Indus Towers Ltd Management Discussions

Macroeconomic Trends

Indian economy remained on a strong footing in 2024- 25, recording an estimated GDP growth of -6.4%, underpinned by resilient domestic demand despite global headwinds. The GDP growth was supported by strong private consumption, Government expenditure, Infrastructure development and policy reforms. CPI inflation averaged 4.6% in FY25, supported by easing food and core inflation pressures. Monetary policy shifted toward a growth-supportive stance, with the RBI cutting the repo rate to 6.0% by April 2025, following earlier tightening measures to curb inflation.

Looking ahead, the International Monetary Fund (IMF) projects global GDP growth to remain moderate at 3.3% in both 2025 and 2026. In contrast, Indian economy is forecasted to grow by 6.5% in both years, maintaining its status as the fastest-growing major economy globally. This divergence underscores Indias increasing weight in the global economy and highlights the critical role of its digital infrastructure and telecommunications ecosystem as long-term enablers of inclusive and sustainable growth.

Indian Telecom Industry Overview

Indian telecommunications sector - the worlds second largest by wireless mobile subscribers (1.16 Billion as of March 31, 2025) - remains a cornerstone of the countrys digital economy. 2024-25 saw the industry achieve new milestones in network expansion, policy reform, and service adoption. A record-fast 5G rollout, surging data usage, and proactive government support have fortified the sectors growth trajectory.

India executed one of the worlds fastest 5G deployments with almost 475,000 5G base stations being installed (covering more than 99% of districts nationwide) as of March 2025 and over 250 Million 5G subscribers. In line with the Governments focus on digital inclusivity, this period saw the completion of critical projects like the Kochi-Lakshadweep undersea cable, which enabled 5G and FTTH broadband in Indias remote islands.

Total telephone connections reached about 1.20 Billion as of March 2025 with overall teledensity at -85%. Notably, internet subscribers grew by -65% Y-o-Y to cross 0.97 Billion by March 2025, a testament to expanding connectivity. Average revenue per user has also been on an upswing as industry ARPU climbed to about ?172 in September 2024, growing 15% Y-o-Y - aided by tariff increase and premiumisation. The increase in ARPU was a major driver of industry financials as the sectors Adjusted Gross Revenue (AGR) (telecom services) jumped 8.2% year-on-year to t2.1 Trillion in 2023-24.

2024-25 witnessed significant structural shifts driven by policy and technology. A landmark development was the introduction of the Telecommunications Act, 2023, which came into effect during 2024, replacing the old laws with a modern framework. The new Act simplifies licensing & right of way simplification, streamlines spectrum allocation and sharing, bolsters security, and enables innovations like regulatory sandboxes - all of which overhaul the operating environment for telcos. The Act also enables a Digital Communications Commission and Digital Bharat Nidhi (fund) to promote R&D and innovation.

The outlook for Indias telecom industry is strongly positive, with multiple agencies forecasting healthy growth. KPMG/COAI forecasts suggest India could have over 1 Billion internet users and 1.4 Billion total connections by 2030, before nearing saturation.

India continues to see strong growth in data consumption, underpinning revenue growth. As per Nokia India MBiT Index Report 2025, the average monthly data traffic per user has grown at a CAGR of 19.5% in the last 5 years to -27.5 GB in December 2024. This is fuelled by one of the lowest data tariffs in the world ($0.16 per GB versus global average of $2.6) and a proliferation of smartphones. With over 1.2 Billion mobile connections and 600+ Million smartphone users in the country, virtually every aspect of life is driving data demand. Notably, Indias fintech surge (e.g. mobile UPI payments) relies on telecom networks - UPI transactions exceeded ?15 Trillion per month in 2024, enabled by widespread 4G connectivity.

The rollout of 5G is a game-changer that is still in early stages of unlocking revenue streams. By covering most cities and sizeable rural areas within 1.5 years of launch, Indian telcos have set the platform for broad 5G adoption. As affordable 5G devices are made available, 5G subscriptions are forecasted to swell.

As per the latest Ericsson Mobility Report, global 5G subscriptions are expected to account for around 67% of total subscriptions by 2030, totalling to over 6.3 Billion. During the September quarter, global 5G subscriptions grew by 163 Million to total 2.1 Billion, with 4G subscriptions falling by 69 Million. In India, 5G subscriptions are expected to reach around 970 Million by the end of 2030, accounting for 74 percent of mobile subscriptions.

Beyond consumer mobile, fixed wireless access (FWA) over 5G is emerging as a substitute for fiber broadband in areas where laying cable is difficult, opening a new market for home internet via 5G. Importantly, 5Gs enterprise applications - though nascent - are set to expand. Use-cases in smart factories, healthcare (remote diagnostics), smart cities, etc., are being trialled.

