Indus Towers Ltd Management Discussions

Macroeconomic Trends

The year gone by saw major economies around the world stabilise even further post the e_ects of the pandemic, underpinned by steady growth, cooling inflation and a generally positive outlook, with the International Monetary Fund (IMF) projecting global growth at 3.2% for 2024. The global central banks are also looking forward to easing of inflation and reversing the rate cycle, therefore aiding the economic growth. Domestically, the Indian economy recorded GDP growth of above 8% for each of the first three quarters of the year 2023-24, supplemented by strong GST collections. IMF revised its growth projection upwards for India to 6.8%.

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 1.17 billion (as of March 31, 2024).

Wireless broadband base now stands at 884.01 million, representing a wireless broadband penetration of ~76%, compared to 71% last year (Source: TRAI). The active subscriber base was at 1.06 billion with the share of active users at 90.8%, compared to 90.4% last year.

Since the Governments launch of the ‘Digital India campaign in 2015, digitalisation in India has progressed at a rapid pace, and the telecom sector has always been at its core. The Government has continually taken initiatives to speed up the proliferation of telecommunication services in the country. The recently introduced Telecommunications Act, 2023 was a significant step in this direction. It had also launched a production linked incentive scheme to provide a thrust to Indian manufacturing ecosystem in telecom, IT hardware, semiconductor value chains with a target to increase electronics manufacturing capacity to C 24,000 billion and which will also help create over a million jobs by 2025-26.

The primary growth drivers for the industry going forward are going to be the rapidly increasing data consumption, coupled with the adoption of newer technologies like 5G, and statistics mentioned in the Nokia India MBiT Index Report 2024 give credence to the same. As per the report, data tra_c in India remains amongst the highest in the world and has grown at a CAGR of 26% over the past 5 years to 17.4 EB per month in 2023. The average monthly data tra_c per user has grown at a CAGR of 21% in the last 5 years to ~24.1 GB in December 2023 and is expected to reach 28-30 GB by the end of 2024. Additionally, as per GSMA (As quoted by one of the TSPs) Indias ARPU (Average Revenue per user) at USD 2.08 per month is one of the lowest in the world, compared to USD 45.41 in the US and USD 16.63 in the UK.

Total 5G subscribers stood at 131 Mn in 2023 and are expected to grow to ~575 Mn by 2026. The device ecosystem for 5G is also progressing well, with 17% of the active 4G devices now capable of o_ering 5G. The year 2023-24 saw accelerated rollouts of 5G services by the operators, and as a result by the end of 2023, 5G services were available to end consumers across the country. The contribution of 5G to total data tra_c has increased from 1.7% in 2022 to ~15% in 2023. During the year, India completed one of the fastest 5G rollouts globally, and as per a report from KPMG, it estimates 5G to contribute USD 170 Bn to the economy and contribute ~1.25% to national GDP by 2027-28.

Despite having the second largest internet user base in the world, penetration levels still remain relatively low compared to other countries. Penetration and usage have witnessed strong growth over the last few years, and this trend is expected to continue in the future as well. Total internet users have grown at a 5-year CAGR of 12% to 881 Mn in 2022-23, while internet access per 100 users has increased from 38.0% in 2017-18 to 63.5% in the same period. As per a report from GSMA, the internet usage gap, which is defined as the number of people not using mobile internet despite living in areas having mobile connectivity, is expected to reduce from 61% in 2021 to 53% in 2025.

These trends are even more pronounced in rural areas, where total internet users have grown at a 5-year CAGR of 20% to 358 Mn in 2022-23 and internet access per 100 users has grown from 16.4% to 39.8% in the same period. As per a report by KPMG, the internet penetration rate in rural areas is expected to reach 56% by 2025. The FTTH (Fiber to the home) broadband subscribers per 1,000 households is also much lower in rural areas at 15.1, compared to 241.2 in urban areas.

Additionally, rural tele density of 58.61% remains significantly below 128.03% in urban areas. The aggressive rollouts by a major operator to expand its rural coverage should also help improve access to telecommunication and internet services.

