Telecom Tower Industry Stabilizes Amid Improved Payments

The telecom tower industry outlook has been upgraded to stable from negative by ICRA. The change comes as customer collections improve, coupled with overdue payments being received. This financial shift has reduced dependency on external debt and is anticipated to boost the sector's return metrics.

ICRA has updated the telecom tower industry's outlook from negative to stable, attributing this shift to improved collections and the receipt of overdue payments. This marks a significant change in the financial health of the sector, which previously faced challenges due to delayed payments from telecom service providers.

The consistent and timely payments to telecom tower companies have vastly improved the industry's financial landscape, with receivable days dropping to about 45-60 days, well below the 80-day threshold that warranted a negative outlook. This positive trend has enhanced the liquidity of these companies while reducing their dependency on external debt.

Ankit Jain, Vice President and Sector Head of Corporate Ratings at ICRA, highlighted that better credit profiles of key telecom service providers have eased the working capital cycle for tower companies. Additionally, the significant clearance of past overdues has allowed for a reversal of previous provisions, marking a positive turn for the industry's financial footing.

(With inputs from agencies.)