A GSMA Intelligence report estimates that 5G will add USD 455 Billion to Indias economy between 2023 and 2040 (-0.6% of GDP annually by 2040)- indicative of telecoms huge macroeconomic impact beyond just telecom company revenues. In the nearer term, GSMA expects 5G alone to contribute USD 26-27 Billion to GDP by 2030 through new applications.

Indias young, tech-savvy population and growing middle class underpin a robust demand outlook for telecom. With a median age in the late 20s and rising incomes, millions of new customers are entering the market for digital services each year.

Bridging the urban-rural digital divide offers a big opportunity. Rural India (home to -65% of the population) still has only about 59% tele-density versus -131% in urban areas as of March 2025. Rural consumers data usage is also far below urban levels, meaning as 4G/5G reaches deeper into villages, overall data traffic and revenues can increase. The Governments 4G Saturation and BharatNet programmes, backed by substantial funding, aim to connect every village by 2025. The rural market offers a long runway of growth - as seen by the 39% growth in rural connections from 2014 to 2024, which outpaced urban growth.

The enterprise segment in Indias telecom remains underexploited relative to developed markets. Enterprises contribute only -10-15% of Indian telcos revenues currently (versus -30% in some global markets), indicating “untapped B2B demand. With the advent of 5G, the concept of private captive networks for industries has gained traction. Telecom operators can play a crucial role by managing these private networks.

The data centre infrastructure segment in India is growing rapidly, thanks to data localisation and cloud adoption. Given the telecom is the backbone of emerging tech like Al, loT, cloud, and with Indias data centre market poised for high growth, robust telecom networks are indispensable.

The Indian telecom industry in 2024-25 not only solidified its recovery and growth path with significant on-ground developments - world-leading 5G expansion, improving finances, and a supportive policy regime - but also set the stage for future opportunities. With strong government backing, increasing investor confidence, and Indias insatiable demand for data, the sector is poised for sustained expansion in the coming years.

Indian Telecom Tower Industry Overview

Indias telecom tower industry forms the foundational layer of the countrys digital infrastructure. With -8.2 Lakh, it serves as the physical backbone that enables seamless mobile communication, broadband connectivity, and the rollout of next-generation technologies like 5G.

2024-25 saw robust government support to telecom infrastructure through landmark policy reforms. Foremost was the IndianTelecommunicat ions Act, 2023, which came into effect to modernise the century-old legal framework. This new Act classifies telecom infrastructure as critical infrastructure, mandates uniform Right-of-Way (RoW) rules, and streamlines licensing to spur innovation. By addressing issues like varied local levies and cumbersome approvals, the Act aims to create a more investment-friendly regime for tower and fibre rollout.

The governments GatiShakti Sanchar portal, launched earlier, has been instrumental in reducing RoW approval timeline from an average of 448 days in 2019 to about 60 days in 2024. As of late 2024, the portal recorded over 323,000 approvals for new towers and fiber routes, reflecting significantly accelerated infrastructure deployment.

The government also backed the tower industry via direct funding and connectivity programmes in FY25.

In September 2024, the Telecom Minister affirmed that 25,000 uncovered villages will get mobile internet by mid-2025, with around 20,000 new towers being erected under ?45,000 Crore of committed funding (largely through the Universal Service Obligation Fund).

Another noteworthy programme is BharatNet, the national fibre backbone for rural broadband. It made strong progress in 2024-25: by Feb 2025, over 214,000 gram panchayats (villages) were equipped with broadband, and 690,000 km of fibre laid under BharatNet.

Budgetary support has reflected these priorities. In Union Budget 2024-25, the Department of Telecom saw a substantial allocation (?81,000+ Crore) to bolster digital infrastructure, including BharatNets expansion and incentives for domestic telecom equipment manufacturing.

A Production-Linked Incentive (PLI) scheme for telecom and networking gear, launched in prior years, continued to spur local production of tower components. Furthermore, to reduce operating costs for towercos, industry bodies like DIPA successfully lobbied some relief: in 2024 the DoT redefined telecom towers as utility infrastructure to exempt them from certain local taxes including property taxes.

Indias digital consumption is on a steep upward trajectory, which will fuel tower industry growth in coming years, in addition to the ongoing transition from 4G to 5G. As per TowerXchange, India may need to add -500,000 new network sites in the next few years (mostly small cells and infill sites rather than full-sized towers) to meet 5G coverage and capacity needs.

The governments digital inclusion agenda will also drive tower industry growth. Flagship programmes like Digital India, are pushing connectivity deeper into semi-urban and rural areas. The plan to connect every village with 4G/5G and fibre broadband creates significant upside for tower demand.

Private network deployments for enterprises are another growth lever: 2024-25 saw initial private 5G networks (like a 5G network at Coal Indias mines), and more such captive networks will need tower-like infrastructure (small cell units, localised towers) often managed by infra providers.

Upgrading tower backhaul from microwave to fiber is crucial for 5G performance. Fibre connectivity to towers is currently relatively low as about 40% of towers are fiberised as of mid-2024.

