Looks like deal is conditional and VIL will need to clear Indus dues. Short term stock prices will be capped on upper side due to the deal but Indus receivables will reduce.
Promoters buying is always positive as they know value of company better than others. Airtel raised cash to buy it further strengthens this argument.
Airtel bought additional stake in 2020 around Rs 215. So probably they see lot of value at these levels.
Looking at stock futures price deal price should be between 200 - 205.
Beyond a point customer loss should stop as customer will get better quality network because of de-congestion. Yes but it can have huge impact financially for VIL and impact Indus profitability big time. But Indus towers will continue with a lower profitability. Also assuming VIL goes down, Indus towers will need to putup additional capacity for Jio and Airtel for 25cr customer. By that time 5G roll-out will kicking requiring more towers. Government is also discussing shared passive infra(fiber) between operators to keep costs low. Globally tower companies also own fiber infra.
Excerpt related to India business of American Tower Corp from latest concall transcript:
And Matt, in terms of your question around India, Iâll hit a couple of highlights here. So in India, I think youâre probably aware that the backdrop of the telecom environment is improving quite a bit and has done so in the last several â certainly the last several quarters, the government has really stepped up and shown support for the wireless segment and the telecom segment. In addition, the carriers themselves have increased the tariff. So there, theyâve got healthier businesses as they go forward.
And specifically to [Inaudible], youâve seen probably just recently even their intentions to monetize part of their stake in the Indiaâs portfolio to improve liquidity. They also chose to have some of the interest on their spectrum does and their AR fees going back to transitioning that from a liability to the government and swapping it for some equity. So theyâve greatly improved kind of their balance sheet. And now they have a much longer runway, really, the whole sector has a much longer runway to kind of sort through the environment there.
Because of those things, we are seeing churn subside in the marketplace, and weâve seen that over the last several years. So in India, specifically, weâre guiding to 2% to 3% positive organic tenant billings growth. That comes with 5% gross organic growth, a 2% escalator, which is contractual throughout all of our leases there, and about 4.5% churn. That churn rate is down from over 10% in 2021.
So thatâs where you see sort of the biggest improvement there. And the other thing I would say is we think the India marketplace is going to be very constructive here over the long term. Certainly, thereâs a large population. The networks are in early stage of development.
They need a lot more infrastructure, and the Indian subscribers really do consume lots of data in there. So we think that the market is still trying to absorb some of these positive changes that theyâve seen. And once that happens and all the carriers kind of get used to the new environment there, we should see churn continue to decline over time as well as gross new business increase over time. And those are the things that kind of get us back to that upper single-digit growth rate potentially.
But as of now, weâre fairly cautious around India in terms of our outlook and projections. And even in the long-term guide that Tom talked about earlier, that 10% AFFO per share growth, we have fairly modest improvements built in there for India, not getting back up to that full upper single-digit growth rate. So thereâs upside from that perspective if India continues to improve over the coming quarters and years.
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Yeah, Batya. So Iâll hit the first one here for you. So weâre looking at around, for 2022, about 6,500 new builds. As in the past, itâs heavily concentrated in the India region.
So north of 4,000 roughly, and these will be rough numbers in India.
So, Indus dues will get paid from this fund raising. That was condition Bharti Airtel had placed on Vodafone for buying their stake.
All this bodes well for sustainability and growth of Indus.
Bodes well for VIL and hence Indus. Government doing its bit to support sector.
Telco: DoT may return Telcosâ âš23kcr bank guarantees - The Economic Times (indiatimes.com)
Good as this will diversify ownership. Customer and owner being same can bring pricing pressure.
I think this can be very bad for the company ,for a tower company to be profitable it needs to have multiple tenants ,being the owner and the own customer insures i chose my own company over others as it also ensures i get returns back in the form of dividends which in case of inuds almost all the profit is being distributed in the form of dividend.
Vodafone is not Customer , Vodafone Idea is customer.
and if they donât sell & infuse into VI forget own promoter is customer , the promoter / customer will be no more.
moreover, Do you know cell on the tower are put strategically and they just canât take it out move it ?
Do you know the towers which were put up for 2G cells , got used for the 3G cells and now holding 4 G cells ?
My point is it doesnât matter customer is promoter or not , the towers going to get re- used bcoz whole ecosystem ( back haul) , coverage area , optical fiber etc built around it.
Agreed but when you have only 2.5 players in the game(0.5 being VI) and the other 2 have their own plans and infra for towers, thereâs not much you can do irrespective of the infra ALREADY in place. No takers, no cash flow. There arenât any regional cell providers like the early 2000s and the 2 other national players can outspend your single business by cross subsidizing.
As much as you hear about the scams on cell tower installations, lots of housing societies now allow Airtel and Jio towers to be installed within their premises which is fantastic for them. A locked in 200-1000 customers and with free security.
Iâve invested in Indus towers and just trying to figure whether there is any new business theyâd get into
Seems a major development!
Interesting read: Indus towers: Vodafone UK in talks to sell residual 21% in Indus Towers - The Economic Times
Does this mean tommorow once the lock in period ends,If Vodafone Idea decided to switch from Indus to Brookfeild Jio it is not possible?
Yes itâs not possible.
5G roll-out will be a big trigger for Indus.
Govt is very eager to roll out 5G. As with ongoing war exports may take a hit, government will look inward sharply on domestic triggers to keep economy going.
So, in current situation rolling out 5G and not letting VIL go down the drain would be big priorities.
Policy making has taken a huge leap with new Telecom ministers (Cabinet and MoS), both are technocrats.
Policy push is clear
DoT to set up 5G use-case test labs in collaboration with 14 Ministries - The Hindu BusinessLine
Regarding societies allowing towers is not a threat. These towers are ultimately managed by Tower companies. Operators donât like to get involved into this directly - lease, power etc. That is where tower companies come into picture. Tower shortage is evident in metros
Excellent results.
Topline growth was also fabulous. If it was not for Vodafone Idea hangover, stock would easily double.
Quarterly Results Update
I am probably overthinking this but just wondering why the word âinterimâ was used for the dividend declaration in the press release : âThe Board of Directors of the Company in its meeting held today i.e. May 05, 2022 has declared an interim dividend of Rs. II/- per equity share (face value of Rs. 10/- each) for the financial year 2021-22â.
Why declare an âinterimâ dividend for FY21-22 in May 2022 after the FY has already ended ? Are they expecting any event between the declaration and record/payout date that might see a âfinalâ dividend being given too ? Just found this a bit curious.
Interim dividend doesnât need share holders approval so paid immediately where as final dividend is subject to share holders approval.
Indus Towers certainly looks very undervalued on current levels. You can probably say all the negatives related to VILs future are already priced in the stock. Thereâs hardly any room for downside. A free cash flowing machine with an increasing topline and margins available at 8X margins and a dividend yield of close to 10%. It should be a no brainer if the industry didnât have so many headwindsâŚThe question is will the industry outlook improve even if VIL doesnât go down. With 5G we might get more into single tenant towers and will that not provide an incentive for Airtel and Jio to have their own captive towers?
I am decidding to buy it but allocating only 2% of my portfolio considering the risks still involved. Depending on what happens to the sector in the near future I might decide to reduce/increase my allocation or make an total exit if needed
