indus towers news: Indus Towers sets aside Rs 1,233 crore as receivables from key customer

Indus Towers set aside Rs 1,233 crore as doubtful debt on its balance sheet, due to receivables owed by one of its major customers, which remained difficult to receive in the short term, and impacted its performance financial statements for the quarter ended June 30. .

The key customer, who analysts say is cash-strapped

told the tower company that she was about to finalize a payment plan to the company where she agreed to pay part of the amount to be invoiced until the end of the year and 100% of the amount subsequently invoiced.

“Although the customer has expressed that it is closer than ever to meeting its financing needs, and also given that there have been positive developments recently, including its participation in the 5G spectrum auction , we have nevertheless reviewed the current situation and adopted a stricter accounting practice to establish a provision for bad debts regarding the contributions recoverable from the client,” Chief Financial Officer Vikas Poddar said on a conference call with analysts on Wednesday. .

As part of its accounting policy, when receivables are overdue beyond a certain threshold, they must set aside provisions for bad debts, Poddar said. But they are also taken over as the company is able to collect these receivables.

“Collectively, as members of the board of directors, we believe that their debts are good and collectible. However, we applied prudent accounting practices to present receivables as bad debts, which impacted our EBITDA, earnings, etc. said outgoing chief executive Bimal. Dayal in the earnings call.

The remaining dues the client offered to pay between January 2023 and July 2023. The proposal is under consideration by the company, said the report from Deloitte’s auditor who audited the company’s financial statements.

“We could reverse the (receivables) trend in Q4 FY22 by restructuring the security package. This coverage ended on July 15, 2022. We continue to work with our client to improve our receivables position, but we are all aware of how strained their financial situation is,” Dayal said.

announced a 66% year-on-year and 73.6% decline in net profit for the quarter ended June 30 to Rs 477 crore from Rs 1,415 crore a year ago and Rs 1,828.5 crore in the March quarter .

The company’s free cash flow and EBITDA margin were also impacted by the trade receivables situation. Free cash flow declined by 75.21% sequentially to Rs 5,509 crore, due to late payment from one of the major customers.

However, Dayal said the outlook for the company remains positive.

“Given the recently concluded 5G auction, explosive data growth and MSA renewal framework agreements, our business fundamentals remain stable and improved this quarter,” Dayal said.

During the earnings call, Indus Towers said it had obtained the renewal of the majority of flatshares expiring between March 2022 and 2023, for an extended period of 10 years. However, the renewal framework now includes a discount on prevailing rates which is estimated to result in a marginal reduction in revenue per quarter.

Financial director

believes that the loss of revenue will be compensated by future growth.

“We believe the financial impact of the rebate will be offset by incremental revenues from future deployment by customers for expanding their network, launching 5G services and other network solutions. ‘A ten-year extension provides long-term certainty and visibility of core earnings,’ Poddar said.

The company also sees a growth opportunity in the upcoming pan-India 5G rollout by telcos after a successful spectrum auction where the government sold 51,235 MHz spectrum out of the 72,098 MHz spectrum put up. on the block.

“Indus towers are designed to meet operators’ 5G requirements based on their deployment strategy. Rapid growth in data consumption coupled with continued migration to 4g and 5g is expected to drive demand for passive telecom infrastructure and we are very well positioned to meet this demand.” Dayal said on the earnings call.

Shares of Indus Towers on Wednesday fell 5.93% to Rs 206.35 at the close of trading, a day after it released its financial statements for the June quarter.

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