Good afternoon, ladies and gentlemen. I'm Sunita, the moderator for this conference. Welcome to the Indus Towers Limited First Quarter Ended June 30th, 2024, Earnings Call. For the duration of the presentation, all participants' lines will be in the listen-only mode. After the presentation, the question-and-answer session will be conducted for all the participants on this call. In case of a natural disaster, the conference call will be terminated post an announcement. Present with us on the call today is the Senior Leadership Team of Indus Towers. Before I hand over the call, I must remind you that the overview and discussion today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. I now hand over the call to our first speaker of the day, Mr. Prachur Sah. Thank you, and over to you, Mr. Sah.
Thank you, Sunita. A very warm welcome to all participants. Joining me today are my colleagues, Mr. Vikas Poddar, CFO; Mr. Tejinder Kalra, COO; and Mr. Dheeraj Agarwal , Head of Investor Relations on the call. I am pleased to present our business performance for the quarter ended June 30th, 2024. We are happy to see the robust performance we delivered in the previous financial year, continuing the first quarter of this year as well. Our tower additions continue to be strong, driven by our ability to maintain our high share in the rollouts of one of our major customers. We would also like to highlight that we have made collections against the past dues for the third consecutive quarter from a major customer, while sustaining 100% collections against the monthly dues.
In terms of our promoter and customers, Vodafone PLC had indicated monetizing its stake in Indus Towers in the past and sold off its 18% stake during the quarter. One of our major customers, Vodafone Idea, successfully raised equity funding and has also announced its plan to raise debt. Given these developments, we remain confident of collection of our past dues and participating in the network expansion of the said customer. Before I dive into specific areas of the business, I would like to take a moment to appreciate the perseverance and commitment of our field force towards helping Indus achieve its vision of enabling connectivity across the nation. During the quarter, our teams on the ground braved challenging weather conditions, including heavy rains to install towers in the hilly regions of Idukki and Wayanad in Kerala among others.
Their spirit truly embodies our mission of transforming lives through enabling communication. On the regulatory front, the government continues to take measures to speed up the deployment of telecom infrastructure across the country while keeping sustainability in view. During the quarter, certain clauses of the Telecommunications Act 2023 were notified, including those related to public safety, same ownership, and right of way for telecom infrastructure, and came into effect on 26 June. As per the recent announcement, government plans to notify all rules and provisions of the Act within 48 days. The Green Open Access Policy introduced last year has been adopted by more than 15 states, and we continue to work with various ministries for faster implementation of the same.
We are also engaged in discussions with the Ministry of Petroleum and Natural Gas, IGL, and GAIL to implement piped natural gas solutions at our sites in order to reduce our diesel consumption. Moving on to 5G, the total number of 5G-based BTS deployed now stands at almost 450,000 after an accelerated rollout by the operators within two years of 5G spectrum auctions. We are pleased to see our loading revenues continue to increase and act as pillars to our growth. After reaching a certain level of penetration, probably over the next two to three years, 5G rollouts would require addition of towers, primarily in the form of small cells, to address network decongestion, which would aid the growth. We believe that we are well-placed to leverage our expertise in order to capitalize on this opportunity.
The adoption of 5G by the end customer is also expected to be swift, as highlighted by statistics mentioned in the Ericsson Mobility Report. As per the report, global 5G subscriptions are expected to reach almost 5.6 billion by 2029, accounting for approximately 60% of overall mobile subscriptions. In India, subscriptions reached 119 million by 2023 and are estimated to touch 840 million by 2029, accounting for approximately 65% of total mobile subscriptions. Fueled by the rapid rollout of 5G and the continuous shift of users from 2G to 4G networks, data consumption continues to experience significant growth. For the top three operators, the total data consumption grew by 29% year-on-year for the March quarter, the highest growth witnessed in the last eight quarters. The average data consumed per user per month grew by 18% year-on-year to 25 GB in the same period.
