Indus Towers Limited (NSE: INDUSTOWER) Q2 2025 Earnings Call dated Oct. 23, 2024
Corporate Participants:
Prachur Sah — CEO & MD
Vikas Poddar — Chief Financial Officer
Analysts:
Aditya Suresh — Analyst
Sanjesh Jain — Analyst
Arun Prasath — Analyst
Kunal Vora — Analyst
Sachin Salgaonkar — Analyst
Vivekanand Subbaraman — Analyst
Presentation:
Operator
Good afternoon, ladies and gentlemen. I’m Sunita, the moderator for the conference. Welcome to the Indus Towers Limited’s Second Quarter Ended September 30, [Technical Issues] Earnings Call. [Operator Instructions].
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.
Prachur Sah — CEO & MD
Thank you, Sunita. And 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, Investor Relations. I am pleased to present our business performance for the quarter ended September 30, 2024. We are pleased to report that in line with the trajectory of the previous three quarters, we sustained 100% collection against monthly billing from a major customer, while our collections against past overdue improved further during the quarter.
And our tower additions remain strong, despite unfavorable weather conditions, such as severe floods and heavy rainfall impacting rollouts. The demand outlook for the next few quarters continues to be strong, and we expect to continue the delivery momentum. Having said that it also gives me great pride to see that despite challenging weather conditions, our teams on the ground continue to show remarkable resilience and fortitude to ensure network connectivity.
Amidst the devastating landslide and heavy rains in Wayanad, Kerala, our field force set up temporary cell on wheels to aid rescue operations by ensuring that communication is not impacted. Similarly, in Tripura, our field force braved the landslides and flash floods triggered by incessant rainfall to continue rolling out sites. We also installed towers in the highest altitude areas of Leh, Kargil, and certain remote locations of Kashmir. The regulatory landscape continues to become more conducive for the swift deployment of telecom infrastructure in the country.
This is underpinned by the proactive measures taken by the government while being cognizant of the sustainability aspect. With the objective of improving telecom services in rural, remote, and underserved urban areas, the DoT notified the Bharat Nidhi Rules 2024, enabling the Digital Bharat Nidhi Fund to support projects to fulfil the objective. Additionally, the move also aims to enhance telecom security and foster innovation. The department has also notified Right of Way Rules 2024 under Telecommunications Act 2023, that aims to resolve interpretational issues within the industry and ensure efficient deployment of telecommunications infrastructure, among other things.
Additionally, the Green Open Access Policy introduced last year has now been adopted by more than 21 states. The policy is aimed at incentivizing the use of cleaner sources of energy.
Shifting gears to 5G. The total number of 5G Base Transceiver Stations or BTS deployed now stands at over 450,000, with India witnessing one of the fastest 5G rollouts in the world. Our loading revenues continue to act as a lever for growth. We expect our loading revenues to be gradually supplemented by a demand for new sites once a certain penetration level is achieved to aid the network decongestion. Given our enhanced strength as a leading player in the passive infrastructure space, including strong execution capability, we believe that we are well-placed to address this demand. 5G subscriptions have continued to increase, both globally and in India as more and more users migrate from 4G.
As per the latest Ericsson Mobility Report, global 5G subscriptions at the end of June 2024 now stand at over 1.9 billion, with 161 million additions seen during the quarter. On the other hand, 4G subscriptions declined by 25 million in the same period. 5G subscriptions are expected to reach almost 5.6 billion by 2029, accounting for around 60% of the overall mobile subscriptions.
As per the latest TRAI report, the total 5G subscription base in India grew to 190 million in Q1 FY ’25, increasing by 31 million. Comparatively, 4G subscriptions saw a decline of 15 million. The swift uptake of 5G in conjunction with the ongoing migration of users from 2G to 4G is providing a boost to data consumption within the country. For the top three operators, the total data consumption growth at 28% year-on-year for the June quarter as well, above the average of the previous eight quarters.
