Indus Towers Limited

Indus Towers reported a healthy pickup in tenancy additions during Q3 FY26, driven by a major customer's network expansion. The company added 3,548 macro towers and 6,105 colocations, achieving an incremental tenancy ratio of over 1.7x. This brought the total macro tower base to approximately 259,600 and the colocation base to 420,000, maintaining a stable industry-leading tenancy ratio of 1.62. The total tower portfolio, including 14,000 lean towers, reached 273,600.

Total revenues for Q3 FY26 increased by 7.9% year-on-year to INR 81.5 billion, with core rental revenues growing 9.5% YoY to INR 52.7 billion. On a sequential basis, total gross revenues were down 0.5% due to lower energy revenue, while core revenues increased 0.6%. Reported EBITDA declined 35.6% YoY and 2.3% QoQ to INR 45.1 billion, with the EBITDA margin at 55.3%. However, adjusted for prior period write-backs, EBITDA grew 13.5% YoY and 2.4% QoQ. Reported PAT declined 55.6% YoY to INR 17.8 billion, but adjusted PAT grew 14.2% YoY and 5.6% QoQ. Free cash flow significantly improved to INR 7.9 billion in Q3 from INR 3 billion in Q2.

The company is accelerating its digital transformation by equipping sites with IoT connectivity, fuel sensors, lithium-ion batteries, solar panels, and smart meters, aiming for real-time asset visibility and operational efficiency. Indus Towers added 4,000 sites with solar access during the quarter, bringing the total to about 40,000, which contributed to a 4% year-on-year reduction in diesel consumption despite a 9% increase in colocations. ESG efforts include planting 260,000 saplings, improving gender diversity to 16.6%, and various CSR programs impacting over 23 million lives.

Indus Towers is making progress on its Africa expansion plan, having set up holding structures in UAE and local country levels. The strategy focuses on phased and disciplined organic greenfield expansion, leveraging the company's experience in efficient tower design and cost architecture from India. Management stated that initial capital requirements for this long-term growth opportunity would be debt-funded, with decisions on the specific funding level (e.g., UAE or GIFT City) still pending.

The company's 9-month FY26 capex stood at INR 6,500 crores, marking a 40% increase. Management expects capex to remain elevated for some time due to ongoing growth opportunities, with an easing anticipated in the next 2-3 years. The balance sheet is described as healthy and underlevered, providing headroom for future leverage. The Board remains committed to shareholder distribution, with a decision on dividends to be made at the Q4 results, considering all options, including recent changes in buyback tax regulations.

The government continues to support the telecom infrastructure sector with progressive policies, including the notification of RoW Rules 2024 in over 33 states and union territories. India's 5G rollout is progressing, with total 5G base stations deployed reaching approximately 520,000. The 5G subscriber base in India stood at over 361 million by September 2025, and 5G usage alone grew 15% quarter-on-quarter, accounting for 35% of the total data traffic in Q2 FY26.