The rapid growth in data usage, coupled with the widespread adoption of 5G, presents a growth opportunity for the passive infrastructure sector. Being the leading passive infrastructure player in the country, we remain well-positioned to address the resulting demand. Moving to operational performance, we are pleased to see that our tower additions continue to be strong, underpinned by robust demand from one of our major customers and our efforts towards sustaining our market share in the business of the customer. We added 6,174 macro towers and 6,340 corresponding co-locations in Q1. The total macro towers and co-locations increased by 13.9% and 7.8% each on a year-on-year basis to 225,910 and 374,928 respectively. Our tenancy ratio continues to be industry-leading at 1.66. Addition of co-locations of lean towers stood at 492 in Q1, and the overall base increased to 11,178 co-locations.
Including lean towers, our net co-location additions were at 6,832 in Q1 versus 8,601 in Q4. Shifting gears to the progress we have made on our four key strategic priorities, namely market share, cost efficiency, network uptime, and sustainability. Firstly, regarding the market share, as highlighted earlier, our quarterly macro and co-location additions continue to be robust. We remain our customer's preferred partner for their rollouts, which, coupled with the initiatives we have been taking, have helped us sustain our market share. During the quarter, we continue to work towards strengthening our partner ecosystem further, supplemented by the digital solutions we have been implementing. To increase our penetration in urban areas, where space is a constraint, we took steps towards tailoring our product offering to offer the best value proposition to the customer.
We anticipate continued network expansion by our major customers in the near term, providing us with growth opportunities. In addition, we are making progress on the deployment of in-building and small cell solutions, enabled by organizational change and capability building delivered in a quick turnaround time. Moving to cost efficiency, wherein we contribute to take initiatives towards optimizing our operating and capital expenses. Reducing our diesel consumption has been one of our key focus areas, and we managed to reduce our diesel consumption by 7% in Q1 on a year-on-year basis. Driving this reduction was our continued focus towards expanding our renewable energy portfolio. After setting up 14,000 solar sites last year, we continued the momentum and set up close to 7,000 solar sites in Q1. Supplementing this was the electrification of non-electrified sites and conversion of sites from indoor to outdoor.
Additionally, prudent site and product selection continues to be our forte and help us tighten our rental costs. Continuous improvement in resource productivity and technological interventions are also helping us optimize our network maintenance costs. With regards to CapEx, we are working towards using more cost-efficient batteries with greater longevity in order to reduce overall cost. Thirdly, network uptime, an important metric for the customer, we continue to improve the uptime and deliver a high level of uptime of 99.97% despite weather disruptions in Q1, which saw severe cyclones and heavy rains in the areas of West Bengal, Kerala, and the northeastern states. I would like to reiterate the dedication and commitment of our field force, which continue to raise the benchmark for itself. Now moving to ESG, a focus area for the organization.
On the environment front, we continue to make progress in our journey towards limiting our GHG emissions. As I alluded to earlier, our strong solar site additions during the quarter have taken the overall count to over 21,000. We continue to take initiatives to encourage the transition to electric vehicles for the business travel needs for both our employees and partners. We also recently introduced a carpooling application for our employees for their work commute to reduce our carbon footprint. To ensure sustainable practices across the value chain, we continue to monitor the disclosure practices of our partners and are happy to see improvements in the same. With regards to our focus on diversity and inclusion, we are pleased to see gender diversity remain as strong at 7.2% in Q1.
In addition to the numbers, we are looking to create equal opportunities for women across all levels, from field operations to management. As part of our activities, we partnered with local NGOs to conduct a cleanup drive on the Rispana River in Dehradun, where almost 200 kilograms of plastic was collected. Our digital transformation grant, in association with NIIT Foundation, continues to educate and upskill disadvantaged individuals. Before I hand over to Vikas, I would like to state the buyback proposal that is approved by the board is an indication of management's belief in the sound fundamentals of the business, its future outlook, and our commitment to generate value for our shareholders. I would now request Vikas to take you through the financial performance of the quarter ended June 30, 2024, and I look forward to your questions. Over to you, Vikas. Thank you.
