Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 6 - Sanjesh Jain - ICICI Securities/Mumbai Got it and its incremental roll out of these two telcos who are 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 confident about that? Prachur Sah – MD & CEO – Indus Towers Limited I cannot give you a number Sanjesh. However as I mentioned earlier because of the rollouts that we have done in the last one and a half years and we have a significant amount of tower rollouts done, we remain in the prime position in terms of the second tenancy and third tenancy being available at the towers so from an availability point of view , we remain in the prime position so we will continue to make sure that tower operation performance keeps us in the pole position to get the majority market share. Sanjesh Jain – ICICI Securities/Mumbai The second question is on the capex side, Reliance Jio has already announced their results and it appears that in the 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 the next two years? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited Sanjesh, it is hard to predict. Of course, the amount of growth we have seen in FY2024 is not going to be repeated every year. However, if you look at 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 – ICICI Securities/Mumbai When you say we continue the momentum, we are referring to tower growth or tenancy growth here? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited Both. Sanjesh Jain – ICICI Securities/Mumbai Both. That is clear. That is it from my side. Thanks for taking my questions and best of luck for the coming quarters. Sunita – Moderator The next question comes from Mr Arun Prasath from Avendus Spark/Chennai. Mr Prasath you may ask your question now. Arun Prasath – Avendus Spark/Chennai Good afternoon everyone. My first question is on this tower build number this quarter, can you just broadly indicate how much of the deployment reduction can be attributable to the weather? Is it substantial or is it due to reduction from the telco activities? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited It is very hard to give you a bifurcation of how much each number is split into, but you can look at historical performance. The Q2 is impacted by the weather conditions but as I mentioned in the earlier question that Sanjesh had asked , the momentum of FY2024 where the numbers of FY2024 may not be repeated every year , but FY2025 so far, if you look at the historical performance, we still continue to deploy a significant amount of towers which are very meaningful , so I cannot give you a split on how much is the order book related and how much is weather related, but I think the tower growth continues from where I stand. Arun Prasath – Avendus Spark/Chennai

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 7 - Right alright. Fair enough. Secondly , we have already seen this solar addition is picking up speed , but how much of the loading in terms of loading activities is the second customer has started? Is it just started or it will start? Some color would be helpful. Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited Yes. I cannot give you the exact numbers again Arun because I do not have it. The others I think but there are three things. One is the col ocation addition 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 to 4G is ha ppening, they have started to materialize and we expect that momentum to pick up in the coming quarters. Arun Prasath – Avendus Spark/Chennai This is even for your largest customers this 4G to 5G that is fairly done or is it still what kind of a momentum we can expect on the largest customer? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited Arun, from a 5G point of view, there was a large rollout that has happened over the last one to one and a half years. I do not believe it is going to be at that speed but there is going to be additions of 5G , may be not at the rate it was being done last year but some orders continue to come. Arun Prasath – Avendus Spark/Chennai Alright. Thank you. All the best. Sunita – Moderator The next question is from Mr Kunal Vora from BNP Paribas/Mumbai. Mr Vora you may ask your question now. Kunal Vora – BNP Paribas Paribas/Mumbai Thank you for the opportunity. I have a few questions. First can you share your thoughts on the GST notice that you received , what is your stance? What is the industry practice regarding the Infotech sales? Vikas Poddar – Chief Financial Officer – Indus Towers Limited Kunal, the show-cause notice that we have received is basically putting a question on the GST credit on passive infrastructure assets like the diesel generator, AC, and battery bank that we deploy and based on our assessment , we believe that the liability currently is not evolving on the company, and we consider this as remote. This is an ongoing thing. Just because it is 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 sub-judice matter but currently it is a disclosure. We really do not see this as a major risk. Kunal Vora – BNP Paribas Paribas/Mumbai What are the next steps? When do you think this will end? Vikas Poddar – Chief Financial Officer – Indus Towers Limited 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 – BNP Paribas Paribas/Mumbai Understood. The second thing is the negative energy margins, like last couple of quarters have been weaker compared to what we have seen historically, so how should we project then going forward?