By 2030, fiberisation could reach -80% with sustained investments, vastly improving network quality. The governments upcoming National Broadband Mission 2.0 is expected to set new fibre targets and facilitate the required investments.

Rural India is the biggest untapped market for telecom towers. While basic coverage has reached most of the country, many villages still lack quality mobile broadband.

Additionally, emerging technologies such as Low Earth Orbit (LEO) satellite broadband might complement towers in very remote areas, but even satellite gateways will need ground infrastructure at telecom sites.

As 5G and eventually 6G progress, network densification via small cells is a largely untapped field in Indias infrastructure. Dense urban and indoor environments will require thousands of small radios and in-building solutions to ensure consistent coverage and capacity.

The drive for greener telecom operations opens untapped potential in power management at tower sites. Telecom towers in India historically rely on diesel gensets for backup power, leading to high fuel costs and carbon emissions. There is a huge opportunity to replace diesel with renewable energy solutions at towers.

In 2024-25, the Indian telecom tower industry consolidated and scaled up to support an unprecedented digital boom. Key recent developments - nationwide 5G rollout, supportive government policies, and towercos own innovations - will contribute to sustainable growth of the sector.

Industry Updates

Vodafone Idea: Fundraising and Government Relief

In a significant effort to strengthen its financial position, Vodafone Idea successfully raised around ?180 Billion through a Follow-on Public Offering (FPO) in April 2024. During the year, Vodafone Ideas promoters Aditya Birla Group and Vodafone Pic also infused funds to the tune of ~?20.75 Billion and ~?19.80 Billion respectively.

Later in December 2024, the Department of Telecommunications (DoT) exempted Vodafone Idea from the requirement to furnish financial bank guarantees - previously amounting to about ?24,800 Crore - for spectrum acquired in auctions from 2012 to 2021. In March 2025, the Government converted ?36,950 Crore of Vodafone Ideas deferred spectrum dues into equity, increasing the Centres stake in the company to nearly 49%. These cumulative measures significantly reduced Vodafone Ideas immediate financial liabilities and improved its liquidity outlook.

Spectrum Auctions - June 2024

The June 2024 spectrum auctions saw a total of 141.4 MHz acquired out of the 10.5 GHz put up for sale. The total expenditure amounted to approximately ?114 Billion, with spectrum licenses valid for a 20-year period. Bharti Airtel emerged as the largest bidder, acquiring 97 MHz in the 900 MHz, 1800 MHz, and 2100 MHz bands for ?69 Billion. Reliance Jio purchased 14.4 MHz in the 1800 MHz band across Bihar and West Bengal at a cost of around ?10 Billion. Vodafone Idea secured 30 MHz of spectrum across 11 circles, covering the 900 MHz, 1800 MHz, and 2500 MHz bands, for a consideration of approximately ?35 Billion. The auction highlighted a more targeted approach by telcos, focussed on strategic renewals and selective additions.

Tariff Hike - June 2024

In a move to improve financial metrics, all three private telecom operators raised tariffs across prepaid and postpaid plans in June 2024. Prepaid tariffs were increased by 17-25%, while postpaid plans saw a 12- 17% hike. This was a significant tariff revision following the one actioned by major telcos in 2021 and was seen as a crucial step toward improving industry Average Revenue Per User (ARPU). The tariff adjustments are expected to aid in margin recovery and support continued investments in network expansion and service quality.

Regulatory and Policy Developments

The Government of India undertook several important regulatory reforms in 2024-25 to catalyse telecom infrastructure growth and sustainability. Key provisions of the Telecommunications Act, 2023 - focussing on public safety, SIM card regulation, and Right of Way (RoW) - were notified and came into force on June 26, 2024. To further streamline infrastructure deployment, the RoW Rules, 2024 were introduced on September 17, 2024 and made mandatory across all states/ UTs from January 1, 2025. These rules addressed longstanding issues such as the classification of telecom towers for property tax/ levies & taxes.

In November 2024, the Supreme Court of India ruled that telecom Companies including towercos were entitled to claim CENVAT credit on excise duties paid for mobile towers. Following this, the Delhi High Court ruled that Companies are entitled to claim Input Tax Credit (ITC) under the GST framework for goods and services used in constructing telecom towers. Both these measures are expected to reduce Companies tax liabilities.

In addition, the Bharat Nidhi Rules, 2024 were notified tooperationalisethe Digital Bharat Nidhi fund, aimed at supporting telecom projects in rural and underserved areas, as well as enhancing network security and innovation. The Green Open Access policy - promoting renewable energy usage in telecom operations - gained wider acceptance and was adopted by over 24 states by the end of the fiscal. These policy initiatives underscore the Governments commitment to enabling efficient, secure, and sustainable telecom infrastructure development nationwide.

