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ICRA revises outlook on telecom tower industry to stable citing healthy receivable days
May-20-2025

The rating agency ICRA has revised the outlook on the telecom tower industry to stable from negative, following healthy collections from customers along with receipt of overdue payments. It noted that the industry was earlier facing headwinds owing to elongated receivables, on account of delays in payments by some of the telecom service providers, however, the situation has improved materially with consistent timely payments to the tower companies resulting in reduction of receivable days to around 45-60 days, which is lower than the ICRA’s negative outlook threshold of 80 days.

ICRA, while revising its outlook, has indicated that the improvement in receivable days coupled with recovery of the past over dues has enhanced the liquidity profile of the telecom tower industry and moderated the reliance on external debt, which is likely to translate into improvement in the return metrics of the industry. It added that improvement in the credit profile of some key telecom service providers, who are the customers for tower companies, has eased the working capital cycle of tower companies. Further, there has been clearance of a sizable amount of past overdues, which has resulted in reversal of provisions made earlier in FY2023.

It noted that with improvement in the credit quality of some of the customers and fund raise exercise concluded by a few of them, these customers are expected to re-initiate their capex plans. It further highlighted that demand for telecom services, especially data, is witnessing very strong growth in India, translating into consistent network expansion and upgradation by the telcos, which is keeping the demand for tower companies buoyant resulting in consistent addition in the tenancies. ICRA expects the tower industry to report an operating income growth of 4-6% with operating margins (adjusting for energy revenues) at around 70-75% for FY2026. These along with easing of the working capital requirements is likely to boost the liquidity position with the cash balances of the industry increasing to around Rs 5,500-6,000 crore, from Rs 2,200-3,000 crore levels in the past.

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