The non-wireless broadband segment also remains largely untapped and has significant potential for growth in the future, as accessibility and a_ordability of these services improve. On overall basis, as of March 2024, the share of non-wireless broadband subscribers was only 4% of total broadband subscribers base. (Source: TRAI)

"Average monthly data tra_c per user grew at a 5-year CAGR of 21% to 24.1_GB in December 2023"

India Telecom Infrastructure Industry Overview

The Indian Telecom Infrastructure industry comprises IP-I registration holders that establish and maintain assets such as towers, Right of Way (ROW), duct space and dark fiber for the purpose of granting them 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 ~796,773 since 2010"

Sharing infrastructure through IP-1 players allows telecom service providers (TSPs) to reduce their operating (opex) and capital (capex) expenses, enter the market faster, and avoid ine_ciencies caused by duplication of resources across the industry. India has pioneered this model of passive infrastructure sharing, which has been adopted worldwide. The number of towers has grown more than fourfold since 2010, reaching approximately 796,773 by March24, ensuring high-quality services for 1.17 billion consumers.

For over a decade, IP-1 companies have acted as a key enabler of the rapid growth of wireless services across the country, while the country has been transitioning between various technologies, the latest one being 5G. As mentioned earlier, a digital divide still exists in the country, especially in rural areas, which are relatively underpenetrated and o_er plenty of headroom for growth for the tower industry. A number of factors, including the exponential growth in data consumption and the rapid deployment of 5G technology across India, is anticipated to significantly stimulate the tower infrastructure industry. As 5G proliferation occurs nationwide, network capacity will require substantial upgrades to accommodate the demands of this next-generation technology. According to the September 2022 EY-DIPA report, current tower site capacity for 2G/ 3G/ 4G services sits at 1 Gbps. However, the report projects a significant leap to 10-20 Gbps per site to handle the demands of 5G. To address this growing capacity challenge, traditional macro towers will likely be supplemented by a more distributed network architecture. This architecture will likely incorporate leaner solutions such as small cells and In-Building Solutions (IBS), ideally interconnected by a robust fiber network. The EY-DIPA report further underscores the critical role of IBS, highlighting that nearly 85% of data tra_c and 70% of voice tra_c currently occur indoors, driving the demand for these targeted solutions.

Indias current rate of tower fiberisation stands at approximately 36%, which is demonstrably lower when compared to developed economies and some Asian counterparts. According to the report, this figure is significantly lower than Thailand (90%), Malaysia (80%), the United States, Japan, and China (all at 75%). While a substantial amount of optical fiber cable (OFC) infrastructure, exceeding 3.7 million kilometers (as of August 2023), has already been laid across India, the nation requires a significant increase in its fiber optic density per capita. This metric, currently at 0.09 compared to over 1.3 in leading countries, underscores the necessity for further investment in fiber optic infrastructure development.

There are potential synergies arising from consolidation in the towerco space, as smaller players might not be able to o_er the same levels of service quality that their larger and more accomplished counterparts may be able to o_er. During the year, it was announced that ATC India assets were to be acquired by Brookfield for a base price of USD 2 billion, potentially going up to USD_2.5 billion, which may result in easing of competitive intensity in the pan India towerco segment.

The aggressive network expansion by an operator to bridge the gap in its rural network presents itself as an opportunity for towercos. Another major operator is planning to make significant investment in 4G and 5G coverage expansion, and also 4G capacity expansion after concluding its fund raise, which is also a sizable opportunity for towerco.

Beyond their core function, towercos possess the potential to capitalise on several adjacent business opportunities. One such opportunity lies in leveraging their expertise in managing passive infrastructure to handle the active infrastructure of telecom service providers (TSPs). This collaboration can generate cost e_ciencies for both parties. Furthermore, the extensive nationwide presence of tower sites presents towercos with the opportunity to deploy additional services such as EV charging infrastructure or outdoor advertising. Finally, the strategic positioning of tower sites, situated in close proximity to customers, makes them ideal locations for the co-location of edge computing infrastructure. By exploring these adjacent markets, towercos can expand their service o_erings and establish themselves as key players within the evolving telecommunications landscape.

Telecommunications Act, 2023: In a landmark move, the_GovernmentofIndiaenactedtheTelecommunications Act, 2023, replacing the nations century-old telecom law. This Act, passed as the Telecommunications Bill and subsequently notified, signifies a renewed commitment to fostering a robust telecommunications sector. It designates telecom infrastructure as critical telecom infrastructure and emphasises network security, while imposing penalties for damage. Its consistent approach to common ducts enhances the e_ciency of telecommunication infrastructure development. It also addresses challenges such as multiple levies, taxes, and Right of Way (RoW) issues, aiming for uniformity across India. The focus is on simplifying business operations, ensuring consistency in RoW rules, capping charges, facilitating deemed approval, and managing telecom infrastructure deployment on private property. It also protects digital infrastructure by delinking telecom infrastructure from property, thereby exempting it from any claims, liquidation or taxes related to such property.