Company Updates

Changes in the Board of Directors

Appointments:

• Mr. Dinesh Kumar Mittal was appointed as an Independent Director effective April 01, 2024, for a term of five years. His appointment was approved by shareholders via postal ballot on June 22, 2024. He was also appointed as Chairman of the Board with effect April 01, 2024.

• Mr. Jagdish Saksena Deepak was appointed as an Additional Director (Non-Executive, Non-Independent) effective August 01, 2024 Shareholders approved the same at the AGM held on August 29, 2024

• On December 21, 2024, the Board recommended the appointment of Mr. Rakesh Bharti Mittal and Mr. Soumen Ray as Non-Executive Directors, effective January 20,2025. Shareholders approved the same via postal ballot Resignations:

• Mr. Pankaj Tewari resigned as Non-Executive Director effective July 31, 2024

• Ms. Sonu Halan Bhasin, Independent Director, resigned effective August 30, 2024

• Mr. Ravinder Takkar, Mr. Sunil Sood and Mr. Thomas Reisten resigned as Non-Executive Directors effective November 18,2024, consequent to the cessation of the Board Appointment Rights of the Vodafone Shareholders in the Company

• Mr. Randeep Sekhon resigned as Non-Executive Director effective January 20, 2025

Buyback of Equity Shares

• The Board approved a buyback proposal on July 30, 2024, for up to 56.77 Million equity shares at ?465 per share, aggregating to ?26,400 Million, through a tender offer and was successfully completed during Q2FY25

• Post-buyback, the total paid-up equity shares stood at 2,638.16 Million as of September 30, 2024

Changes in Promoter Shareholding •

• During Q1FY25, Vodafone Promoters divested 484.7 Million shares (-17.98% of the Companys paid-up capital) via their eight wholly-owned subsidiaries. Bharti Airtel Limited acquired -26.95 Million shares (-1%) during the quarter, increasing its shareholding to 48.95% as of June 30, 2024

• Post completion of the buyback in Q2FY25, Bharti Airtels stake increased to -50.01%, and Vodafone Promoters stake stood at -3.00% as of September 30, 2024. Subsequently, on December 5, 2024, Vodafone Promoters sold their remaining -3.00% shareholding, fully exiting the Company

• Request letter was received on December 20,2024, from Vodafone Promoters seeking reclassification from Promoter to Public. The Company has undertaken necessary steps in compliance with Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the said reclassification. The approval of the Stock Exchanges is awaited

Subsidiary Classification under IND AS

Consequent to the change in composition of Board of Directors of the Company due to cessation of nominee directors of Vodafone Shareholders on November 18, 2024, the Company became a subsidiary of Bharti Airtel Limited under the applicable provisions of IND AS.

Green Energy Open Access

In line with its long-term sustainability strategy Indus Towers continued to strengthen its renewable energy portfolio in FY25 through key strategic investments in captive solar power projects. The Company entered into a Power Purchase Agreement with JSW Green Energy Eight Limited, a special purpose vehicle (SPV), for the procurement of 130 MW of solar power under the captive mode. As part of this arrangement, Indus committed an equity investment of approximately ?38.03 Crore to acquire a 26% stake in the SPV, in accordance with applicable electricity and open access regulations, with project completion targeted by March 2026, subject to regulatory approvals.

Indus also signed an agreement to acquire a 26% equity stake in Amplus Tungabhadra Private Limited, another SPV dedicated to establishing and operating a 50 MW captive solar power plant. The investment of approximately X21 Crore will facilitate the procurement of renewable power in compliance with the Electricity Act and Indian Electricity Rules, supporting the Companys objective of reducing its reliance on conventional energy. The completion of this project is anticipated by early 2026, subject to receipt of the requisite regulatory approvals.

Both transactions reflect Indus Towers strategic intent to integrate sustainability into its core operations and reduce its carbon footprint through renewable energy adoption, while ensuring regulatory alignment and cost-efficient energy sourcing.

Acquisition of Passive Infrastructure Assets

In line with its strategic priority to expand its market share through increasing its tower portfolio, in 2024-25, Indus Towers acquired over 12,000 telecom towers and associated passive infrastructure assets - including Macro Sites, Ultra Lean Sites (ULS), and Cell on Wheels (COW) - from Bharti Airtel. The asset base is a single operator portfolio and offers a potential of sharing these towers with other operators.

The Company with its expertise and resources can efficiently manage the infrastructure, ensuring seamless operations and maintenance, and improve service quality.

Financial Results & Operations

The Companys macro tower portfolio increased to 249,305 and macro co-locations increased to 405,435 as on March 31, 2025. Total Co-locations on leaner towers stood at 13,878. For the year ended March 31, 2025, the closing sharing factor stood at 1.63 times per tower.