Thank you, Prachur, and good afternoon, everyone. I'm pleased to share with you the financial results for quarter ended 30th June 2024. So to begin with, I would like to reiterate our robust operational performance, wherein we added 6,832 co-locations on our towers, including lean towers during the quarter. Moving to the financial performance for quarter one FY 2025, gross revenues increased by 4.3% year-on-year to INR 73.8 billion, wherein the core revenues from rental grew by 7% year-on-year to INR 46.4 billion, driven by the strong co-location additions and loading. On a quarter-on-quarter basis, our reported gross revenue and core revenue from rentals were up by 2.6% and 1.3% respectively. Our reported EBITDA increased by 29.4% year-on-year and by 10.8% quarter-on-quarter to INR 45.5 billion. EBITDA margin was up by 11.9 percentage points year-on-year and 4.5 percentage points quarter-on-quarter to 61.6%.
In line with the trend witnessed in the past two quarters, we collected a sum against the past overdue, along with the collection of 100% of the monthly billed amount from a major customer. This has resulted in write-back of provision for doubtful debt and aided our profitability for quarter one. Adjusted for an overall provision write-back of INR 7.6 billion, EBITDA increased by 5.5% year-on-year and was largely flat quarter-on-quarter due to higher seasonal energy costs in quarter one as electricity outage increases in summer months. Reiterating what Prachur Sah had said earlier, we continue to take initiatives to reduce our diesel consumption and work towards addressing the reconciliation issues, which should help minimize our energy costs. Reported profit after tax grew 42.9% year-on-year and 3.9% quarter-on-quarter to INR 19.3 billion.
Please note that quarter four of last year had a higher finance income due to clearance of interest receivable of a major customer. Adjusted for the provision write-back, profit after tax was largely flat year-on-year and declined 10% quarter-on-quarter. The reported pre-tax return on capital employed and post-tax return on equity for the loading 12 months were at 20.9% and 25.7% respectively. We generated free cash flow of INR 18.7 billion in quarter one on account of higher collections and lower CapEx. Our trade receivables decreased by INR 7.3 billion, primarily due to better collections. We continue to engage with our major customers to finalize a payment plan and are seeing a regular collection of our past due. We are also having positive discussions with the customer on participating in the network expansion plan following its fundraising and expect to see co-location additions this year.
In summary, we are pleased to see the momentum in tower additions witnessed last year and continue to grow in this quarter as well. Our financial performance continues to be aided by strong additions and collection of past dues. We remain optimistic about our growth outlook in view of the network expansion and 5G rollouts by our major customers. Our cash flow situation should also improve further with the sustained collection of past overdue. With this, I would now request the moderator to open the floor for question and answers, please. Thank you.
Thank you very much, sir. We will now begin the question and answer interactive session for all the participants who are connected to audio conference service from Airtel. Due to time constraints, we would request if we could limit the number of questions to two to enable more participation. Hence, management will take only two questions per participant to ensure maximum participation. Participants who wish to ask a question may please press star one on their Touch-Tone enabled telephone keypad. On pressing star one, participants will get a chance to present their questions on first-in-line basis. To ask a question, participant may please press star one now. Participants who wish to ask a question may please press star one. The first question comes from Mr. Sachin Salgaonkar from BofA , Mumbai. Mr. Salgaonkar, you may ask your question now.
Hi. Thanks for the opportunity. Congrats on a good set of numbers. My two questions are. First question. Again, just wanted to understand on this buyback a bit more. One way to look at it is we have still not received full dues from Idea, and there was this intention to return back cash to shareholders whenever we receive full dues from Idea. So is it fair to say that whenever, let's say, Idea raises debt on back of it, returns the past dues to Indus, Indus could think about another dividend or another potential buyback to return cash back to shareholders? Is that a fair assessment or something has changed after the recently announced buyback?
Yeah. So hi, Sachin. Thanks for the question. I think just to give you a bit more details on the buyback, of course, there are a couple of reasons, but I think the overall objective of this buyback is, of course, to basically distribute cash. So as you know, we have not been able to pay dividend in the last two years, but the fact that we have started collecting our past dues gives us the confidence in the free cash flow improvement going forward. So that's one of the important reasons. The other reason is also the fact that we do see buyback as a tax-efficient way of distributing cash for a large group of our shareholders, especially in the current tax regime, because from 1st of October, with the change in tax regime, things may not be the same.