The average data consumed per user per month increased to 26 GB in the same period, growing by 17% year-on-year. Additionally, as per TRAI, 5G data consumption grew 28% quarter-on-quarter to 11.4 billion GB and contributed to 20.3% of total data usage in Q1 FY ’25, compared to 16.9% in June Q4 FY ’24. The robust data consumption story coupled with the rapid uptake of 5G is expected to spur the need for passive infrastructure, and we are confident of leveraging our core strengths to capitalize on this opportunity.
Moving to operational performance, our power and tenancy additions continue to be material despite seasonal disturbances. In Q2 we added 3,748 macro towers and 4,308 corresponding co-locations. Our total macro towers and co-locations base stood 229,658 and 379,236 each, increasing by 12.5% and 7.3% year-on-year respectively. Our tenancy ratio continues to be industry-leading at 1.65. Addition of co-locations on leaner towers stood at 182 in quarter two, and the overall base increased to 11,360 co-locations. Including leaner towers, our net co-location additions were at 4,419 in Q2 versus 6,832 in Q1.
I will now talk about the progress we have made on our four key strategic pillars, namely market share, cost efficiency, network uptime, and sustainability. On market share, we are pleased to see that the proactive measures we are taking have helped us maintain our share in the business of our major customers. The technological interventions we have been taking across the value chain along with the strengthening of our partner ecosystem have contributed to our achievement.
We continue to grow our presence in urban areas, underpinned by the capabilities we have built, which help us deploy towers 24/7 at speed. These have helped us address challenges specific to urban areas, including minimizing disturbances during deployment. We have also continued to leverage the government’s RoW policy relating to the deployment of sites on lands owned by government bodies, including state municipal corporations and PSUs, in order to increase our reach further.
Additionally, our robust internal processes and quality standards have helped us improving our competitiveness, which is further supplemented by expanding our portfolio to bridge the gap in network footprint. In addition to the rollouts, one of our major customers, we are anticipating incremental tenancies to flow through from other major customers, as well in the near term, which we believe will act as a pivot to our growth. We believe the demand for other offerings, including in-building and small-cell solutions, will grow as the telecom infrastructure landscape evolves further.
In terms of cost efficiency, our initiatives towards reducing our operating and capital expenses continued in Q2 as well. Our diesel consumption reduced further by 2% in Q2 on a year-on-year basis. Reduction in diesel consumption was lower primarily due to weather disturbances I had alluded to earlier. Our renewable energy portfolio continues to expand, with our solar site count increasing to more than 25,000 and quarterly additions being close to 4,000. The conversion of sites from indoor to outdoor and electrification of non-electrified sites continue to be part of our OpEx strategy. All these actions will help us optimize our energy costs.
With regards to CapEx, we are working towards implementing technological solutions at our sites, which would enable remote monitoring of sites on a real-time basis and provide records in general. This in turn would help us carry out infrastructure rationalization and resource optimization, resulting in cost efficiencies. Thirdly, network uptime remains the key ask of the customer. I would like to reiterate that Q2 saw a large number of weather disruptions, with such instances being more than 1.5 times compared to the same period last year.
In addition to Kerala and northeastern states, heavy rains and floods were also seen in parts of West Bengal, Uttar Pradesh, Gujarat, and Bihar. Despite this, the dedicated efforts of our field teams helped us maintain a Pan-India uptime of 99.96%, reaffirming our competitiveness in operating and maintaining such an extensive distributed asset base.
Now moving to ESG, a strategic priority for the organization. We are pleased with the headway we have made within each dimension of ESG, underpinned by our consistent efforts. With regards to the environmental dimension, we continue to maintain a strong focus on reducing our GHG emissions by both reducing our diesel consumption and increasing the contribution of renewable sources to fuel our energy needs.
