- Industry
- 2 min read
ICRA revises telecom tower industry's rating to stable from negative
The improved credit quality has helped to boost the demand for telecom services, especially data, which would lead to consistent network expansion and upgradation by the telcos. "This is keeping the demand for tower companies buoyant, resulting in consistent additions in the tenancies," the release by ICRA added.
According to ICRA, the situation has improved drastically "with consistent, timely payments to the tower companies," leading to a reduction in receivable days to around 45-60 days, which is lower than ICRA's negative outlook threshold of 80 days.
"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. Moreover, there has been clearance of a sizeable amount of past over dues, which has resulted in reversal of provisions made earlier in FY2023," said Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA Ltd.
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The improved credit quality has helped to boost the demand for telecom services, especially data, which would lead to consistent network expansion and upgradation by the telcos. "This is keeping the demand for tower companies buoyant, resulting in consistent additions in the tenancies," the release by ICRA added.
ICRA sees the tower industry is likely to see an operating income growth of 4-6 per cent with operating margins at around 70-75 per cent 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." the agency added.