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 8 - Prachur Sah – MD & CEO – Indus Towers Limited Again, there are two elements to it. Of course, we have to look at what is the reconciliation that we have to do with our customers to make sure it becomes reflective and that is an ongoing process and that will happen and typically in Q1 and Q2 , in these quarters which are impacted by heavy rainfall and monsoons . So typically Q1 and Q2 , the energy margin is impacted by the seasonality which we expect to recover in the Q3 and Q4, but yes that is something as I mentioned in my talk earlier as well that is the constant effort that we are making to improve operational efficiency which reduces our energy cost and 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 – BNP Paribas Paribas/Mumbai Understood. For the new tenanc ies from Vodafone Idea do you negotiate it at all ? Is there any scope for that especially if competition offers bulk discount? Can you respond or you have a flat rate and there is no scope for negotiation? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited As I said our offering besides commercial is a strong operation al 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 – BNP Paribas Paribas/Mumbai Can you share your thoughts on dividend payment in the coming quarters which include cash collection and lower capex? Prachur Sah – Managing Director & Chief Executive Officer – Indus Towers Limited Kunal as we have always maintained in our previous calls and now as well we have a very clear dividend policy which directs u s 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 – Chief Financial Officer – Indus Towers Limited Just to add Kunal , the free cash that we generated in H1 , we have 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 si tuation and we will take that call together with the Board. Kunal Vora – BNP Paribas Paribas/Mumbai Thanks and just one last question how should we look at the finance cost going forward? The number has increased in the recent quarters? Vikas Poddar – Chief Financial Officer – Indus Towers Limited The finance cost is largely the cost of borrowing and I do not think there is anything major that has changed there. If you are looking at the net finance cost number then obviously there is a bit of fluctuation in our finance income which is driven by the fact that we are trying to collect interest on the overdue 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 – BNP Paribas Paribas/Mumbai I was referring to the net finance cost , which is elevated now compared to the recent quarters , so the recent quarters the numbers which you have seen are they sustainable numbers or will they come down? Vikas Poddar – Chief Financial Officer – Indus Towers Limited Like I said, it is 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 overdue right. So last year we manage to collect a large part of interest both in cash as well as via the accounting adjustment that we have explained in the Q3 and the Q4 results , so that effort continues and when we will collect those

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 9 - interest certainly that will reflect in the finance cost so I do not think we can really sort of peg the current finance cost for the next couple of quarters. Kunal Vora – BNP Paribas Paribas/Mumbai That is it from me. Thank you very much. Sunita – Moderator The next question comes from Mr Sachin Salgaonkar from Bofa/Mumbai. Mr Salgaonkar you may ask your question now. Sachin Salgaonkar – Bofa/Mumbai Thanks for the opportunity. My first question is just wanted to understand a bit that in one of your earlier comments did men tion about loading increasing from 4G to 5G , but when I look at the reported average rent per tenant or for that matter even the normalized one, it is 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 – Chief Financial Officer – Indus Towers Limited Sachin, 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 you explained earlier the ARPT is basically a function of 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 help 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 large part of the offset that is happening in the loading is the mix. Sachin Salgaonkar – Bofa/Mumbai 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? Vikas Poddar – Chief Financial Officer – Indus Towers Limited ARPT is the revenue per tenancy, so obviously with additional tenant 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 – Bofa/Mumbai Okay from a loading perspective. Okay fair point. That is very clear. The second question is Vodafone Idea recently concluded a USD 3.6 billion deal with multiple vendors ; is it fair to assume that there is not much of a contribution from that deal come into numbers and in subsequent quarters we should see that flowing through, and any timeline you could give from that perspective? Prachur Sah – MD & CEO – Indus Towers Limited I believe you are talking about the deal they have done for the active equipment. Sachin Salgaonkar – Bofa/Mumbai Correct. Prachur Sah – MD & CEO – Indus Towers Limited The active equipment comes on board, I think that is when the tenancy would start showing up.

