indus towers ltd share price Management discussions


India Telecom Industry Overview

The Indian telecom market is the second largest in the world in terms of the number of subscribers with a wireless subscriber base of 1.14 billion (as of March 31, 2023).

Wireless broadband base now stands at 813.08 million, representing a wireless broadband penetration of ~71%, compared to 67% last year. (Source: TRAI). The active subscriber base was at 1.03 billion with the share of active users at 90.4%, compared to 89.4% last year.

There has been a strong trend of data consumption in the last few years. Several factors have facilitated this consumption story, led by the Governments strong push towards digitization which put a number of positive regulatory developments in action. Technological advancements and higher tower rollouts have led to increased network capacity and coverage. Low-cost smartphones and lower tariffs have further increased the affordability for the average Indian consumer, especially in rural areas. India has one of the lowest tariffs globally, thus outlining the potential for growth of Telecom Service Providers (TSPs) ARPUs in the future. The demographic profile of India is favourable, with the median age of the Indian population at 29 years in 2022. Younger consumers are more likely to embrace digitization than their older counterparts, and they demand higher speeds and low latency for their increasing consumption of video content and cloud gaming among other things. To support these functionalities, having the appropriate telecom infrastructure in place is essential.

The Nokia India MBiT Index Report 2023 reiterates the strong data consumption seen over the past few years. Data traffic in India remains amongst the highest in the world and has grown at a CAGR of 50% in mobile broadband over the past 6 years. The average monthly data traffic per user has also grown at a CAGR of 19% in the last 4 years to ~19.5 GB in December 2022. The momentum continued in 2022 as both overall data traffic and average monthly data traffic per user grew by 14% year-on-year. The growth is underpinned by the continued migration from 2G/3G to 4G, given 31 million 4G data users were added/upgraded in 2022. The launch of 5G services during the year and the rapid rollouts by the operators are expected to augment this data consumption even further. As per the Nokia report, cumulative 5G smartphone shipments are expected to cross the 100 million mark in Q2 2023, surpassing 4G smartphone shipments by the end of 2023. As per Ericsson mobility report, 5G subscriptions are expected to reach the 500 million mark by 2027 with a penetration of about 40%. Geographically, the rural market is underpenetrated compared to urban market, as evidenced by the low teledensity of 57% in rural compared to 128% in urban. The non-wireless broadband segment also has significant potential for growth in the future. As of March 2023, the share of non-wireless broadband subscribers was only 4% of total broadband subscribers base. (Source: TRAI)

"Average monthly data traffic per user grew at a 5-year CAGR of 28% to 19.5 GB in December 2022"

India Telecom Infrastructure Industry Overview

The Indian Telecom Infrastructure industry is comprised IP-I registration holders that establish and maintain assets such as towers, Right of Way (ROW), duct space and dark fiber for the purpose to grant on lease/rent/sale basis to the Licensees of Telecom Services under Section 4 of the Indian Telegraph Act, 1885.

"Pan India telecom towers more than quadrupled to ~754,000 since 2010" For more than a decade, IP-1 players have acted as anchor for the swift proliferation of wireless services in the country. With the 5G rollouts in full swing and a pan-India rollout planned by the top two operators within the current financial year, infrastructure players are expected to continue playing a key role in supporting the rollouts. By providing shared infrastructure to TSPs, IP-1 players ensure opex and capex efficiencies, faster time-to-market and avoid any duplication across the value chain which would otherwise lead to wastage of resources. India has been at the helm of passive infrastructure sharing, a model that has been emulated globally. Since 2010, number of towers has more than quadrupled to ~754,000 towers at present providing ubiquitous quality services to 1.17 billion consumers.