Our solar site additions continue to be robust, with our overall base now standing at over 25,000 sites. During the quarter, we launched our Future Earth [Phonetic] program through which we aim to plant 1 million trees by 2027, in order to create a sizable carbon sink for the country. With a view to ensure sustainable practices across the value chain, we conducted ESG training for more than 80 major partners.
In terms of making a diverse and inclusive workforce, our focused hiring programs have led to our gender diversity improving to 14.3% in Q2, compared to 11.2% in Q1. During the quarter, we also launched our Women Leadership Development Program, Shakti, in collaboration with IIM Indore, to equip our women employees with the requisite skills and behaviors needed to take up leadership roles in the future.
Another pleasing aspect was to see our ESG efforts being appreciated, as BW Businessworld recognized Indus Towers as one of the most sustainable companies for 2024 in the infrastructure sector. On the CSR front, we supported flood-affected communities of Andhra Pradesh by distributing over 1,000 relief kits. We are pleased to see our Digital Transformation Van Initiative aimed at educating and upskilling disadvantaged individuals, expand into six states in Q2. Our scholarship program for disabled children has now over 600 beneficiaries. During the quarter, the Company successfully completed the buyback of 56.8 million shares at a price of INR465 per share. Post this, the shareholding of Bharti Airtel in the Company increased to more than 50%. I would now request Vikas to take you through our financial performance for the quarter ended September 30, 2024 and I look forward to your questions. Over to you, Vikas. Thank you.
Vikas Poddar — Chief Financial Officer
Thank you, Prachur, and good afternoon, everyone. I am pleased to share with you all the financial results for the quarter ended September 30, 2024. We had a robust financial performance in quarter two, aided by meaningful roll-outs, wherein we added 4,490 co-locations on our towers, including lean towers. In terms of the financial performance for Q2, our revenues stood at INR74.7 billion, growing 4.7% year-on-year, while the core revenues from rental grew by 8.5% year-on-year to INR47.1 billion. These were driven by co-location additions and loading.
On a quarter-on-quarter basis, our reported gross revenue and core revenue from rentals were up by 1.1% and 1.5% respectively. Moving to profitability, the reported EBITDA increased by 42% year-on-year and 8% quarter-on-quarter to INR49.1 billion. EBITDA margins increased by 17.3 percentage points year-on-year and 4.2 percentage points quarter-on-quarter to 65.7%. Our collections against the past overdue from a major customer have continued in this quarter, and this has resulted in write-back of provision for doubtful debt and aided our profitability for Q2.
Adjusted for overall provision write-back of INR10.8 billion in Q2, EBITDA increased by 6.9% year-on-year and 1.2% quarter-on-quarter. Coming to energy performance, we are actively taking steps to cut down on diesel usage, and expanding our renewable energy portfolio, and addressing the reconciliation challenges that we face. Moving on to the profit after tax, reported profit after tax was INR22.2 billion, increasing 71.8% year-on-year and 15.5% quarter-on-quarter.
Adjusted for the provision write-back, the profit after tax was up 13.8% year-on-year and 4.6% quarter-on-quarter. The reported pre-tax return on capital employed and post-tax return on equity for the rolling 12 months were at 22.9% and 29.0% respectively. We generated free cash flow of INR14.4 billion in quarter two, aided by higher collections and lower CapEx. Trade receivables decreased by INR0.9 billion due to better collections.
For the last few quarters, we have been collecting a sum against the past overdues from a major customer. We have collected a total of more than INR23 billion in the last 12 months. This has resulted in our provision for doubtful debt reducing to about INR35 billion. We are also in constant discussions for clearance of the remaining overdue, and additionally, as touched upon by Prachur earlier, we are expecting additional tenancies from this customer, as it expands its 4G capacity and coverage.
In summary, the consistent collections of past overdues from a major customer, in addition to collection of 100% of the monthly billing amount, continue to support our financial performance. On our operational performance, we were able to record a meaningful number of tower and tenancy additions, despite the weather disturbances seen during the quarter.