From a company perspective, it certainly improves the financial ratios for us, and it also helps us in preserving our distributable reserves to some extent for any future dividend. On the second part, basically, I mean, as far as after this buyback scenario is concerned, obviously, I mean, like I said, there is more confidence in our free cash flow generation going forward. Our dividend policy continues to be linked to free cash flow, so at the end of the year, we will continue to assess our free cash flow situation, and if situation permits, then there is a possibility of considering dividend again.
Thank you so much for the comprehensive answer. My second question is, again, wanted to understand, I know you guys can't speak on any forward-looking statement, but in a very simplistic manner, the way to look at it is your core revenues for the last few quarters have grown in the range of 7%-8%, and this is mainly on the back of one customer giving good business. So is it fair to assume that whenever business picks from Idea, we should see an acceleration on the growth from current levels? And that should also be a bit margin-accretive too because this is, at the end of the day, an incremental tenancy improvement which is being seen.
Sachin, I think all our customers, I mean, not just the two customers that you mentioned, I mean, we are looking at opportunities across all the customers. So I think, as I mentioned in my commentary, I think the growth looks strong, gave a strong order book for both towers and depending on how we progress with other customers in terms of tenancies as well. Yes, while I cannot give you a percentage, but I think I'm looking forward to continuing strong growth in our tower.
Sachin, from a margin perspective, of course, I mean, second tenancy onwards is high operating leverage for us. Certainly, it's going to be margin accretive.
Sorry. Very clear and all the above. Thank you.
Thank you.
Thank you very much, Mr. Salgaonkar. The next question comes from Mr. Kunal Vora from BNP Paribas, Mumbai. Mr. Vora, you may ask your question now.
Yeah. Thanks for the opportunity. First one, on the energy margins, you did mention that there was a problem this quarter, but in the past, what we've seen is you recovered some of this money you could lag. So would you expect this to happen because this quarter energy margins were significantly more negative compared to what you typically see?
Yeah, Kunal, I mean, let me just put some perspective on this. I mean, like I had explained earlier also, I think our negative margin is a result of various issues that arise largely because of the difference between our expected cost and what the actual cost is. And like I had explained earlier, I think these costs can vary because of several factors, right? There's always seasonality. There is sometimes high diesel consumption due to weather disturbances. There are some timing differences in electricity bills and so on. So it is possible that we will have these fluctuations on a quarter-on-quarter basis. However, I think what is really best to do is look at energy from a fuller perspective. So this quarter, quarter one particularly, we certainly have seasonality issues because of EV availability and some of the cyclone and flood situations in some states and so on.
But at the same time, as Prachur said, I think we are sort of still driving a lot of costs out in terms of diesel and so on. So I think from a fuller perspective, we will try to achieve whatever our ambition is, but certainly, first quarter is a bit of seasonality issue.
On a fuller basis, you will expect what, like slight negative number, or do you think it's possible to get to a break-even on energy?
Well, I mean, I think certainly the long-term ambition would be to sort of reach a break-even, but there are obviously operational issues and so on that we need to keep sorting. So to that extent, I think there will be some negative always. We will just try to build up on that and try to improve that situation year on year.
Understood. Thanks. And secondly, do you see any synergy benefit between tower business and data center business? There have been some news reports that Airtel might look to merge these businesses. I'm not asking about your thoughts on the merger, but just wanted to understand your thoughts on whether there is any synergy benefit at all between a data center and a tower business.
So to be honest, I think, Kunal, it's a bit premature or a little discussed. I don't have any. I've not done any analysis per se from a synergy. At the end, I mean, we are an infrastructure company, so we'll evaluate whatever opportunities are there. If there is something that we can evaluate, but at this time, I won't be able to have a position to tell you comment because we haven't obviously done an analysis from a synergy or an opportunity.
Understood. Okay. Just one last one, if I can. We've seen receivables decrease this quarter. As things normalize at Vodafone Idea, where do you see the receivables stabilizing?
Well, like we said, Kunal, we are working on finalizing a payment plan. Obviously, for the last three quarters, we have seen a collection of past dues. Sometimes there are also timing differences in the receivables. So I think where we see this stabilizing is probably a few months down the line, but it's very difficult to put a very concrete timeline because the discussions are still ongoing.