As outlined earlier, the rapid growth in data consumption coupled with the fast-paced 5G rollouts are expected to provide a fillip to the tower infrastructure industry. As 5G proliferates across the nation, there will be a need for increased capacity to meet the network demands. As per the EY-DIPA September 2022 report, the current capacity per tower site is 1 Gbps for 2G/3G/4G services, while going forward the capacity needed for each site is expected to increase to 10-20 Gbps for 5G services. Hence macro towers will increasingly be supplemented by leaner structures like small cells and In-Building solutions (IBS) ideally connected by a fiber network. As per the report almost 85% of the data traffic and 70% of voice traffic is currently generated indoors and would drive the demand for IBS. 5G would also further strengthen the case for fiberization of towers, another opportunity that can be explored by towercos. Indias current tower fiberization level is at around 35% which is significantly lower than the likes of Thailand (90%), Malaysia (80%), US, Japan and China (75%), as per the report.

This is expected to pick up to ~70% by 2024-25. The fiber kms per capita for India is also quite low at 0.09 compared to upwards of 1.3 in US, Japan and China. The Government is also driving fiber connectivity and is aiming to ensure fiber connectivity to all villages by 2023. In addition to the opportunities presented by the usual course of business, there are a few adjacent areas that are appealing to towercos. Handling the active infrastructure of TSPs is one such opportunity given towercos expertise of handling passive infrastructure and the cost efficiencies arising out of such an arrangement.

The pan-India presence of tower sites also provides an opportunity to provide EV charging infrastructure or outdoor advertising. Given the proximity of tower sites to customers, they are ideal for the co-location of edge computing infrastructure. All these areas can be explored by towercos.

Industry Structure and Key Developments

Launch of ‘Gati Shakti Sanchar portal: The year gone by saw an important development in the telecom sector in the form of the launch of a centralized portal ‘Gati Shakti Sanchar to facilitate ‘Right of Way ("RoW") permissions and approvals. The portal has eased the right of way application process through a single window, and allows real-time tracking of applications, which is expected to enhance transparency of the entire process. With 5G rollouts in full swing, this significantly eases the site acquisition process and leads to a much faster creation of 5G infrastructure in the country.

Right of Way (RoW) changes: Under the notified Right of Way (Amendment) Rules, 2022, street furniture can be used to deploy small cells at a nominal cost. The ability to use street furniture is important from 5G perspective, as telecom infrastructure needed to facilitate 5G would be in the form of much leaner structures and in large quantity. As per RoW (Amendment) Rules, 2022, licensees can deploy telecom infrastructure over any private property and shall not require any approval from the concerned authority but shall submit an intimation prior to commencement of such establishment.

The Government is also working with cross sectors i.e., National Highways Authority of India (NHAI), Ministry of Road Transport and Highways (MoRTH), Indian Railways to align their RoW policy with central notified policy for faster utilization of land and building available with them. Indian Railways have amended their policy and allowed IP1 infrastructure players to deploy telecom infrastructure on their land/property.

Draft Telecom Bill: The Government released the draft Indian Telecommunication Bill, 2022 in November for public consultation, proposing comprehensive legislation to replace three laws: the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession) Act, 1950. These existing laws were made decades before the internet age and the technology currently available, hence a new single bill makes more sense from a relevance standpoint.

As per the Government, the primary motive of the bill is to protect consumers by ensuring quality service and maintaining a healthy competition. The bill states that in case a TSP becomes insolvent, the spectrum assigned to it reverts to the control of the Government. The bill in its current form also allows the Government to waive license fees /registration fees, interest, additional charges or penalty or damages payable by TSPs, if needed to protect consumers, preserve competition, or ensure continuity in telecom services.

5G Updates: The year began with the announcement of the 5G spectrum auctions by the Government. The auctions were conducted in July-August and saw active participation from the top 2 operators. The operators began their 5G rollouts in October, which have progressed at a rapid pace since. A brief description of these events is given below:

a) Auction - The 5G auction in July-August saw active participation from the TSPs, with the acquisition of a total of 51,226 MHz of spectrum across bands, out of a total of 72,098 MHz put up for auction. Out of the total acquisitions made, Jio acquired 24,740 MHz of 5G airwaves at a cost of ~Rs 881 billion. Airtel bought 19,868 MHz of airwaves worth ~Rs 431 billion while VIL spent ~Rs 188 billion to buy 6,228 MHz of airwaves. The top two operators also announced their aggressive rollout plans. Airtel is planning a pan-India rollout by March 2024, while Jio expects to complete its pan-India rollout by December 2023.