We believe that the network expansion and the 5G roll-outs of our customers will continue to act as levers of growth. With this, I would now request the moderator to open the floor for questions-and-answers. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. [Operator Instructions] The first question comes from Mr. Aditya Suresh from Macquarie Mumbai. Mr. Suresh, you may ask a question now.
Aditya Suresh
Yeah, thank you and good afternoon. I just had one question actually. So can you help us understand the competitive dynamics as we speak, in particular, given the consolidation of the number two, number three player? The real question is, I mean, are we seeing any changes, whether it’d be in the rental terms or migration of tenancies from, whether it’d be Jio or Vodafone internet consolidation tenancy? Thank you.
Prachur Sah
So, Aditya, if I’m understanding the question correctly, you’re asking about the consolidation in the towerco side, if it’s impacting Indus. To be honest, I think — I mean, we’ve not seen any such thing. I think we continue to be driving in tower and tenancy growth from our customers. So I’ve not seen any impact as such in terms of any change in the competitive dynamics. And I — I believe it’s a reflection of the market from an operator side, which is reflected in the towers consolidation.
So I don’t see any impact on that. Our focus remains on our own performance, making sure we capture the market share, remain very competitive in terms of deploying in time with the right quality, and delivering a strong operational performance to the customer.
Aditya Suresh
Maybe just as a follow-up, if I could ask, as your rental contracts are coming up for renewal what sort of discounts are we seeing here right now?
Vikas Poddar
So, Aditya, I think as far as the renewal discounts are concerned the framework is very consistent. So just as a recap, we had signed a renewal framework in FY ’22 and thereafter — and that was the time when we had really a bulk sort of a renewal. Thereafter, there has not been any major lumpy renewal in the last two financial years, but pretty much the framework remains consistent and the discount levels are also very similar to what we had worked out.
Aditya Suresh
Thank you.
Operator
Thank you very much, Mr. Suresh. The next question comes from Mr. Sanjesh Jain from ICICI Securities Mumbai. Mr. Jain, you may ask your question now.
Sanjesh Jain
Yeah, good afternoon. Thanks for taking my question. I’ve got two of them. First, on the tenancy growth, this is one quarter where probably after many quarters, the tenancy growth is materially higher than the tower growth which indicates that we are getting some additional tenancy from BSNL and Vodafone. Is it consistent in the next few quarters?
Prachur Sah
Sanjesh, your voice was not very audible, if you don’t mind repeating, please.
Sanjesh Jain
Yeah, yeah. Am I audible now?
Prachur Sah
Yes, very clear.
Sanjesh Jain
Yeah, thank you. So I was telling this is one of those quarters after many quarters where tenancy growth is materially higher than the tower growth, which indicates that we are getting additional tenancies from the VIL and BSNL roll-out. This trend, is it fair to assume will continue for next three quarters?
Prachur Sah
I would assume so. I think, Sanjesh, as our major customers continue to roll out, I believe this growth will continue. And in fact, if you see over the last one, 1.5 years, because of our strong tower roll-out, we will remain the prime candidate to make sure we capture this growth.
Sanjesh Jain
Got it. Got it. And an incremental roll-out of these two telcos who are being aggressively rolling out network, will we retain our market share, say 60%, 70% market share what we have today in VIL and some amount of incremental tenancy from BSNL? Are we — are we confident about that?
Prachur Sah
I cannot give you a number, Sanjesh, because it’s not — I mean, however, as I mentioned earlier, because of the roll-outs that we have done in the last 1.5 years and where we have a significant number of tower roll-outs done, we remain in the prime position in terms of our second tenancy and third tenancy being available at the tower. So from an availability point of view, we remain in the prime position. So we will continue to make sure that our operational performance keeps us in the pole position to get the majority market share.
Sanjesh Jain
Second question is on the CapEx side. Reliance Jio has already announced their results and it appears that in first half their CapEx intensity from last year has halved. And Airtel has also guided of slowing or decelerating CapEx. Do you think the incremental growth from the aggressive players historically can materially reduce in next two years?