I just wanted to understand the normal receivable date? Let's say, where do you see the normal receivable date? I mean, it may take two quarters, three quarters, four quarters, whatever. But what will be the aspiration in terms of receivables once things normalize?
Well, our aspiration is always to get it done right away, but I think we are working with our customers to see how we can do this quickly. So again, as I said, I won't like to put a date on it, but as you've seen good progress in the last quarter, I think we expect to gain more momentum in the coming quarters and hope to unwind it as quickly as possible.
Understood. That's it from me. Thank you very much, sir.
Thank you.
Thank you very much, Mr. Vora. The next question comes from Mr. Arun Prasath from Avendus Spark. Mr. Prasath, you may ask your question now.
Hi. Good afternoon. Thanks for the opportunity. My first question is on the new tower orders from Vodafone. They have indicated they will be expanding their tower base by 20, 30, 40, whatever the 40,000 numbers that they are talking about. Apart from the agreement that we have with this customer, what is our right to win? Because for your competition, for your major competition also, it's a very high operating leverage play. They can also offer a lower rate. What is our strategy to gain maximum market share from this expansion from this customer?
See, I think our strategy remains for all the customers. Even for our current major customer, our strategy is to make sure we deliver a commercially competitive offer from our tower point of view and then offer a service that offers a robust uptime and a delivery to them. So I think that remains our focus in terms of delivery. And of course, the third element is the turnaround time. From the time any customer asks us for delivery, we are able to turn it now. So not specific to any customer, I think we have made a good impact in FY 2024 in our market share compared to FY 2023. We significantly changed that way, and I think we want to continue the momentum for all our customers.
So, what is realistically the market share that we can expect from these new tower orders from the customer?
I won't give a number. I mean, as a company, our target remains to gain the maximum market share possible, but I wouldn't like to quote a number on stable tendencies.
So what I'm trying to understand is, is the way to gain market share or retain the market share by discounting? Because the other party is also fairly good on turnaround time and upkeep and delivery parameters that we are talking about. So how are we? Is discounting the only way to retain the market share?
No, I don't think that's the only way. I think, again, I think it's a competitive business, so we'll do whatever we can to gain market share.
Just to kind of add a little more to what Prachur just said, so while commercial, of course, is one way of addressing the opportunity, I mean, we have a performance that we have delivered over the years to the customer. We have a total cost of ownership that we address to our customer. I think the speed of delivery and speed to market is another strong element that we have demonstrated to all our customers in the past. So given all this, it's a comprehensive package which Indus brings to the table, and that is the differentiation the customers also see and the reason why they have given that kind of business to us. So we are banking on that, and we are very confident that this should be a win-win proposition for us as we go forward as well. Understood.
Just to understand, at least in the past, can you share what is the market share on the macro tower side? Our market share gains?
Market share, you mean in terms of, yeah, well, currently, I think if you see at an overall tower count perspective, at current tower count, we are probably 50%-60% of the total towers in India. I think that's the number that I would be looking for.
45%-50%.
45%-50%. I mean, that's what the team is telling me here. I think that's the number that we are currently there.
That's on a pan-India footprint.
That's pan-India footprint.
All TowerCos together.
All right. So our endeavor is to maintain this. That's what I can understand from your point of view.
I think that's the current status. I mean.
All right. Now, I'll move on to my second question. So secondly, if we look at your sharing revenue per operator, it's been constantly decreasing quarter after quarter. But where we can expect this number to be stabilized at a portfolio level?
See, I mean, there are various moving parts why the ARPT number moves. It's not that it has been declining significantly every quarter. I just want to comment on the movement in this quarter versus last quarter. Particularly in this quarter, the reason is in quarter four, we get a lot of these taxes from municipal corporations and property-related taxes and so on, and that gets passed on to the customer. That gets billed to the customer. Accordingly, the ARPT has some uptick from these rates and taxes. In quarter one, there is a slowdown in these rates and taxes billed back to the customer. As a result, there is this nuance where there are these minor changes from a quarter-on-quarter perspective.