b) 5G rollouts The TSPs began rolling out 5G services in October and the rollouts have been progressing at a rapid pace with operators working towards their plan for a pan-India 5G rollout within the stipulated timelines. Within 6 months of the launch, more than 140,000 Base Transceiver Stations (BTS) have been deployed across the country, with the top 2 operators together putting up more than 30,000 BTS per month on an average. As a result, 5G services are now available in more than 500 cities across the nation. Both the operators have decided to rollout 5G services on different technologies. While Airtel has opted for 5G Non-Standalone (NSA), Jio has opted for 5G Standalone (SA). Different technologies also warrant different network configuration and the number of equipment to be installed on a tower.

As the leading passive infrastructure player in the country, Indus Towers is committed to facilitate the swift rollout of 5G services. The company is seeing increased demand in the form of additional loading of 5G equipment on its existing sites and it remains well-placed to cater to this demand and maximize the opportunity arising out of it. As the network matures with greater 5G adoption, there will be a need for increased capacity as well, driving the demand for new sites.

"5G auction concluded with >50,000 MHz of spectrum purchased for more than Rs 1.5 trillion"

SingTel stake sale in Airtel: In September 2022, Singtel concluded the sale of its 3.33% stake in Bharti Airtel for ~Rs. 144 billion. Around 3.2% was acquired by Bharti Telecom Limited (BTL), while the rest was acquired by the public. Post completion of the stake sale, BTL owned 38.62% in Airtel, up from 35.4%. Singtels effective holding in Bharti Airtel decreased from 31.4% to 29.7%. Its reduced holding in Airtel will include a 19.2% (up from 17.5%) indirect stake through BTL and a 10.5% (down from 13.9%) direct stake. Mittal familys effective stake in Airtel direct and through BTL increased to 25.5% from 23.9%.

VIL equity conversion: In February 2023, the Government cleared the conversion of VILs interest on spectrum installments and AGR dues to Government equity in line with the reforms and support package for telecom sector announced in September 2021 and the conversion option exercised by VIL earlier. Subsequently, equity shares of VIL against its interest dues of Rs. ~161 billion were allotted to the Government. Post the allotment the shareholding of the Government of India stands at 33.44% in the Company.

"5G gathering momentum with completion of coverage across more than 500 cities"

Company updates

Update on Key Managerial Personnel and Board of Directors: In December 2022, the Board of Directors of the Company appointed Mr. Prachur Sah as Managing Director and Chief Executive Officer (MD & CEO) of the Company w.e.f. January 3, 2023, for a period of five years. Additionally, Mr. Pankaj Tewari was appointed as an additional director in the category of Non-Executive Non-Independent Director while Mr. Ramesh Abhishek was appointed as an additional director in the category of Independent Director.

Master Service Agreement (MSA) renewals: During the year, the company renewed a large part of its colocation portfolio with its two major customers. Both the customers have renewed the colocations for a period of 10 years thereby assuring long-term commitment and revenue for the Company, while retaining the option of exiting up to 9% sites without exit penalty. Though the revised pricing is likely to result in marginal reduction in revenue for the Company, the reduction in revenue should be offset by incremental revenue from future rollouts by the customers for their network expansion.

Opportunities and Threatsts

Opportunities

Network expansion led by 5G rollout and further penetration of 4G:

The fast-paced 5G rollouts coupled with the migration of 2G/3G users to 4G are expected to lead to the increased demand for passive telecom infrastructure to handle both coverage and capacity requirements. The demand for passive infrastructure presents a greenfield opportunity for the towercos in the form of 5G small cells, strengthening of existing towers for loading of 5G equipment and network densification through infill sites for further penetration of 4G. As per the EY-DIPA report January 2022, outdoor small cell deployment in India is expected to grow from 80,000 - 90,000 in 2020 to 475,000 - 550,000 by 2025. Since this will require a large volume of small cells and infill sites, optimisation of site and tower design for reduction of both capex and opex will be the key for a quick rollout by TSPs.