Prachur Sah
Sanjesh, it’s hard to predict, right. I think, you know, of course, I think the amount of growth we’ve seen in FY ’24 is not going to be repeated every year, right. However, if you look from our rollouts that have happened this year, they still remain on the higher side than what we have done in the past. And looking at order book, I believe we will continue this momentum.
Sanjesh Jain
When you say we’ll continue the momentum, we are referring to tower growth or tenancy growth here?
Prachur Sah
Both.
Sanjesh Jain
Both, that’s clear. That’s it from my side. Thanks for taking my questions and best of luck for the coming quarters.
Prachur Sah
Thank you.
Operator
Thank you very much, Mr. Jain. The next question comes from Mr. Arun Prasath from Avendus Spark, Chennai. Mr. Prasath, you may ask your question now.
Arun Prasath
Hi. Thank you. Good afternoon, everyone. Thanks for the opportunity. The first question is on this tower build number this quarter. Can you just ballpark indicate how much of the deployment reduction is — can be attributable to the weather? Is it — is it better? Is it substantial or is it due to reduction from the telco activities in the pool [Phonetic]?
Prachur Sah
Mr. Arun, it’s very hard to give you a bifurcation of how much — how much that each number is split into, but you can look at the historical performance every year, that quarter two is impacted by the weather conditions. But as I mentioned in the earlier question that Sanjesh had asked, I think momentum on the FY ’24, whereas the numbers of FY ’24 may not be repeated every year, but FY ’25 so far. And if you look at the historical performance, we still continue to deploy a significant amount of towers, which are very meaningful. So I can’t give you a split on how much is the order book related and how much is the weather-related, but I think the tower growth continues for the right time.
Arun Prasath
Thank you. All right. And secondly, on the — we have already seen this solo additions is picking up speed, but how much of the loading in terms of loading activities is that the second customer has started. So is it just started or is it — it will start, some color would be very helpful.
Prachur Sah
Yeah. So again, I can’t give you the exact numbers again, Arun, because I don’t have it to be honest, I think, but there are three things. One is the co-location additions, as you mentioned from the other customers who can come on the towers that we are starting to see. Secondly, the loading, both 4G and 5G, where the conversion from 2G — 2G to 4G is happening, I think they have started to materialize and we expect that momentum to pick up in the coming quarters.
Arun Prasath
And this is even for the — for your largest customer, this 4G to 5G that it’s barely done or is it still — what kind of a momentum we can expect on the largest customers there?
Prachur Sah
You know, so I think Arun, from a 5G point of view, I think there was a large roll-out that has happened over the last one, 1.5 years. I don’t believe it’s going to be that speed, but there are going to be you know, additions of 5G, maybe not at the — at the rate it was being done at last year, but some orders have begun to come.
Arun Prasath
All right. Thank you. All the best.
Operator
Thank you very much, Mr. Prasath. Next question comes from Mr. Kunal Vora from BNP Paribas, Mumbai. Mr. Vora, you may ask your question now.
Kunal Vora
Yeah. Thanks for the opportunity. I have a few questions. First is, if you can share your thoughts on the GST notice that you received what is your stance what is the industry practice regarding the infrastructure?
Vikas Poddar
Yeah, Kunal, I think the show cause notice that we’ve received is basically putting a question on the GST credit on passive infrastructure assets like the diesel generator, AC, battery bank that we deploy. And I mean, based on our assessment, we believe that the liability currently is not evolving on the Company and we consider this as remote. I mean, this is an ongoing thing just because it’s a very large number, we have disclosed it. There are also other matters linked to this, which are currently in the courts. So the matter is a bit of a sub judice matter. But currently, it’s a disclosure. We really don’t see this as a major risk.
Kunal Vora
Understood. What are the next steps? When do you think this can get resolved?