The consolidated revenues for the year, at ?301,228 Million grew by 5.3% over the corresponding period last year. EBITDA grew by 41.9% Year-on-Year to ?208,447 Million, representing an EBITDA margin of 69.2%. EBIT increased by 67.7% Year-on-Year to ?142,479 Million and the net profit for the year grew by 64.5% Year-on-Year to ?99,317 Million.

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 together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and as amended by the Ministry of Corporate Affairs (MCA) from time to time.

Parameters	Unit	Full Year Ended
		March 2025	March 2024	March 2023
Debtors Turnover	Times	5.37	5.05	4.76
Current Ratio	Times	1.32	1.03	1.07
Debt Equity Ratio	Times	0.07	0.16	0.22
Operating Profit Margin (%)	%	69.2%	51.4%	34.4%
Net Profit Margin (%)	%	33.0%	21.1%	7.2%
Interest Coverage Ratio1	Times	14.48	19.98	6.72
Inventory Turnover	NA	NA	NA	NA
Average Sharing Factor	LEFT>Times	1.65	1.72	1.79
Closing Sharing Factor	Times	1.63	1.68	1.78
Sharing Revenue per Tower p.m		67,422	71,034	76,379
Sharing Revenue per Sharing Operator p.m		40,856	41,198	42,580
Return on Shareholders Equity Pre Tax	%	44.19%	33.74%	12.80%
Return on Shareholders Equity Post tax	%	33.36%	25.07%	9.40%

1 Interest coverage ratio: it is computed by dividing EBITDA for the preceding (last) 12 months from the end of relevant period by finance cost (net) for the preceding (last) 12 months excluding lease liabilities.

The financial ratios with a change of at least 25% during the year have been explained as below:

The profitability ratios improved due to significant collection of overdue receivables from one of its major customers.

This recovery of overdues led to significant increase in cash, part of which was deployed in short-term investments. This was the primary reason for increase in current ratio.

The debt equity ratio decline was due to the significant profits resulting in an increase in the retained earnings, hence the shareholders equity. The debt was also reduced as the Company repaid a significant portion of its debt.

The interest coverage ratio declined due to an increase in net finance cost. The finance income reduced due to lower collection of interest from a major customer, as it cleared a large portion of its overdues during the year.

Opportunities and Threats Opportunities

Network Expansion through 5G deployments and 4G Densification

Indias rapid 5G rollout, led by the top two operators, achieved nationwide service availability by December 2023. 5G requires a denser grid of sites to provide wide coverage and ultra-fast speeds. For tower companies, this translates into more equipment on existing towers and eventually demand for new sites once a certain level of penetration is achieved.

Meanwhile, the gap in network coverage between operators is driving demand for more footprints. A major operator has already started to scale up its 4G and 5G network following a substantial fundraise. This translates into heightened need for new towers, co-locations, and site upgrades.

Rural Connectivity and Coverage Expansion

Despite the mobile revolution, vast rural and remote regions (in India and globally) remain under-connected, representing a significant opportunity for tower expansion. Governments and multilateral agencies are funding programmes to extend networks into these areas, often subsidising tower deployment where commercial viability is marginal.

Strategic Consolidation

The Indian telecom tower landscape remains fragmented, with a mix of large operators and numerous smaller entities. This presents a compelling opportunity for strategic consolidation through acquisitions, enabling tower companies to expand their footprint, achieve scale, and drive cost efficiencies across operations. Beyond traditional tower assets, inorganic growth could also be pursued through the acquisition of businesses that complement and strengthen the existing infrastructure portfolio.

Green Energy Adoption and Efficiency Gains

Energy costs and emissions can be reduced by transitioning tower sites to renewable and hybrid power solutions. Setting up solar panels for onsite electricity generation will help in replacing diesel and fossil fuel generated electricity with green energy. Participation by towercos in providing solar infrastructure creates a business opportunity for them, and also brings down the overall energy cost. The Green Open Access initiative presents a notable opportunity for tower companies to transition toward cleaner and more economically viable energy solutions. By enabling direct procurement of electricity from renewable sources, this policy creates a pathway for towercos to reduce their dependence on conventional grid power and diesel-based systems, lower operating costs, and advance their sustainability goals.

Evolving Business Models j™

As the digital infrastructure ecosystem evolves, tower companies are positioned to capitalise on adjacent opportunities. Beyond the core areas discussed, some TowerCos are exploring managing small cell networks for cities or enterprises and investing in fibre networks to complement their towers. Another horizon opportunity is supporting private wireless networks: enterprises setting up their own 5G networks (in factories, ports, campuses) will need passive infrastructure and potential an active network management; towercos could serve as neutral hosts in that domain. Some are already offering managed DAS (Distributed Antenna Systems) inside buildings as a service.

Expanding Horizons - Adjacent Opportunities for Tower Companies

Tower companies are increasingly well-positioned to diversify beyond their core function of managing passive telecom infrastructure, with several emerging sectors offering compelling growth prospects.