Given the expertise of towercos in getting RoW permissions and deploying towers in an efficient manner, the towercos are better placed to capture this opportunity. The coverage gap in 4G network especially in rural areas for leading TSPs also offers a great opportunity. As the TSPs are increasing their focus on bridging this gap, leading towercos stand to benefit from this by capitalising on their existing relationship with TSPs and expertise in efficient site rollout.

Business adjacencies: For a tower company, several adjacent business opportunities exist beyond the domain of creating and managing passive infrastructure. The ubiquitous presence of tower sites presents an opportunity to provide Electric Vehicle (EV) charging infrastructure. Adoption of Electric Vehicles is increasing every day and is expected to grow substantially in the future, considering the focus of countries across the world to reduce their environmental impact by using cleaner fuels.

Towercos already have the experience of managing distributed infrastructure, acquiring land or site and providing power solutions on these locations which are the key requirements for setting-up EV charging stations. Experience in managing these infrastructures at a large scale is a big competitive advantage for towercos. This makes a good case for towercos to build on this emerging opportunity.

On similar lines, towercos are also well positioned to provide outdoor advertising and surveillance on their sites. Presence of tall structures in cities and along the highways make them an apt choice for advertisers. Pan India presence of such structures offers a greater coverage opportunity to an entity with national interest.

Inorganic growth: Presently, the towerco space is comprised 3 large players supplemented by a number of small players with relatively limited footprints. The present structure of the operator industry with only 3 major TSPs is not conducive for the existence of a large number of towercos. This is because the whole construct of efficiencies arising out of passive infrastructure sharing gets diluted in such a situation. Hence, consolidation within the towerco industry would be a logical progression and Indus Towers keeps evaluating such opportunities which would offer value.

Regulatory actions:

The Governments positive steps to promote the faster deployment of telecom infrastructure across the nation provides an opportunity for towercos. The launch of a centralized ‘Gati Shakti Sanchar portal to facilitate ‘Right of Way ("RoW") permissions and approvals has eased the right of way application process through a single window, and allows real-time tracking of applications, which is expected to enhance transparency of the entire process. Changes to Right of Way (RoW) rules now allow towercos to deploy small cells on street infrastructure at a nominal cost.

The ability to use street furniture is important from a 5G perspective, as the telecom infrastructure needed to facilitate 5G would be in the form of much leaner structures. Additionally, towercos can deploy telecom infrastructure over any private property by simply submitting an intimation to the concerned authority prior to commencement of such establishment, without the need for an explicit approval. The Government is also working with cross sectors i.e., National Highways Authority of India (NHAI), Ministry of Road Transport and Highways (MoRTH), Indian Railways to align their Right of Way (RoW) policy with central notified policy for faster utilization of land, building available with them. Indian Railways have amended their policy and allowed IP1 infrastructure players to deploy telecom infrastructure on their land/property.

Threats

Operators financial state: The financial stability of the TSPs still remains a key monitorable for the sector. In the past few years, TSPs have made significant outlays on spectrum purchase and rollouts of services. The year 2022-23 also witnessed substantial investments from the major TSPs towards aggressive rollout of 5G services. This is expected to continue in the near to medium term as TSPs aim for pan India coverage of 5G services in the current year, thus putting further stress on their financials. Such developments may impair the ability of TSPs to make payments to Indus Towers for the passive telecom infrastructure Indus provides.

Consolidation in TSP space: The structure of the telecom industry has evolved a lot over the last decade from more than 10 TSPs to the current structure of 3 large private TSPs. Further consolidation within the space would pose a threat to towercos, as the fundamental benefit of passive infrastructure sharing offered to TSPs would be significantly diluted. Operating cost will increase for both towers and TSPs, and may impact the profitability.