Prachur Sah
Like I said, the matter is sub judice. We are waiting for the judgment from the court. So once the judgment is known, thereafter there will be some proceedings. So sometimes these things take time, Kunal.
Kunal Vora
Understood. Second is the negative energy margins, this like last couple of quarters have been weaker compared to what we’ve seen historically. So how should we project them going forward?
Prachur Sah
So Kunal, I mean again, there are two elements to it. Of course, we have to look at what is the reconciliation that we do with our customers to make sure it becomes reflective and that is an ongoing process once that will happen. And typically in Q1, Q2 in these quarters, which are impacted by heavy rainfall and monsoons, so typically Q1 and Q2, the energy margin is impacted by the — by the seasonality, which we expect to recover in the Q3 and Q4.
But yes, that is something as I mentioned in my you know talk earlier as well that — I mean that is a constant effort that we are looking at improving operational efficiency, which reduces our energy costs and hence improves the margin. So I believe there is a little bit of a timing issue. We should see the margins getting improved in the later part of the year.
Kunal Vora
Understood. Third one is, for the new tenancies from Vodafone Idea, do you negotiate at all? I mean, is there any scope for that? Especially if competition offers bulk discount, can you respond or you have a rack rate and there is no scope for middle booking?
Prachur Sah
I think we believe that — Kunal, I think, as I said, I mean our offering is besides commercial is a strong operational performance. I would not like to discuss the commercial aspect here, but I think we remain very competitive, both commercially and operationally to make sure we get the larger part of the share.
Kunal Vora
Understood. And can you share your thoughts on dividend payment in the coming quarters with improved cash collection and the lower CapEx?
Prachur Sah
Yes, Kunal, as you know, as we have always maintained in our previous calls and now as well, we have a very clear dividend policy, which directs us to distribute the free cash flow. So at the end of the year, the Board will take a call in line with the policy.
Vikas Poddar
Yeah. Just to add, Kunal, the free cash that we generated in H1, we’ve already used that for distributing through the buyback. So that policy is unchanged, and we will certainly evaluate again at the end of the year based on the collections and the cash flow situation and we’ll take that call, you know, together with the Board.
Kunal Vora
Yeah, thanks. And just one last question, how should we look at the finance cost going forward? The number has increased in the recent quarter?
Vikas Poddar
The finance cost is largely the cost of borrowing and I don’t think there’s anything major that has changed there. If you’re looking at the net finance cost number, then obviously, there is a bit of fluctuation in our finance income, which is you know driven by the fact that we are trying to collect interest on the overdues as well from one of our customers. So whenever that fluctuates to that extent, the net finance cost fluctuation is visible. But otherwise, at a gross level, the finance cost is pretty stable.
Kunal Vora
Yeah, I was referring to the net finance cost, which is elevated now compared to the recent quarter. So the recent quarter — the numbers which you’ve seen, are they the sustainable numbers or would they come down?
Vikas Poddar
Well, like I said, I mean, it’s very difficult to predict because the net finance cost is also dependent on the finance income, which is nothing but the interest that we collect on the overdues, right. So last year, we managed to collect a large part of interest both in cash as well as via the accounting adjustment that we had explained in the — in the quarter three and the quarter four results. So that effort continues. So as and when we will collect those interests, certainly that will reflect in the finance cost. So I don’t think we can really, you know, sort of peg the current finance cost for the next couple of quarters.
Kunal Vora
So that’s it. That’s it from me. Thank you very much.
Prachur Sah
Thank you, Kunal.
Operator
Thank you very much, Mr. Vora. [Operator Instructions]. The next question comes from Mr. Sachin Salgaonkar from BofA, Mumbai. Mr. Salgaonkar, you may ask your question now.
Sachin Salgaonkar
Hi, thanks for the opportunity. My first question is I just wanted to understand a bit that you in one of your earlier comments did mention about loading increasing from 4G to 5G. But when I look at the reported average rent per tenant to that matter, even the normalized one, it’s actually not showing a meaningful increase. So I presume there are other factors which is leading this entire loading not get fully reflected into the numbers. Can you throw some color on that?