And like I said, there are several other moving parts which may not have impacted this quarter, but there's also the mixed angle because we don't make only one type of towers. We make several types of towers. So recently, as you know, we have been making towers which are lower CapEx, more frugal, etc. And obviously, those have lower rents and so on. So I think there are various things, but broadly, if I were to single out a reason, that's because of the seasonality in rates and taxes.
All right. Regarding the remaining contracts, at least it to be where the new rate will be passed on, will it be complete by this year, or there will be some pending in the next year as well?
Sorry, your question is not clear, Arun.
I was asking about the new contracts where the yields were lower, the remaining contracts. So that is also contributing to the reduction in the.
Not in this quarter so much. Like I said, I mean, every quarter has its own reason. This quarter, the primary reason is the rates and taxes seasonality.
All right. So can I ask, what is the pending amount of contracts which is yet to be renewed? Because two years before, we had around one third, and then over the last two years, we have renewed a majority of that. So.
Yeah, but in the past, Arun, there are basically some contracts that come up for renewal every year. So if you refer to the past calls, you'll get the answer. Thank you.
All right. Thank you.
Thank you very much, Mr. Prasath. The next question comes from Mr. Aditya Suresh from Macquarie, Mumbai. Mr. Suresh, you may ask your question now.
Thank you so much, and good afternoon. My first question is more on the competitive dynamics. In the context of Brookfield looking to acquire or consolidate ATC's operations, and given that they're also sponsored for Summit, I'm just curious to understand what the dynamics have been for you in terms of tenancies from Jio on your network, and how should we think about this going forward?
You mean, so I think we still maintain a good tenancy amongst the Jio's, and I think that's continuing. I mean, I don't think there's anything else per se to add.
I guess the question is more framed along the lines of Jio has lots of tenancies at the urban sites with Indus. Are we seeing any kind of tenancy erosion there as Brookfield looks to kind of expand its tower footprint?
There's nothing out of the ordinary that can come out.
Yeah. I mean, it requires a lot of network reconfiguration, and there are various other activities, Aditya. So to that extent, I think so far, the situation is quite stable. So we don't really see any major dynamics happening.
Thank you. The second question was more on the fuel cost, and we mentioned this a few times in the call, but I just want to understand, whilst your diesel consumption was down, you kind of spoke about this. Just in absolute terms, it seems like sequentially, quarter-over-quarter, your current fuel cost is up fairly meaningfully, right? What explains this? Sorry if I missed the understanding.
Typically, Aditya, the fuel cost quarter and quarter would increase because of the volume that has increased. If you look at the number of towers that we have added every quarter, so the absolute cost is going to grow in proportion of the volume. So the growth of the fuel cost line is an impact from the volume point of view as well.
This under-recovery, which was a question which was previously asked, that you would expect to normalize in the upcoming quarter. Is that a fair understanding?
Yeah, that's what we customarily explained, that you want to have some seasonality effect, and we'll see how to make sure that it normalizes over a period of time like it does last three years.
Thank you so much.
Thank you, Aditya.
Thank you very much, Mr. Suresh. The next question comes from Mr. Vivekanand Subbaraman from Ambit Capital, Mumbai. Mr. Subbaraman, you may ask your question now.
Hi. Thank you very much for the opportunity. Two questions. So Vodafone PLC with 3% shareholding, is it still categorized as a promoter? I just wanted to understand what is the condition under which they will exit as a promoter? I mean, will they still be categorized as promoters with very low shareholding? That is one. And related point is, the promoters, have they indicated whether they'll participate in the buyback or not? So that's question one. Second question is, this quarter, you rolled out around 6,000 macro towers, higher than last year's same quarter, yet your CapEx is down around 15% year-over-year. So how do you reconcile this? And on a related note, since you have order book visibility from Airtel, can you help us understand how many macro towers or lean sites you are likely to add this year? Thank you so much.
I'll try to answer all the four questions that you asked. So first, let me go back to the tower count. I think CapEx is not always a combination of towers, upgrades, and replacements. So I think compared to last year, I think that may be a combination that is showing the effect, right? There is no specific reason per se on just because of tower count, the CapEx. I think it's a combination of all these factors that have potentially played a part.
I see. I understand.
And I think last year, Q1, there was a larger rollout of 5G as well. So that could be a reason for the CapEx on that one. On the other question, what was the.