Rising competition among towercos: The towerco industry is currently represented by 3 major towercos and a large number of small players. Consolidation in the TSP space has caused rise in the competitive intensity putting pressure on pricing and market share. As the industry is also witnessing a shift towards leaner towers for network densification purpose, small players have become more active in acquiring incremental share through predatory pricing etc. These factors may impact the revenues and profitability of Indus Towers. Indus Towers pan-India network, and expertise and experience in building infrastructure solutions competitively provide it a moat against other players.

Unfavourable terms for contract renewals: Any adverse changes to the contract terms with the customer such as lower pricing or annual escalation upon renewal of leasing agreements pose a threat to the Company. The contracts are typically signed for a period of 10-year and any unfavorable change in the terms would directly affect the financials.

EMF radiation norms: EMF radiations are the invisible electric and magnetic forces arising from the active infrastructure installed at telecom towers. World Health Organization (WHO) has referred to the International Exposure Guidelines developed by International Commission on Non-Ionizing Radiation Protection (ICNIRP). Department of Telecommunication (DoT) has already prescribed stricter precautionary limits for Electro Magnetic Field (EMF) radiation from antenna on mobile towers.

The present prescribed limits for EMF radiations from Base Station in India are one-tenth (1/10th) of internationally prescribed limits of ICNIRP. To ensure compliance to the prescribed stricter precautionary norms of EMF radiation from antennas on mobile towers, the extensive audit of comprehensive compliance self-certificates, submitted by telecom service providers and base transceiver station (BTS) sites, is carried out by Telecom Enforcement Resource & Monitoring (TERM) field units of DoT.

This is regularly done by TERM units for the purpose of limiting the EMF radiation exposure and keeping public areas in the vicinity of towers safe. In case of any non-compliance i.e. if any BTS site is found to violate the prescribed EMF norms, severe pecuniary actions are taken including closing of BTS site as per the prescribed procedure.

DoT has also referenced on WHO report as well as 25,000 articles in the past 30 years to say that there was no confirmation of "any health consequences from exposure to low level electromagnetic fields." Despite these measures, in the recent past there have been concerns around the radiations and its ill effects due to which securing a site for new tower addition has become difficult in few pockets. If proper information is not disseminated to public, it might affect tower infrastructure business adversely.

Strategy/Outlook:

The demand outlook for the telecom infrastructure space remains healthy, underpinned by the strong data consumption story, accelerated 5G rollouts and network gap in 4G services. Looking forward, one of the Companys key priorities is to acquire the most of incremental market share. To this end, the Company is continuously working towards simplifying its end-to-end processes to facilitate a faster time-to-market of its products, which has been one of the important asks of the customers. Use of technology and innovation in tower design and erection will be key enabler to achieve this goal.

The Company has a sharp focus on driving cost efficiencies in both capex and opex to further strengthen the cost competitiveness of its services. Indus Towers prides itself on delivering operation excellence to its customers as maintaining a high uptime of its sites is one of its strategic priorities. The Company believes that time to market, cost and uptime have potential to create value for its customers, hence it remains committed to offer competitive services to them. The Company‘s strategy is aligned with its long-term vision of providing customer delight through continuous innovation.

Financial Results & Operations:

The Companys net tower portfolio grew to 192,874 and net colocations grew to 342,831 as on March 31, 2023. For the year ended March 31, 2023, the closing sharing factor stood at 1.78 times per tower. For the quarter ended March 31, 2023, Indus Towers had average sharing factor of 1.79 (with closing sharing factor of 1.78 per tower). The consolidated revenues for the year, at Rs. 283,818 Mn grew by 2% over the corresponding period last year.

For the year ending March 31, 2023, EBITDA declined by 35% Y-o-Y to Rs. 97,670 Mn, representing an operating margin of 34.4%. EBIT declined by 55% Y-o-Y to Rs. 43,447 Mn and the net profit for the year decreased by 68% to Rs. 20,400 Mn.

The financial statements of the Company have been prepared to comply in all material respects with the Indian Accounting Standard (Ind AS) notified under section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 issued thereunder and other relevant provisions of the Companies Act, 2013 as amended from time to time.

