Indus Towers flags delays, cost pressures as LPG supply tightens amid West Asia conflict

NEW DELHI: Bharti Airtel’s subsidiary Indus Towers on Friday flagged supply risks from the West Asia conflict, as disruptions in liquefied petroleum gas (LPG), a key manufacturing input, threaten to slow tower production, delay rollouts and raise costs.

“There is a strong order book looking ahead as well as the next few quarters. However, I think given the situation, there is a little bit of a tightness in the market in terms of tower supplies because that is dependent on LPG availability,” Prachur Sah, managing director and chief executive officer of the company said. “We continue to monitor the situation closely and mitigating actions are being taken in line with the evolving geopolitical and market conditions.”

LPG is a key input in tower manufacturing, used to heat steel parts so they can be coated with zinc to prevent rust and extend tower life. Any disruption in LPG supply can slow production and, in turn, delay network rollouts.

Mobile towers also rely on diesel-based generator sets during power outages. Tower companies procure diesel at retail prices, and any increase can raise operating costs. However, these costs are largely passed on to telecom operators such as Airtel, Jio, and Vodafone Idea.

“If the retail pricing (of diesel) has an impact, it will impact both the revenue and cost on an equal basis. The net margin may have a slight impact. But the major impact comes from only revenue and cost on equal basis,” Sah said.

For Indus Towers, fuel and power expenses at ₹11,996 crore in FY26 accounted for 37% of its annual revenue from operations of ₹32,493 crore.

In the December quarter, the company’s revenue from operations rose 4.8% year-on-year (YoY) to ₹8,101 crore, and was flat sequentially. Net profit stood at ₹1,793 crore, up 0.8% YoY.

The company added 4,892 towers sequentially and 15,209 towers on a YoY basis, taking its total to 264,514 as of March end. Co-location sites stood at 428,014. A single tower can host equipment for multiple operators, with each counted as a co-location. The portfolio tenancy ratio, or average tenants per tower, was 1.62 during the quarter.

“For Indus Towers, we remain below consensus and continue to see risk of Jio migrating tenancies to Altius (Summit Digitel, ATC combined),” brokerage house Macquarie said in a note dated 17 February.

“We still see only modest growth (5% revenue CAGR over FY25-28E), driven by a slower pace of tenancy additions (a moderation from strong tower expansion phase in FY24-26), along with the lack of a meaningful turnaround in tenancy ratio even assuming new sites for Vodafone Idea (note re-farming and additional loading does not improve tenancy ratio),” the brokerage said.

When asked about renewal by Jio for its tower portfolio, Sah said, “for all the customers we always have a portfolio which are not renewed and we work with them and they get renewed. Even for Jio, they have certain tenancies that have expired, which are still operating…very minor percentages have been churned.”

Vodafone Idea

Indus Towers counts Vodafone Idea as one of its largest customers. “Gradual improvement in the financial position of a major customer aided by government support provides the possibility of strong business momentum,” Sah said.

As of March end, the company’s trade receivables stood at ₹4,939 crore. Vodafone Idea constitutes a significant portion of outstanding receivables and unbilled revenue, as per the company’s financial statements.

Africa expansion

Indus Towers also outlined progress on its Africa expansion. “In Zambia, we have secured the operating license and are now advancing on ground execution. In Uganda and Nigeria, we are in the last stages of getting regulatory approvals,” Sah said, adding that the tower rollout will begin soon.

“Commercial frameworks are largely established with the primary customers and initial orders are in place. In parallel, we have made good progress in setting up supply chain ecosystem, strengthening operational engineers, positioning us well for efficient and scalable deployment,” he said.

With full scale in Africa, Indus Towers’ capital expenditure could reach $200–300 million, with the entity’s capital structure planned as a balanced mix of debt and equity, the management had said in October last year.