Vikas Poddar
So Sachin, sure. So, I think the — you must be referring to the ARPT, the average revenue per tenancy, which is showing a very stable sort of a number for the last few quarters. Now, as we’ve explained earlier, the ARPT is — is basically a function of a couple of factors. There are factors that really pull up the ARPT and there are factors that drag it down. So in terms of the loading from 4G to 5G, certainly that basically helps the ARPT. What also helps the ARPT is the annual escalation.
But apart from this, what has been dragging down the ARPT is the mix because like we have explained earlier, the new towers that we are doing are basically low capex and the ARPT relating to those new towers are also lower than the legacy portfolio. So to that extent, there is a bit of a drag. And then, of course, there is a renewal discount, not very significant in terms of the portfolio, but there is a drag coming from there also. So overall with the upsides and the downsides together, we are looking at a very stable situation. But a large part of the offset that’s happening in the loading is the mix.
Sachin Salgaonkar
Thanks, Vikas, very clear. But is it fair to say that whenever we see the second anchor customer coming and using a lot of towers as a second tenant, we should see an increase in ARPT, right, because that will come as a [Speech Overlap]
Vikas Poddar
ARPT is the revenue per tenancy. So obviously with additional tenants coming in, the average revenue per tower will increase, but per tenancy should be stable or slightly declining because the new tenant may not come with the same load.
Sachin Salgaonkar
Yeah. Okay. From a loading perspective, okay fair point. That is very clear. Second question is Voda-Idea recently concluded a INR3.6 billion deal with multiple vendors. Is it fair to assume that there’s not much of a contribution from that deal come into the numbers and in subsequent quarters we should see that flowing through? And any timeline you could give from that perspective?
Vikas Poddar
Yeah, I believe you’re talking about the deal they’ve done for the active equipment.
Sachin Salgaonkar
Correct.
Vikas Poddar
So as the active equipment comes on board, I think that’s when the tenancies would start showing up.
Prachur Sah
Yes, Sachin, so obviously, there is a time lag between when they close the deal and when they start getting the equipment for roll-out. So for this current quarter, obviously, there is none. So we see this coming towards the mid-to-end quarter is what indications we get from the customer. So hopefully, this quarter, we’ll see some things rolling out.
Sachin Salgaonkar
Got it. And my last question is, has anything changed for you, you know, from a Vodafone-Idea perspective after the recent AGR verdict? And I’m asking that because there was this one school of thought that whenever Idea finishes a debt raise, they may look to give a lump sum amount in terms of whatever payables is remaining. Does that change or should we expect quarterly INR7 billion to INR8 billion kind of payment what we see every quarter?
Vikas Poddar
Sachin, I can’t give you the look ahead. And I think as I’ve informed earlier in the calls as well and now as well, I think — we have started receiving our overdues payments and I think we remain engaged with the customer to get the overdues paid as fast as possible. So I think from our perspective, the timeline has to be as quick as possible, but we’re working with the customer to make sure we get the overdues at one.
Sachin Salgaonkar
Got it, very clear. Thank you.
Prachur Sah
Thank you.
Operator
Thank you, Mr. Salgaonkar. The next question comes from Mr. Vivekanand Subbaraman from Ambit Private Limited, Mumbai. Mr. Subbaraman, you may ask your question now.
Vivekanand Subbaraman
Yeah, thank you for the opportunity. Further to an earlier participant’s query on the show cause notice that you received, I also note that your contingent liabilities recorded in FY ’24, they include some income tax claims again connected to the treatment of — of network equipment, passive infrastructure assets. I just wanted to understand — I know this matter is sub judice, the one that you’ve recorded in notary. But does this verdict have any bearing on the way the income tax liability for which you’ve recorded INR41 billion contingent claim or does that have any ramification on the income tax case? Thank you. That’s question one.