Parameters Unit Full Year Ended Mar23 Full Year Ended Mar22
Debtors Turnover Times 4.76 5.09
Current Ratio Times 1.07 1.40
Debt Equity Ratio Times 0.22 0.25
Operating Profit Margin (%) % 34.4% 53.9%
Net Profit Margin (%) % 7.2% 23.0%
Interest Coverage Ratio1 Times 6.72 9.98
Inventory Turnover NA NA NA
Average Sharing Factor Times 1.79 1.80
Closing Sharing Factor Times 1.78 1.81
Sharing Revenue per Tower p.m Rs. 76,379 80,467
Sharing Revenue per Sharing Operator p.m Rs. 42,580 44,264
Return on Shareholders Equity Pre Tax % 12.8% 44.3%
Return on Shareholders Equity Post Tax % 9.4% 33.5%

Risks & Concerns

The following section discusses the various aspects of enterprise-wide risk management. Readers are cautioned that the risk related information outlined here is not exhaustive and is for information purpose only.

Indus Towers Limited believes that risk management and internal control are fundamental to effective corporate governance and development of a sustainable business. The Company has a robust process to identify key risks across its operations and prioritize relevant action plans that can mitigate these risks. Key risks that may impact the Companys business include:

Financial health of operators:

The business growth mainly depends on the demand from operators. Financial health of the key customer continues to be a concern. The deterioration in the financial health of the operator due to increased competition, adverse regulatory regime, general economic conditions, policy changes etc. could lead to persistent payment defaults leading to subdued cash flows.

Emerging risk due to loss of competitive advantage

There is a possibility of the company losing its competitive advantage as a result of - a) Market share erosion b) Tenancy churn

Risk of sustainability of business in the long run

There may be risk of business sustainability if the Company does not focus on-a) Diversification - New avenues of business b) Adherence to the ESG requirements for the Company c) Transitioning to alternative energy sources, such as renewable energy, which may require substantial investments in new infrastructure and equipment in case Government restriction is imposed on the usage of diesel which may pose significant challenge to the business

Natural Disasters Damaging Telecom Networks:

The Companys telecom infrastructure networks are subject to risks from natural disasters or other external factors. The Company maintains insurance for its assets, equal to the replacement value of its existing telecommunications network, which provides cover for damage caused by fire, special perils and terrorist attacks. Such failures and natural disasters even when covered by insurance may cause disruption, though temporary, to the Companys operations. The Company has been investing significantly in business continuity plans and disaster recovery initiatives which will enable it to continue with normal operations and offer seamless service to its customers under most circumstances.

Technological Changes Affecting the Tower Demand:

With new technologies coming to market and ever-evolving customer requirements, agility is required to develop the right product portfolio and deliver new products profitably. The Company does not foresee any risk in near future and keeps assessing all the new technology advancements in the sector for better understanding and preparedness. Also, with respect to the product portfolio and price comparison, the Company is competitively placed given its leadership position.

Cyber and Data Security

The Company has reached a level where processes are enabled and there is continuous upgrade of IT processes. The data security is considered critical and accordingly addressed through focus on sensitivity of data and financial impact of data leakage. Cultural change is being driven from the top with a focus on new/ enhanced cyber-security and information security risks to ensure the interest is protected from sudden cyber-attacks or breach of confidentiality which can impact the business adversely.

General Economic Conditions in India:

A significant change in the government policies, issues related to tax and regulatory changes, impact of litigations or similar new taxes or levies could lead to significant financial exposure, loss of reputation or disruption of business operations.

Inherent risk of the business

Inherent risk of working in the field as well as structural weakness of old/ existing towers could lead to employee/ public safety incidents and/ or adverse media coverage. The company needs to be agile in responding to such situations in order to protect the business interest.

Internal Control Systems

The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are accountable for financial controls, measured by objective metrics on accounting hygiene and audit scores. The Company has deployed a robust system of internal controls that facilitates the accurate and timely compilation of financial statements and management reports, ensures regulatory and statutory compliance, and safeguards investor interest by ensuring the highest level of governance and periodic communication with investors. The Audit & Risk Management Committee reviews the effectiveness of the internal control system across the Company.

