Clear dues or lose tower access: Indus Towers to Vodafone Idea

Indus Towers has called on Vodafone Idea (Vi) to clear its dues or else run the risk of losing access to its towers from November. Vi's mobile services to its over 255 million subscribers could be seriously disrupted if Indus blocks tower access to the cash-strapped telco.
The tower company shot off this warning to Vodafone Idea in a strongly-worded letter written on Monday, said two people aware of the matter. This followed an Indus Towers board meeting earlier in the day that discussed the company's mounting trade receivables and noted that it was mainly due to payment delays by Vi.

"Independent directors on the Indus board were upset about the prolonged non-payment of dues by Vi," one of the people told ET.

Vi's accumulated dues to tower firms is estimated upwards of ₹10,000 crore, of which it's reckoned to owe well over ₹7,000 crore to Indus and the balance to American Tower Co (ATC). The carrier has been trying to raise ₹20,000 crore, split between more debt from lenders and equity, but hasn't been able to close any deal yet.


Indus had reported a 66.3% on-year fall in its June quarter net profit to Rs 477.3 crore, stung mainly by heavy receivables.

Its trade receivables stood at Rs 6,249.6 crore in the April-June period, largely due to delayed payments by Vi. The prolonged trade receivables issue prompted Indus to take a provision for doubtful debts of Rs 1,230 crore for aging receivables.

Vi's trade payables jumped almost 13.6% sequentially to Rs 14,956.2 crore in the June quarter. Its payables - part of its current liabilities - include dues to tower firms, network vendors and other suppliers.

In its letter, Indus is believed to have told Vi to clear all past dues at the earliest, pay 80% of its current monthly dues immediately, and going forward, clear 100% of monthly dues on time, failing which access to the tower network would be barred.

Indus operated some 1,86,474 towers at June end, with Vi as one of its main customers. Bharti Airtel owns 47.76% in Indus with Vodafone Group Plc holding 21.05%. Vi had sold its stake in Indus at the time of the tower company's merger with Bharti Infratel.

In response to ET's queries, an Indus spokeswoman declined to comment. At press time, queries to Vi remained unanswered. ATC also did not reply to queries on steps it planned to take to recover its dues from Vi. Shares of Vi closed 1.6% higher at Rs 9.14 on Tuesday on the BSE. The Indus stock also ended 1.6% up at Rs 189.10.

At June-end, Vi's net debt was over Rs 1.98 lakh crore, with its deferred spectrum payment dues at over Rs 1.16 lakh crore and debt from banks and financial institutions at Rs 15,200 crore. Its cash and cash equivalents were at Rs 860 crore.

ET recently reported that Vi has been facing challenges in finalising contracts for 5G network gear supplies and tower tenancies, with vendors pushing the cash-strapped operator to clear their 4G-related dues and fork out advance payments for fresh contracts. In addition to dues to the tower companies, Vi reportedly owed over Rs 5,000 crore to network vendors and other suppliers at the end of the June quarter. These numbers are likely to have risen further in the succeeding three months.