Other regulatory changes: The Government remains committed towards facilitating the nationwide expansion of telecom infrastructure, and it continues to implement measures to achieve the same. These measures include a composite billing scheme for multiple power connections, provision of applying for a power connection for telecom infrastructure via the Gati Shakti Sanchar portal, and integration of various ministries into the Gati Shakti Sanchar portal for Right of Way (RoW) applications. The Green Open Access policy, which incentivises the use of cleaner sources of energy, had been notified and subsequently adopted by a few states.

Vodafone Idea Limiteds fund raise: In February 2024, Vodafone Idea announced its plans to raise C 450 Bn through a combination of equity and debt. The Companys Board approved an equity fund raise of up to C 200 Bn which was subsequently also approved by its shareholders, with the promoters also expected to participate by providing support to the tune of C 20 Bn. It said that it had also engaged with lenders to tie up debt funding. Securing the funding would enable it to make necessary investments in network expansion, through addition of new sites and increasing capacity on existing sites, which bodes well for towercos.

Consolidation in towerco space: In January 2024, American Tower Corporation announced that it had signed an agreement with Data Infrastructure Trust (DIT), pursuant to which DIT would acquire 100% of the equity interests in ATC India. The base purchase price of the deal was USD 2 Bn, with the total realisation for ATC India potentially going upto USD ~2.5 Bn. Data Infrastructure Trust (DIT), an Infrastructure Investment Trust is sponsored by Brookfield Infrastructure Corporation, an a_liate of Brookfield Asset Management. DIT currently houses Brookfields telecom tower businesses in India through Summit Digitel and Crest Digitel. The consolidation in the towerco industry is important given the major consolidations witnessed in the telecom industry over the past decade, wherein the number of TSPs reduced from over 10 to 3 major players in the space.

"India witnessed one of the fastest 5G rollouts in the world with a pan India rollout completed by December 2023"

5G Update: The momentum seen in the 5G rollouts by TSPs in the second half of the previous financial year has continued into this year as well. As a result, the country witnessed one of the fastest 5G rollouts in the world, with 5G services being available to the end consumers by December 2023, in less than 15 months after the launch. During the year, more than 270,000 Base Transceiver Stations (BTS) were deployed across the country by the top 2 operators, providing pan-India 5G services.

The choice of 5G technology by telecom operators has a significant impact on infrastructure requirements. While Bharti Airtel is rolling out 5G Non-Standalone (NSA), Reliance Jio has opted for 5G Standalone (SA). These di_erent approaches necessitate variations in network configuration, hence the requirement for di_erent types of equipment at tower sites. The installation of additional equipment on towers provides revenue opportunities to a towerco.

In lieu of these accelerated deployments by operators, our loading revenues continued to increase significantly as the year progressed. As the network matures, we expect the demand for new sites to increase in order to aid the network decongestion, which bodes well for us given our leadership position in the passive infrastructure space.

Update on Key Managerial Personnel and Board of Directors: During the year, Mr. Dinesh Kumar Mittal was appointed as an Additional Director in the capacity of Non-Executive Independent Director for a term of five consecutive years w.e.f. April 1, 2024, subject to the approval of Members of the Company in accordance with the applicable laws. Additionally, Mr. N. Kumar, Chairperson and Independent Director, ceased to be a director of the Company e_ective March_ 31, 2024, upon completion of his second tenure as an Independent Director.

Network expansion led by 5G rollout and further penetration of 4G: India recorded one of the fastest 5G rollouts in the world led by the top 2 operators, with 5G services being available to end customers across the country by December 2023. While the rollouts have been primarily in the form of adding equipment on existing sites to provide coverage, as the network matures there will be a need for additional sites to aid network decongestion, thereby significant headroom for growth for passive infrastructure players.

Additionally, the network gap that currently exists between the top operator and the other players also presents an opportunity for towercos. A major operator has been expanding its network aggressively in rural areas, while another major operator is planning to make significant investment in 4G and 5G coverage expansion, and also 4G capacity expansion after concluding its fund raise. The demand for passive infrastructure can be fulfilled by towercos through deployment of new towers and 5G small cells, strengthening of existing towers for loading of 5G equipment and setting up 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 e_cient manner, towercos are better placed to capture this opportunity.

The coverage gap in 4G network especially in rural areas for leading TSPs also o_ers 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 e_cient site rollout.