A CEO and CFO Certificate signed by the Managing Director & CEO and Chief Financial Officer, is included in the Corporate Governance Report which confirms the existence of effective internal control systems and procedures in the Company. The Companys Internal Assurance Group also conducts periodic assurance reviews to assess the adequacy of internal control systems and reports to the Audit & Risk Management Committee of the Board.

The Company has enhanced its internal control systems across all circle operations by significantly improving the quality and frequency of various reconciliations, enhancing the scope and coverage of revenue assurance checks, segregation of duties, rolling out of self-validation checks, regular physical verification, system audits, desktop reviews as well as continuous training and education. Indus Towers is certified by The British Standards

Institution (BSI) on ISO 27001:2013, a standard which specifies the requirements for establishing, implementing, maintaining and continually improving an information security management system within the context of the organization. It also includes requirements for the assessment and treatment of information security risks tailored to the needs of the organization.

Human Resources

At Indus Towers, we believe that our people are key to the success of our business. Indus Towers has set an example for several organizations in India by leading the way and demonstrating how putting people front and center in organizational initiatives can lead to achieving higher levels of business performance. We have our employees at the core of business who deliver and sustain the service delivery by living the core values of the organization Excellence, Customer, Integrity, Teamwork and Environment (ExCITE) and relentlessly work towards our vision to Strive for Customer Delight through continuous Innovation. Many employees and organizations spent last year settling into their new ways of working after the initial, prolonged disruption of the pandemic subsided.

This adjustment period coincided with an uncertain economy, continued resignations and "quiet quitting" making headlines amid declining employee engagement after a decade of growth. The Gallup Exceptional Workplace Award (2023) awarded to Indus Towers is a testament to the fact that despite these challenges, we as an organization stood strong with our values and built a culture that thrives in the new work environment. For a young organization like Indus Towers, which operates in the B2B space, defining and percolating an organization wide culture and becoming an employer of choice are two important and interrelated aspects.

The fact that we have received this award for the 10th consecutive year establishes the fact that to be among the most engaged workplaces across the world, we must continue to put people first and continue to make employee engagement a cultural priority in our business strategy. During our journey, we have realized that the first step in creating an employer brand is to define and articulate the culture which proves to be a differentiating factor for external and internal employees.

Connecting and engaging with 3,249 employees spread across our 22 circles has become possible through our constant communication. Our leadership has always been the first one to communicate with all employees and focus on their well-being is their priority. It regularly connects with their Team Managers to guide them on how to efficiently manage teams operating in critical and ambiguous times. Throughout the year, the leadership stood by their people in times of crisis valuing their relentless efforts and providing all the support that was needed.

The year gone by was transformational yet extremely demanding for our workforce at Indus. While on one side rigor on 5G roll out was one of the biggest ask from our customers, there has been a war of talent in the market for this niche skill. To address the situation in time, we ensured that we proactively start upskilling our current workforce. We invested in our talent through various training interventions and awareness sessions delivered by the Leaders and Subject Matter Experts to become 5G ready and ensured that we deliver on the expectations of our esteemed customers. At Indus, we constantly strive to build and sustain a culture of high performance and ensure that our employees play a crucial role in catalyzing growth and innovation in the organization. Therefore, we aim to build a future-ready, resilient, and nimble workforce. Our strategic approach to creating a pool of best-in-class talent is guided by a three-dimensional approach:

Attracting the right talent

Retaining the better

Advancing the best

Our unique employee value proposition and integrated approach to employee development align organizational values with the personal values of the employees thus helping them achieve breakthrough results.

The communication strategy at Indus has been instrumental in keeping morale of the employees high while ensuring their engagement at the same time. At Indus Towers, we believe in embracing technology and continue to use it to our advantage to make processes simpler and more efficient. We continue to automate our processes, use the systems and take advantage of technological shifts for people to become ‘fit for the future, both as professionals and as individuals. Keeping this in mind, we constantly organize various learning and development initiatives for our employees. While during the pandemic we capitalized on virtual and online learning, this year we also brought back many classroom training interventions as well. Keeping the development opportunities as relevant and engaging, this was a year of many new launches for Indus Towers when it came to future ready capability building for our employees. We reviewed our existing courses and made improvements as per the changing needs, future skills and training needs identified.

