past can now become viable. .

I think growth is for us to see how we can push the boundaries in terms of what we can offer to the customer. So some of the towers can become more viable for them at a lower revenue as well. So I think -- so while the organic growth may see limitations, but I still believe the next year or so will remain strong given the fact that the other customers are catching up to the metal expansion. But at the same time, we'll continue to push the boundaries in terms of how we can create better solutions for the customers to come create more towers and tenancies which were earlier not possible.

Clear, clear. One data keeping last question. With us, you said that we have consolidated or restated the numbers from 19th of November. That means the acquisition should have ideally reflected the full quarter impact, right?

Not -- so it reflects the full quarter impact as far as the cost, OpEx and depreciation is concerned, Sanjesh, it is not a billable quarter because the operation handing over happened in the last week of March. So from a revenue perspective, it will be reflected in the next quarter.

So we have booked all the costs not the revenue?

[indiscernible] accounting.

Got it. Got it. So the cost and depreciation have been accounted for, but not the revenue?

Yes. This is as per the Indian accounting standards between group entities, if there is a common control business combination, then the reinstatement of financial needs to happen from the date of [indiscernible]. .

We'll take the next question from Mr. Aditya Bansal from Motilal Oswal.

So just wanted to understand the ARPT profile currently or the towers acquired from Airtel, like what would it be in the next year? What should we take?

See, the towers acquired from Airtel as of the acquisition date or the year-end date are largely single tenancy towers, right? So then have the ARPT or the revenue in line with the MSA for single tenancy. So as and when we get more tenancy, then obviously, there will be some growth in terms of overall revenue for the tower and so on. But for the time being, they are reflecting largely the single tenancy revenues.

And like this circles, would this be pertaining to? And is there an opportunity to have an incremental tenant here?

Yes. So they are across the country pretty much in all circles. And of course, there is an opportunity which we will be working on.

Ladies and gentlemen, we will now conclude the question-and-answer session. I would now like to hand the conference back to Mr. Prachur Sah, MD and CEO, for closing comments. Thank you, and over to you.

Thanks, Michelle. In summary, FY '25 marked another strong year for Indus Towers driven by robust tower and tenancy additions as we retained a significant share of our customers' network expansion. Equally important, a major customer cleared large overdue payments during the year, adding the generation of strong cash flows. Notably, our customers are continuing with their rollout activities, providing us with an opportunity to cure a substantial share of their rollouts. We will continue to work towards strengthening our market leadership position through participation in customer loads and investing in strategic opportunities. Thank you, and have a good day.

Thank you, members of the management. Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to audio conference service from Chorus Call, and have a pleasant evening. Thank you so much.