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 10 - Tejinder Kalra – Chief Operating Officer – Indus Towers Limited Sachin, so obviously there is a time lag between when they close the deal and when they start getting the equipment for rol lout so for this current quarter obviously there is none. We see this coming towards the mid-to-end quarter is what indications we get from the customer so hopefully this quarter will see some things rolling out. Sachin Salgaonkar – Bofa/Mumbai My last question is, has anything changed for you from a Vodafone Idea perspective after the recent AGR verdict and I am asking that because there was this on e school of thought that whenever Idea finishes with their 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 Rs 7 billion to 8 billion kind of a payment what we see every quarter? Prachur Sah – MD & CEO – Indus Towers Limited Again, I cannot give you the look ahead and as I ha d informed earlier in the calls and now as well . We have started receiving our overdue payments and I think we remain engaged with the customer to get the overdue paid as fast as possible . So from our perspective the timeline has to be as quick as possible but we are working with the customer to make sure we get the overdue unwound. Sachin Salgaonkar – Bofa/Mumbai Got it. Very clear. Thank you. Sunita – Moderator The next question comes from Mr Vivekanand Subbaraman from Ambit Capital Private Limited/Mumbai. Mr Subbaraman you may ask your question now. Vivekanand Subbaraman – Ambit Capital Capital/Mumbai 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 FY2024 they include some income tax claims again connected to the treatment of network equipment and passive infrastructure assets . I just wanted to understand , I know this matte r is sub-judice, the one that you have recorded in notary, but does this verdict have any bearing on the way the income tax liabilities for which you have recorded Rs 41 billion rupees contingent liability or does that have any ramification on the income tax case, thank you? That is question one. Vikas Poddar – Chief Financial Officer – Indus Towers Limited Okay if I may just take this question Vivekanand. The show-cause notice that we have disclosed is with regard to GST so it is a different matter. The contingent liability for direct tax or income tax that you are referring to is a legacy matter that has been going on for a long time and that is basically goes back to almost 2010, 2011 and 2012 , so that matter is also at various levels of jurisdiction. So I think because we believe those matters are probably not based on the merits of the case and not a high -risk and that is basically being disclosed as contingent liability, so these two are very different. Have I understood the question right? Vivekanand Subbaraman – Ambit Capital Capital/Mumbai I was just wondering if they are linked or are they very different. Vikas Poddar – Chief Financial Officer – Indus Towers Limited They are very different. Vivekanand Subbaraman – Ambit Capital Capital/Mumbai

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 11 - Okay so you are confirming that even if there is an adverse verdict in respect to the AGR claims for which you have received the show-cause notice, it does not rub the income tax liability the wrong way? I mean, it does not mean that you will automatically inherit the income tax liability, correct? Vikas Poddar – Chief Financial Officer – Indus Towers Limited No, these are very different matters Vivekanand. We can maybe discuss offline. I may share more details if you want but these are very different matters. Vivekanand Subbaraman – Ambit Capital Capital/Mumbai Sure that is very clear. 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 Rs.600 Crores to Rs.700 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 – MD & CEO – Indus Towers Limited Vivekanand, I am not sure how you split the maintenance capex there, but before the merger the tower count was what it was and after the merger the tower count has increased substantially, so I do not think there is any lumpiness as far as maintenance capex is concerned. It is a very standard practice that is followed in terms of how the equipment is replaced or refurbished, so I do not think there is any lumpiness on maintenance capex. Vivekanand Subbaraman – Ambit Capital Capital/Mumbai I am calculating maintenance capex as the overall capex minus growth capex . I do understand that the number of towers ha s 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 – Chief Financial Officer – Indus Towers Limited Just to sort of add some color to this, I mean probably maintenance capex should not be looked at in that manner because 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 if you have the pack in front of you. In September 2024 we have spent Rs.2.9 billion and before that was Rs.2.6 billion and before that was Rs.3.4 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 and annual perspective it is pretty stable, consistent year-on-year. Vivekanand Subbaraman – Ambit Capital Capital/Mumbai Okay fair enough. I will seek more clarify if needed on the legal basis. Thank you. Sunita – Moderator I would now hand over the call proceedings to Mr Prachur Sah for the final remarks. Prachur Sah – MD & CEO – Indus Towers Limited To sum up, the progress we are making on each of our strategic priorities furthers our competitiveness and reaffirms Indus as a leading player. Our strong financial performance is underpinned by continuous rollouts, also supplemented by collections of past overdue from a major customer. We expect the ongoing rollouts of a major customer coupled with start of rollouts 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 on offer. I thank you all for joining the call and wish all of you a very Happy Diwali. Sunita – Moderator

Transcript of Indus Towers Limited Second Quarter ended September 30, 2024 Earnings Call Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Indus Towers Limited. - 12 - Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to audio conference service from Airtel and have a pleasant evening.