"License to Lead Program" was launched to prepare individual contributors to lead effectively in their first ever role as a People Manager. Launch of ‘5G Technology training module helped our employees gain knowledge about basics of 5G, its importance, technology changes, applications, etc.

‘Business of Telecom training module was launched to enable employees gain an insight into Indian telecom industry, its evolution journey, telecom markets, telecom infrastructure and more.

The STEP-UP program which is part of Campus to Corporate Training plan designed for Management and Graduate Engineer Trainees aims at training and guiding the campus hires to learn to adjust and assimilate in the corporate culture. To ensure employee safety at workplace, every new employee is required to undergo mandatory safety training as well as Competency Development Program (CDP) which introduces them to understand important concepts and their application in the context of their work. As part of our commitment towards holistic development, employees are continuously being encouraged to go for external certifications and MDP programs from elite institutions like ISB, IIMs, etc. At Indus, we focus on building an overall employee experience and engagement and well-being forms the core of it. Our aim is to make our people proud of the work they do at Indus. We want them not only to excel, but also to realize their contribution to the organization and provide them with opportunities to learn and grow.

Some of the key initiatives undertaken during the year included:

Volunteering programs under Personal Social Responsibility (PSR) were organized involving more than 800 volunteers impacting over 3,000 beneficiaries. 37 employees volunteered for 5 to 6 days with our partner NGOs and contributed their time and knowledge towards the community. Joy of Giving week was celebrated across all circles and corporate office and contribution to the society was made through initiatives such as book donation drive, food distribution, clothes donation, visit to old age home etc.

Conducted financial wellness programs that were designed to help employees manage their finances better. Programs were conducted on a regular basis to help employees manage health and stress in work and personal environment focusing on the overall physical and mental wellbeing.

Inhouse doctor and advisor continued to provide medical consultation and support to the employees.

Social and emotional wellbeing formed an essential part of our wellbeing programs. Regular field connect with employees through virtual/hybrid engagement initiatives helped to keep the connect stronger. Employee Appreciation Week was celebrated through which our employees reinforced the positive energy by recognizing colleagues who truly make an impact on their everyday work life. More than 15,000+ appreciations happened on the digital platform apart from physical recognitions. Rewards & Recognition through our digital platform ‘i-Appreciate continued to be a way for rewarding employees on the go. "Values Celebration" was celebrated for 3 weeks and each circle drove initiatives around the 5 values for these 21 days. It was a great occasion for our employees to remember our company values and how we live by them. It provided an opportunity to showcase great examples of how they exemplify these values in their day-to-day work. It also focuses on inclusion, which we think is crucial at Indus.

Diversity and Inclusion (D&I) is at the heart of Indus. Over the years we have been constantly working on strengthening our policies and processes to provide a safe, equal and inclusive work environment for all. We have been successful in onboarding diverse talent not only for office-based roles but also in the field. Indus Towers being an engineering and hardcore technical organization, availability of diverse talent is limited. However, share of women in our total employee population has inched up from 5.8% in 2021-22 to 6.3% in 2022-23 and we are determined to improve this year on year. Continuing our efforts to ensure a conducive and safe environment for women employees, we have added a mandatory training on Prevention of Sexual Harassment (POSH) to our online learning module, which needs to be completed by all employees within a month of joining. We also have a neutral Internal Complaints Committee which investigates and takes appropriate action on any concerns related to harassment raised by employees. Apart from this, many engagement initiatives are planned and calendarized for D&I. Talks by Women Leaders were held for I-WIN network, which is a Pan Indus womens network focused on networking, learning and growing. Year 2022 marked the launch of Gender Sensitization Workshops. This is an organization wide effort to build an inclusive workplace for our employees and create awareness on the ground to address gender sensitive issues.