The promoter.
Buyback?
Yeah. So whether VPLC with 3% can be called a promoter?
I think as per, I mean, if you look at it, I think they will still be called a promoter. There are certain SHA rights, SHA clauses that are there that give the timeframe. So I believe they would still be called a promoter. I will let you know the exact timeline till which that is going to be the case, but I think they will still be called a promoter till a certain date.
So on the other point regarding the promoter participation in the buyback, I think just like other shareholders, even the promoters have the right to participate in the buyback. We have already disclosed that one of our major promoters has decided not to participate. So that is already disclosed. And we'll get to know the full status only when the offer opens eventually.
All right. There was one thing you missed. So you mentioned that these factors, tower adds, upgrades, replacement, and perhaps more cabinet space for 5G, these are factors driving CapEx. Would you have visibility on how many towers would you end up rolling out in FY 2025 since you may have some sort of order book from Airtel?
Well, I think rather than giving a number because I think the customer plans are in place, I think all I can say is that we continue to have a robust growth plan from not just from one customer, from some other customers as well. So I think the momentum, I believe, will continue for the next foreseeable few quarters. So I think if there's any change, we'll let you know, but I think we have still remained strong order book for the next three quarters.
Okay. Thank you so much, all the rest.
Thank you, Vivekanand.
Thank you very much, Mr. Subbaraman. The next question comes from Mr. Sanjesh Jain from ICICI Securities, Mumbai. Mr. Jain, you may ask your question now.
Thanks for taking my question. I got a few clarifications from earlier comments. Prachur, you said that you were working on some cost efficiency in the batteries. Can you elaborate on that, please?
Sanjesh, I think there are many elements. I think first is the type of battery. Secondly, in the past, the technology limited the form factor of the batteries in terms of how big a minimum module of the battery was available. So these are the things that we are trying to work on. The kind of batteries, the form factor of the batteries, on how we can modularize the things better. So these are the things that we are looking to, and of course, leveraging our volume from a supply chain point of view to get a per-unit price down. So I think these are three, four things that are potentially helping us or working towards reducing our cost of batteries.
Will this have any material impact on the CapEx number we are looking at per tower because of this?
Sanjesh, I think at the end, as I mentioned, this is part of our cost efficiency efforts, right? So whether it's going to have a material impact or not, see, the fact is we are a large infrastructure company. Any saving that we do will always have a material impact if we can scale it up. So I think from a cost efficiency point of view, this is one of the initiatives, and I expect once we deploy it across the scale, then materially, it will be material enough for a period of time because it's something that we replace very regularly as well.
Fair enough. Second on the receivable days, I think overdues are being provisioned. That means the receivable days, what we see, because we said that all customers are paying on time, that means in terms of what we report in the balance sheet, receivable days, that's more sustainable number, right?
Yeah, that's right, Sanjesh.
That's fair assumption, right?
Yeah, that's right.
There is no deviation from that thought process, correct?
Yeah.
My last question, again, a last bookkeeping question a bit. The depreciation, which is excluding the lease liability impact in the depreciation and amortization, that tends to be declining for last two quarters while our CapEx remain to be very healthy. What explains the falling depreciation?
I think there was some catch-up depreciation in the previous quarter. So to that extent, the depreciation that we reported in last quarter was slightly higher, and that is why it looks flat quarter on quarter despite the new rollouts that we have done.
Okay. Because I think in last four quarters, it has been a little volatile and been broadly around INR 960 crore while CapEx continues to be healthy. So in terms of modeling, we should be looking at this number to be going up, right, sequentially?
So Sanjesh, I think the other important thing to understand is depreciation also has several parts. So there is one which is CapEx-driven. There is also the Ind AS 116 lease accounting and amortization of ROU assets that basically goes and sits in that line. And then as and when we also write off some of the assets because of various flood or damage or things like that, that also goes and sits in the depreciation line. So there could be small fluctuations quarter-on-quarter because of these factors. But broadly, I think if you look at the broad trend, the depreciation has gone up, which is largely driven by fresh investments that we have done and also the fact that we have rolled out much more, and as a result of which, we have a lot of lease liabilities.
