Indus Towers Limited

Indus Towers Limited reported a total revenue of INR 81.9 billion for Q2 FY26, marking a 9.7% year-on-year growth. Core rental revenues contributed INR 52.4 billion, up 11.3% YoY. Reported EBITDA stood at INR 46.1 billion, a 6% decline YoY but a 5.1% QoQ increase, with an EBITDA margin of 56.3%. Adjusted for prior period write-backs, EBITDA grew 14.9% YoY. Profit after tax was INR 18.4 billion, down 17.3% YoY but up 5.9% QoQ, with adjusted PAT growing 18.6% YoY.

The company demonstrated robust operational performance, adding 4,301 macro towers and 4,505 co-locations during the quarter, leading to a year-on-year growth of 11.5% and 9.6% in tower and co-location base, respectively. The industry-leading tenancy ratio remained stable at 1.62. Despite challenging weather conditions, including devastating floods, the network uptime was maintained at approximately 99.97% in Q2 FY26, an improvement from 99.955% in Q1 FY26.

Indus Towers announced its strategic foray into Africa, commencing with Nigeria, Uganda, and Zambia. This move is part of a long-term growth strategy, aiming to replicate its proven operating model in high-growth markets. The initial phase will involve organic growth by building new towers, leveraging an anchor customer's presence, and focusing on delivering cost-efficient infrastructure and high service quality. The company expects initial rollout activities to commence within 3 to 6 months.

Driving cost efficiency remains a key priority, with efforts focused on redefining operating processes, upgrading site infrastructure with IoT-based devices, and leveraging digital tools for process automation. The company added 3,900 solar sites during the quarter, bringing the total base to approximately 36,000, as part of its transition to cleaner energy sources and reduction of diesel dependency. Workplace safety and gender diversity (15.8% in Q2 FY26, up from 14.3% last year) also saw improvements.

Energy margins remained negative at -4.8% in Q2, compared to -4.0% in Q1. This was primarily attributed to the prolonged monsoon season, which led to higher electricity outages and increased diesel consumption to maintain network uptime. The company acknowledged that while business volumes and tower count are growing, the challenges of grid availability in remote and difficult terrains contribute to higher energy costs. Efforts continue to reduce diesel consumption and improve energy efficiency.

Free cash flow for the quarter was INR 3.0 billion, a sequential decline attributed to increased capex and a timing gap in collections, which also led to a rise in trade receivables. The Board remains committed to distributing cash to shareholders, with the timeline for consideration still set for the end of the financial year (Q4 FY26). For the Africa expansion, the company plans to fund it through a mix of debt and equity, leveraging its strong balance sheet, and clarified that India's free cash flow would not be used for this purpose.