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    Indus Towers

    INDUSTOWER
    Telecommunication·28 Oct 2025
    Management Summary

    Indus Towers delivered robust Q2 FY26 performance with strong tower and co-location additions driving revenue growth, despite a decline in reported profitability metrics due to prior year write-backs and negative energy margins. The company announced its strategic foray into Africa, signaling a new long-term growth avenue, while maintaining focus on operational efficiency and network reliability in India.

    Highlights

    5

    • Total Revenue grew by 9.7% year-on-year to INR 81.9 billion, driven by strong tower additions.

    • Core Revenues from rental increased by 11.3% year-on-year to INR 52.4 billion.

    • Added 4,301 macro towers and 4,505 co-locations, leading to a total base of 256,000 towers and 415,000 co-locations.

    • Adjusted EBITDA (excluding write-backs) grew by 14.9% year-on-year.

    • Achieved an industry-leading network uptime of 99.97% in Q2 FY26, improving from 99.955% in Q1 FY26.

    Concerns

    4

    • Reported EBITDA declined 6% year-on-year to INR 46.1 billion.

    • Reported Profit After Tax (PAT) declined 17.3% year-on-year to INR 18.4 billion.

    • Energy margins remained negative at -4.8% in Q2, impacted by prolonged monsoon season and higher diesel usage.

    • Free Cash Flow saw a sequential decline to INR 3.0 billion due to increased capex and a timing gap in collections.

    What Changed2

    vs Q3 FY26

    Guidance items0 → 6 (+6)Risks discussed1 → 4 (+3)

    Key financials

    Single quarter

    09 metrics
    1. 01Total Revenue₹81,900 Cr+9.7%YoY
    2. 02Core Rental Revenues₹52,400 Cr+11.3%YoY
    3. 03EBITDA₹46,100 Cr-6%YoY
    4. 04EBITDA Margin56.3%-9.4%YoY
    5. 05Energy Margins-4.8%

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    M&A

    Africa (Nigeria, Uganda, Zambia)

    acquisition · announced

    Guidance & targets

    5
    CategoryTargetPriority
    Shareholder Returns
    Dividend distribution timing
    End of financial year in Q4
    		High
    Africa Expansion
    Update on strategy and financials
    Better update
    		High
    Africa Expansion
    Rollout timeline
    3 to 6 months
    		High
    Working Capital
    Receivables unwinding
    Unwind
    		High
    Tenancy
    Tenancy additions
    Pick up
    		Medium

    Africa Expansion Strategy & Financials

    Within 3 to 6 months
    CurrentInitial organic entry, understanding market, no financial specifics.
    TargetMore concrete details on MSAs, expected returns, investment amounts, and funding mix.

    Why it matters

    Provides clarity on the financial viability and scale of the new growth avenue.

    Sanjesh, I think this is something that we will have a better update 3 to 6 months down the line as we go into the market.

    How to verify

    capital_allocation.m_and_a[target='Africa'].status

    Risks & concerns

    4
    RiskSeverity

    Prolonged Monsoon & Weather Disruptions

    Led to higher electricity outages and increased diesel consumption, negatively impacting energy margins and increasing diesel consumption by 3% YoY in Q2 FY26. — Management acknowledged

    high

    Receivables Timing Gap

    A timing gap in collections led to a sequential rise in trade receivables, impacting free cash flow, though expected to unwind in the current quarter. — Management acknowledged

    medium

    Africa Expansion - Currency Volatility

    Concerns raised by analysts regarding currency volatility in African markets, which management is cognizant of and plans to mitigate. — Analyst acknowledged

    medium

    Jio Renewals & Potential Churn/In-sourcing

    Risk of a major customer (Jio) in-sourcing or switching to competitors during renewals, which management aims to mitigate through service quality and tenancy expansion. — Analyst acknowledged

    medium

    Q&A highlights

    7

    “So from my perspective, the order book still remains strong both on new towers and tenancies and it's a mix of all the customers, not just one customer. I think for the growth outlook for the next 3 to 4 quarters, we remain confident that it is going to remain robust in India. On the second part, when you talked about expansion in Africa, whether it's organic or inorganic. See, as I mentioned earlier, the initial part is organic growth. We will be entering and making new towers, expanding or understanding the local market. And if an opportunity comes in the right position, the inorganic part may be considered.”

    Clarifies the company's immediate growth drivers in India and the phased, initially organic, approach to Africa expansion.

    asked by Sachin Salgaonkar (BofA)

    3 min read7 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Performance Highlights

    Indus Towers reported total revenue of INR 81.9 billion for Q2 FY26, marking a 9.7% year-on-year growth, with core rental revenues increasing by 11.3% YoY to INR 52.4 billion. On a sequential basis, gross and core revenues grew by 1.6% and 2.6% respectively. Reported EBITDA stood at INR 46.1 billion, a 6% YoY decline, while EBITDA margin was 56.3%. Profit After Tax (PAT) was INR 18.4 billion, down 17.3% YoY, and Free Cash Flow for the quarter was INR 3.0 billion.

    02

    Operational Growth and Network Reliability

    The company added 4,301 macro towers and 4,505 co-locations during the quarter, bringing the total tower base to 256,000 and co-location base to 415,000. This represents an 11.5% and 9.6% YoY growth in tower and co-location base respectively. Despite challenging weather conditions, including severe floods, Indus Towers maintained an impressive network uptime of 99.97% in Q2 FY26, an improvement from 99.955% in Q1 FY26.

    03

    Energy Management and Efficiency Initiatives

    Indus Towers continued its transition to cleaner energy sources, adding 3,900 solar sites and bringing the total solar-enabled sites to approximately 36,000. However, energy margins remained negative at -4.8% in Q2 FY26, a slight deterioration from -4.0% in Q1. This was primarily due to prolonged monsoon season, which led to higher electricity outages and a 3% YoY increase in diesel consumption, impacting overall profitability.

    04

    Strategic Foray into Africa

    A significant strategic move this quarter was the announcement of Indus Towers' foray into Africa, initially targeting Nigeria, Uganda, and Zambia. This expansion will begin organically by building new towers and leveraging Bharti Airtel's presence as an anchor customer. Management expects to provide a more detailed update on the strategy, market understanding, and financial implications within the next 3 to 6 months, acknowledging the need to mitigate risks such as currency volatility.

    05

    Capital Allocation and Shareholder Returns

    Capex increased in Q2, driven by higher rollout numbers (an additional 1,800 towers) and upgrades for 5G and battery banks, with customer-driven infrastructure additions classified as growth capex. The Board reiterated its commitment to distributing cash to shareholders by the end of the financial year (Q4 FY26), with the timing unchanged despite recent positive developments regarding AGR dues. The company also noted a write-back of INR 195 crores in provision for doubtful receivables.

    06

    Market Dynamics and 5G Rollout Progress

    The total 5G subscription base in India crossed 322 million by June 2025, with 5G usage accounting for 32% of total data traffic in Q1 FY26, up from 30% in Q4 FY25. While the pace of 5G rollouts has tapered, ongoing deployments continue to support loading revenues. Management expressed confidence in a robust growth outlook for the next 3 to 4 quarters in India, driven by strong order book for new towers and tenancies.

    07

    ESG and Workplace Diversity Initiatives

    Indus Towers signed an MoU with IIT-Madras for research into glass fiber reinforced polymer as a sustainable alternative to steel structures. The company's ESG score improved from 55 to 57 over the last financial year, and gender diversity increased to 15.8% in Q2 FY26 from 14.3% in the same period last year, reflecting ongoing commitment to sustainability and inclusive workplace practices.

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