One of the most promising areas is electric vehicle (EV) charging infrastructure. As global priorities shift toward sustainability and clean energy, the rise in EV adoption is accelerating in India. Towercos - given their extensive nationwide footprint, access to reliable power, and experience in operating distributed assets - are uniquely suited to support the rollout of EV charging stations. Indias electric vehicle market has experienced significant growth in recent years The governments ambitious targets - such as 30% of private cars and up to 80% of two- and three-wheelers to be electric by 2030 - underscore the urgency for a robust charging ecosystem. The Indian government has set guidelines for the installation of charging stations every 25 km on highways and every 3 km in cities. Tower infrastructure could play a vital role in supporting this transition.

Another fast-evolving area is the deployment of edge computing infrastructure, which is becoming critical to enable the next wave of Internet of Things (loT) applications. With their dispersed locations and built-in power and connectivity, telecom towers are potential candidates for hosting edge nodes. So far, this is nascent in India; towercos have not yet widely deployed micro data centres on site, but the concept has been proven elsewhere by their global peers.

Additionally, the growing demand for fiber connectivity to support 5G, FTTH, and enterprise-grade networks presents another strategic adjacency.

Threats

. Regulatory and Policy Risks * *

Tower infrastructure is subject to local regulations, permits and government policies. Complex approval processes for new sites or high fees for Right of Way can slow expansion. Recent measures taken by the Government to ease the approval process and reduce Right of Way charges will be a significant enabler for network expansion. In India, the Governments new National Broadband Mission 2 (NBM2) and Draft National Telecom Policy (NTP), 2025 impose specific sustainability mandates on tower firms envisaged adoption of renewable energy for 30% of telecom towers by 2030.

Financial and Market Risks B

Tower operators typically rely on a few large mobile network operators (MNOs) as tenants, leading to concentration risk. If a major tenant undergoes financial stress, merger, or shutdown, the tower companys revenues suffer. In recent years, TSPs have committed substantial capital toward acquiring spectrum and expanding service networks, particularly in the rapid deployment of 5G. While initial 5G investments have primarily focussed on upgrading equipment at existing sites, continued network evolution will necessitate the addition of new sites.

The four-year moratorium on spectrum and Adjusted Gross Revenue (AGR) dues, which was availed by telecom operators, is set to expire this year. This will result in substantial financial outflows once the moratorium ends. These combined factors could potentially constrain the ability of TSPs to meet their financial obligations to Indus Towers.

Technologic al risk

Evolving network technology can threaten the tower business. One risk is network sharing, if carriers share active networks, demand for separate tenancies can drop.

Another potential disruptor is the rise of non-terrestrial networks like satellite broadband. While satellites are unlikely to replace urban mobile networks, they could penetrate into rural backhaul or remote area connectivity that towers would otherwise serve.

> Environmental and Energy Risks

Operating telecom towers presents significant energy and sustainability challenges. Many towers in regions with unreliable electricity grids rely on diesel generators for backup power, which is costly and carbon-intensive. This is both a climate risk and a cost risk, especially as fuel prices or carbon taxes rise.

Extreme weather events exacerbated by climate change pose another risk: towers can be damaged by cyclones, hurricanes, or flooding, causing service outages and repair costs.

Operational and Execution Risks

The day-to-day operations of managing hundreds of thousands of dispersed tower sites carry their own challenges. Site acquisition and permitting can be a slow, unpredictable process; securing rooftop or ground leases and municipal permits often involves navigating local bureaucracies and community feedback. Any delays here directly impact rollout timelines. Maintenance and security at tower sites are another concerns. Towers in remote or rural areas can fall prey to battery theft, fuel theft, or vandalism, which not only incurs costs but also disrupts service.

Impact of TSP Consolidation on Infrastructure Sharing

The concept of passive infrastructure sharing was originally designed to deliver capital and operational efficiencies, while accelerating network rollout for telecom service providers (TSPs). However, the ongoing consolidation trend in the TSP landscape over the past decade has begun to challenge this model. If the number of active operators continues to shrink, the potential for infrastructure co-location sharing diminishes, reducing the economic advantages of shared tower usage and posing a strategic risk to tower companies.

Evolving Competitive Dynamics

The industrys gradual pivot toward deploying compact, lower-cost infrastructure such as lean towers and small cells for network densification may create an opening for smaller, more agile players, who can roll out these solutions at scale and potentially undercut larger incumbents through aggressive pricing strategies.

The renegotiation of long-term customer contracts presents a potential risk to future financial stability. Given that most agreements span a duration of approximately ten years, upcoming renewals may involve revisions to key commercial terms such as pricing structures and escalation clauses. Any adverse changes introduced during this process could directly affect the companys revenue trajectory and profitability outlook.