Vikas Poddar
Okay. If I may just take this question, Vivekanand. I think the show cause notice that we have disclosed is with regard to GST, so it’s a different matter. The contingent liability for direct tax or income tax that you’re referring to is a legacy matter that has been going on for a long time and that’s basically, you know, it goes back to almost 2010, ’11, ’12, so that matter is also at various levels of jurisdiction. So I think you know, because we believe those matters are probably not based on the minutes of the case not a high risk and that’s basically being disclosed as contingent liability, so these two are very different. Have I understood the question right and does that make sense?
Vivekanand Subbaraman
Yes, I was just wondering if they are linked or are they very different that was the question.
Vikas Poddar
They are very different, yeah.
Vivekanand Subbaraman
Okay. So you are confirming that if — even if there is an adverse verdict in respect to the AGR claims for which you’ve received the show cause notice, it doesn’t rub the income tax liability the wrong way. I mean, it doesn’t mean that you will — you will inherit — automatically inherit the income tax liability, right?
Vikas Poddar
No, no, no. These are very different matters, Vivekanand. We can maybe discuss offline. I can maybe share more details if you want, but these are very different matters.
Vivekanand Subbaraman
Sure, that’s very clear. Thank you. The second question is, as far as your maintenance capex expenditure is concerned, is there any lumpiness in this regard as well? Because, when I look at the maintenance capex trajectory, I mean when the merger had happened, it was around INR600 crores to INR700 crores. Now it has more than doubled in the last four years. So does this mean that the maintenance capex levels will remain elevated because the network has become bigger or how to think about the maintenance capex aspect?
Prachur Sah
So, I think, I’m not sure how you split the maintenance capex there. But see before the merger, the tower count was what it was and after the merger, the tower count has increased substantially. So I don’t think there is any lumpiness as far as maintenance capex is concerned. It’s a very standard, you know, practice that is followed in terms of how the equipment is replaced or refurbished. So I don’t think there is any lumpiness or — on maintenance capex.
Vivekanand Subbaraman
Okay. I am calculating maintenance capex as the overall capex minus growth capex. I do understand that the number of towers have gone up, but even otherwise, the maintenance capex per tower or maintenance capex per tenant, that has moved up. That is why I was asking this question.
Vikas Poddar
So I think just to sort of add some color to this, I mean probably maintenance capex should not be looked at in that manner because you know, if you are simply looking at capex minus growth — by the way, we are reporting maintenance capex as a separate line in our investors pack. And that shows pretty sort of stable numbers quarter-on-quarter if you look at those numbers and in case you have the pack in front of you.
In September ’24, we have spent INR2.9 billion and before that was INR2.6 billion and before that was INR3.4 billion and so on. So it is a stable number quarter-on-quarter. Now coming to the lumpiness part of it, I think while you could see some quarterly fluctuations but from an overall year perspective, annual perspective, it’s pretty stable, consistent year-on-year.
Vivekanand Subbaraman
Okay, fair enough. Thanks. Thanks. I will seek more clarity if needed on the legal case. Thank you.
Operator
Thank you very much, Mr. Subbaraman. [Operator Instructions]. At this moment, there are no further questions from participants. I would now hand over the call proceedings to Mr. Prachur Sah for the final remarks.
Prachur Sah
Thank you, Sunita. To sum up, the progress we are making on each of our strategic priorities furthers competitiveness and reaffirms Indus as a leading player. Our strong financial performance is underpinned by continuous roll-outs, also supplemented by collections and past overdue from a major customer. We expect the ongoing roll-outs of a major customer coupled with the start of roll-outs and 5G loading by the other major customer to continue to drive our near to medium-term growth. Keeping sustainability at the core, we believe that we remain well-positioned to capitalize on the growth opportunities and offer. I thank you all for joining the call and wish all of you a very Happy Diwali. Thank you.
Operator
[Operator Closing Remarks]. [Operator Closing Remarks].