Fair enough, fair enough. That answers all my questions. Thanks for answering the questions and Mr. Sah for the comments.
Thank you, Sanjesh.
Thank you, sir.
Thank you very much, Mr. Jain. Participants, who wish to ask questions, may please press star one. The next question comes from Mr. Tanmay Gupta from Motilal Oswal, Mumbai. Mr. Gupta, you may ask your question now.
Yeah. Hi. Thank you for the opportunity. Sir, I have two questions. First is, when we can expect the tenancies to increase from another customer's in second half of FY 2025 or in FY 2026? And secondly, on the pricing pressure from any of the competitors, are we feeling any such kind of pricing pressure from Brookfield or ATC? I wanted to understand on that.
So I think the first question, Tanmay, I think from a tenancies point of view, it all depends on customer planning. So I think we are working with the customer in terms of how we will unwind the receivables and how we can participate in network expansion and when they will start releasing the tenancies. I think I can't give you a date right now, but I think it all depends on the customer requirements and how we can work with them in parallel of unwinding of the past years. So yeah, unfortunately, I can't give you an exact date, but that is a work in progress, and we are currently closely engaged with the customer in terms of planning the growth. From a pricing pressure point of view, I think even if you look at past FY 2023, FY 2024, we have managed to increase our market share.
So, I think we have managed to deal with the amidst of pricing pressure and remain very competitive in the market. So as of now, I don't expect any new thing coming through, but we'll be ready in case there is any such thing coming to remain competitive.
So the reason I'm asking is because if the competitor provides lesser pricing to Vodafone, is there any probability or possibility whether they will shift to the competitors or since we have a larger market share of 50%, as you mentioned, that will restrict them not to shift to the competitors?
I think there are two elements. One is shifting to the competitor, as you mentioned, or talking about the new tenancies. I think there is an established base. We are a large company. So I think shifting always has its own nuances, and we managed to renew our larger portfolio, as Vikas earlier mentioned. We have managed to renew our portfolio for two of the major customers. So I don't see that much of a risk from that point of view, but we'll be wary of any competitive pressure that comes through. But we remain confident that through our product offerings and our solutions, we will remain competitively well-placed to grab the market share.
Okay, sir. Sir, whether there has been any discussion with the customer Vodafone Idea whether they will be enrolling more into Macro Towers or Lean Towers? I mean any such kind of guidance you can provide?
Tanmay, I think that's a discussion we are currently in, in the planning phase with the customers. So I can't give you a specific guidance as such, but that is a discussion that is currently ongoing. Once the customer makes its plans firm, you will see that reflecting in the orders.
Understood, sir. Thank you, sir.
Thank you very much, Mr. Gupta. The next question comes from Mr. Yash Dalvi from Systematix, Mumbai. Mr. Dalvi, you may ask your question now.
Yeah. Good afternoon, sir. Thank you for taking up my question. So my question was regarding the pending dues from Vodafone. So if you would quantify the amount which was due, which we can expect to come?
Yash, unfortunately, we can't really discuss customer-specific details here. I think all I can say is the overdues are provided, and as and when we collect the overdues, we are writing back those provisions. But I can't really give very specific numbers.
Anything regarding the timeline, like how long can it take or how much quarters we can expect it to come in?
Yash, as I answered earlier, the same question earlier, that we are working with the customer. We have started seeing the unwinding. So our endeavor or our working with the customer is to get that unwinded as soon as possible. I mean, rather than putting a deadline, I think we are seeing progress, but our objective is to get this unwinded as soon as possible.
Okay, sir. That was it from my side. Thank you and all the best.
Thank you.
Thank you very much, Mr. Dalvi. Participants, who wish to ask questions, may please press star one. At this moment, I would like to hand over the call proceedings to Mr. Prachur Sah for the final remarks.
Thanks, Sunita. As strong operational and financial results, we affirm our core position in the passive infrastructure space. We anticipate sustained network expansion supplemented by the 5G rollouts to continue to drive both tower and co-location additions and rolling. Given these growth aspects, we are confident in our ability to capitalize on these opportunities while maintaining our commitment to sustainability. I again thank you all for joining the call and have a good day.