Telecom towers emit electromagnetic fields (EMF) as a byproduct of the active equipment they host, such as antennas and base stations. While international standards on EMF exposure are guided by the International Commission on Non-Ionising Radiation Protection (ICNIRP), India has adopted far more stringent norms. The Department of Telecommunications (DoT) mandates exposure limits that are just 10% of ICNIRPs globally accepted thresholds, reflecting a precautionary approach to public safety.

To ensure strict adherence, the DoTs Telecom Enforcement Resource and Monitoring (TERM) cells routinely audit EMF self-certifications submitted by telecom operators and conduct field inspections across sites. Non-compliance is met with severe penalties, including the potential shutdown of non-conforming base stations, in line with established regulatory procedures.

Despite these safeguards and international studies — including over 25,000 research articles reviewed by the World Health Organisation — consistently finding no conclusive evidence of health risks from low-level EMF exposure, public apprehension continues in some areas. Misconceptions around EMF radiation have, in certain cases, led to resistance from local communities, making it more challenging to acquire new tower sites. Without effective communication and public awareness efforts to dispel these fears, the infrastructure rollout—particularly in densely populated or sensitive regions—could face delays or opposition, posing risks to network expansion and service quality.

Strategy/Outlook

During 2024-25, Indus Towers remained focussed on delivering against its core strategic priorities: increasing market share, enhancing cost efficiencies, maintaining best-in-class network uptime, and advancing its sustainability agenda. The Company also accelerated efforts to diversify into adjacent growth areas including captive solar power, and digital connectivity solutions.

Market Share and Customer Growth

Indus Towers sustained a majority share of its customers network rollouts during the year, driven by its robust execution, tailored deployment models, and digital integration across the partner ecosystem. Contributing to this growth was the renewed rollout momentum from Vodafone Idea, which cleared all its past dues to the Company and resumed network expansion following its successful fundraise and the Governments relief measures. Indus Towers captured a substantial part of Vodafone Ideas new rollouts during the year and expects this momentum to continue.

The Company also concluded the acquisition of over 12,000 towers from Bharti Airtel during Q4, further expanding its footprint. Additionally, the Company recorded its highest-ever quarterly deployment of In-Building Solutions (IBS) in Q3FY25, enhancing its service proposition in urban and high-density environments. Additionally, the Company is evaluating opportunities in areas such as satellite broadband infrastructure, FTTH support, and expanded IBS offerings as future growth levers.

Cost Efficiency and Operational Excellence

Indus Towers continued to drive operating leverage through disciplined cost control, improved site planning, and digitised workflows. Diesel consumption declined 6% Y-o-Y in FY25, enabled by a growing solar footprint, electrification of non-electrified sites, deployment of additional storage solutions and conversion of sites from indoor to outdoor. The number of solar-enabled sites increased to over 29,000 by end of FY25, supported by proactive investment in renewable procurement and deployment of Li-ion batteries for energy storage. On the rental front, Indus leveraged product design improvements, site prioritisation, landlord segmentation, and negotiation strategies to reduce costs. Technological interventions, such as real-time remote monitoring and technician productivity tools, also contributed to savings.

Network Uptime and Delivery Excellence

Delivering superior uptime remained a core customer requirement and a central pillar of Indus Towers strategy. Despite multiple quarters of extreme weather conditions including floods, cyclones, and landslides, the Company further improved its uptime levels to 99.97% across its network. These outcomes underscore the resilience of its field teams and the maturity of its network monitoring systems.

Sustainability Leadership

Indus Towers deepened its commitment to sustainable operations through strategic investments and recognitions. During the year, the Company entered two significant captive solar power arrangements, securing long-term renewable energy access. Both investments are aligned with the Green Energy Open Access framework and support the Companys Net Zero ambitions. In parallel, solar site deployments crossed 29,000 sites. Indus Towers also made progress in social sustainability, including gender diversity initiatives, partner ESG training, and award-winning CSR interventions, such as its Digital Transformation Van programme and flood relief efforts.

Outlook

With continued additions by a major customer, Vodafone Ideas improved financial visibility, and its return to network investments, Indus Towers is well positioned for delivering growth. The acceleration in 5G deployments and strong sectoral data demand underpin a favourable operating environment. Backed by operational resilience, cost discipline, and a long-term sustainability roadmap, Indus Towers remains committed to delivering value to its all stakeholders while evolving into a future-ready digital infrastructure platform.

Detailed discussion on Strategy/Outlook forms part of Strategic Priority Framework section of this integrated report.

Risks & Concerns

The following section provides an overview of the various aspects of enterprise-wide risk management. Readers are advised that the risk-related information presented here is not exhaustive and is intended solely for informational purposes. Indus Towers Limited firmly believes that effective risk management and robust internal controls form the cornerstone of sound corporate governance and are essential for building a sustainable business.

The Company has implemented a comprehensive framework to systematically identify key risks across its operations, assess their potential impact, and develop prioritised action plans to mitigate these risks effectively. Detailed discussion on Risk Management forms part of Risk Management Framework section of this integrated report.

Internal Control Systems and their Adequacy

The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) hold responsibility for ensuring robust financial controls, evaluated against objective metrics on accounting hygiene and audit scores. The Company has implemented a comprehensive internal control system that enables the accurate and timely preparation of financial statements and management reports, ensures compliance with regulatory and statutory requirements, and upholds the interests of investors through exemplary governance and regular investor communications.

The Audit & Risk Management Committee provides oversight by reviewing the effectiveness of the Companys internal control mechanisms. As part of the Corporate Governance Report, the Managing Director & CEO and the Chief Financial Officer, certifies the effectiveness of the Companys internal control procedures. Additionally, the Internal Assurance Group conducts periodic assurance reviews to evaluate the adequacy of internal control systems and reports its findings to the Audit & Risk Management Committee of the Board.

The Company has further strengthened its internal control framework across all circle operations. This includes significant enhancements in the quality and frequency of reconciliations, expanded coverage of revenue assurance checks, segregation of duties, implementation of self-validation mechanisms, regular physical verifications, system audits, desktop reviews, and ongoing training and education initiatives.

Human Resources

Indus Towers prioritises a people-centric approach, reflected in our core values: Excellence, Customer Focus, Integrity, Teamwork, and Environment (ExCITE). This philosophy has earned us the Gallup Exceptional Workplace Award for the 12th time. Were committed to building a future-ready, resilient, and agile workforce through strategic talent acquisition, retention of high performers, and development of future leaders.

The past year marked a significant transformation for Indus Towers. In response to evolving customer demands and the pursuit of new business opportunities, we undertook a strategic restructuring to ensure swift delivery and establish clear lines of accountability. Additionally, we prioritised digitisation and automation to streamline work processes, enhance efficiency, and boost overall productivity.

To cultivate a high-performing and motivated workforce, Indus Towers prioritises a performance-driven culture. We acknowledge the critical role of our field workforce in achieving key operational metrics, and to this end, weve launched various incentive plans which align with our strategic focus on growth. This year, we initiated a shift in our approach to performance management and launched a revamped Annual Performance Appraisal (APA) process, placing Employee Development at the forefront. Driven by the introduction of Talent Councils at both the Circle and Corporate levels, we fostered deeper conversations about Performance, Potential, and Career Growth.

Recognising and rewarding exceptional performance is central to our ongoing growth. We continue to motivate our people through our Reward & Recognition programme “iAwards". Alongside these initiatives, we prioritise continuous learning and development for our employees. We offer a comprehensive blend of virtual, online, and classroom training programmes, ensuring our employees possess the skills and knowledge for present and future success.

Furthermore, we understand the importance of a skilled frontline. Daksh Learning Academy, launched last year specifically to strengthen the skillset of our Technicians, Field Support Engineers (FSEs), and Area Operations Managers (AOMs), has been instrumental in this area. We actively encourage employees to pursue external certifications and participate in Management Development Programmes (MDPs) for holistic development. Additionally, programmes such as

“Saarthi" (leadership coaching), “Udaan" (Hi-Potential Development programme for Emerging Leaders) and “Unnati" (Hi-Potential Development Programme for Young Leaders), saw an overwhelming response from the participants. This financial year, we also launched women-centric development programme “Shakti", to prepare our women employees for leadership roles.

We dedicate ourselves to creating a positive work environment where employees feel valued and take pride in their contributions. Open communication is paramount, and our leadership team actively connects with all 3,791 employees across all circles. They prioritise employee well-being and offer guidance during challenging times. To foster a culture of open dialogue, we utilise “Workplace by Facebook" as an internal communication platform, enabling two-way communication. Additionally, we conduct “Roobaroo - Connect with CEO" and “Samvad - An Employee Connect Initiative" to strengthen in-person connections with employees.

Diversity and Inclusion (D&l) are core values at Indus Towers. We are committed to creating a safe, equal, and inclusive work environment for all genders and are actively advancing our efforts in this direction.

Over the past two years, through dedicated efforts, the number of women employees at Indus has more than doubled, taking our Gender Diversity from 6.3% (FY23) and 11.8% (FY24) to 16.2% (FY25). Our committed focus on attracting and hiring women leaders resulted in a significant increase in leadership roles and a strong pipeline for front-end field roles through our revamped campus recruitment programme. We launched programmes like Sangini - a women community, Prerna - mentorship programme for women and “Shakti", all designed to support the holistic development of our women employees.

To further this commitment, we have implemented mandatory POSH training and established a neutral Internal Complaints Committee to address any harassment concerns. By fostering a diverse and inclusive workplace, we aim to create a more innovative and successful organisation for the future.

At Indus Towers, we are constantly innovating and evolving to create a work environment that fosters high performance, continuous learning, and employee engagement. By prioritising our people, we aim to remain a leader in the telecommunications industry.