Businessadjacencies:For towercos, several adjacent business opportunities exist beyond the domain of creating and managing passive infrastructure. The accelerated adoption of Electric Vehicles (EVs), driven by global environmental concerns and a shift towards cleaner fuels, necessitates a robust network of charging stations. Towercos expertise in managing a large-scale distributed infrastructure by providing power and space aligns perfectly with the requirements for EV charging station deployment and hence presents a sizeable opportunity. The latest Economic Survey underlines that Indias automotive industry will play a critical role in the transition towards green energy. It is estimated that the countrys EV market is expected to grow at a compounded annual growth rate (CAGR) of 49% between 2022 and 2030 and that the annual sales of EVs in 2030 may cross 10 million units. The Government aims to achieve EV sales penetration of 30% of private cars, 70% of commercial cars, 40% of buses and 80% of two and three-wheelers by 2030 and is taking several initiatives and o_ering incentives to promote the development of EV ecosystem.

The Internet of Things (IoT) applications are expected to see significant growth, and having appropriate edge computing infrastructure is critical to its proliferation. Tower sites, due to their strategic locations and existing power connectivity, can be ideal locations for co-locating edge computing equipment. Towercos can partner with cloud providers and enterprises to develop and manage edge computing infrastructure. Leasing space for billboards or other advertising displays on tower sites can generate additional income. Towercos can leverage their existing network footprint and expertise in site acquisition to become key players in fiber network expansion for various stakeholders, including telecom service providers (TSPs) and internet service providers (ISPs).

Inorganic growth: The telecom tower industry is fragmented, with several smaller players alongside the major towercos. Acquisitions can help consolidate the market, increase tower portfolio, and potentially lead to operational e_ciencies. Additionally, towercos can also explore acquiring Companies that compliment their existing business model. The examples would include i) fiber network providers, which would strengthen a towercos position in o_ering comprehensive infrastructure solutions, and ii) Small Cell specialists, which have expertise in deploying and managing small cell infrastructure and would enhance the towercos 5G capabilities.

Regulatory actions: Green Open Access, a policy initiative by the Indian government that aims to promote the purchase of electricity directly from renewable energy sources, is a significant opportunity for towercos to access cleaner and more cost-e_cient sources of energy. Additionally, opting for green energy demonstrates a tower companys commitment to environmental sustainability, which can be a positive di_erentiator in the market. This can attract environmentally conscious investors, partners, and tenants (TSPs) who value sustainability practices. Other regulatory actions, such as the launch of the Telecommunications Act, 2023, the composite billing scheme for multiple power connections, and the provision of applying for a power connection for telecom infrastructure via the Gati Shakti Sanchar portal are all steps taken to facilitate the swift deployment of telecom infrastructure in the country.

Financial stress of operators: A critical factor to monitor for the telecommunications sector remains the financial health of Telecom Service Providers (TSPs). Recent years have witnessed significant investments by TSPs in spectrum acquisition and service rollouts, including the investments in 5G which have been continuing rapidly since launch. Although the investments in 5G have been mainly towards upgrading the equipment on existing sites, as the network matures there will be a need for new sites as well. Additionally, as outlined earlier, there exists a network gap between the major operators, especially in rural areas, and bridging this gap would also require significant investments.

A major operator is raising large funds through both equity and debt to improve its financial health and make the necessary investments to bridge its network gap with other operators. Additionally, the 4-year moratorium on spectrum and AGR dues opted for by the telcos is ending next year, which would mean a large outflow of funds post the moratorium period. All these factors may limit the ability of the TSPs to fulfil their financial obligations towards Indus Towers.

Consolidation in TSP space: The basic premise of passive infrastructure sharing was to o_er opex/capex e_ciencies and enable a faster time to market for TSPs services. However, if the consolidation witnessed in TSP space over the past decade continues, it would pose a threat to towercos as the synergies o_ered by sharing infrastructure would be reduced significantly. Competition landscape: After the recent proposed consolidation within the towerco space, the industry landscape consists of two major towercos alongside a number of smaller players. The consolidation within the telecom service provider (TSP) space has intensified competition, exerting pressure on pricing and market share. Furthermore, the industry is shifting towards deploying leaner towers for network densification. The trend towards leaner towers for network densification purposes may favour smaller players who can deploy these structures more easily and potentially at a lower cost by using predatory pricing.

Emergence of newer technologies: The emergence of newer technologies, such as satellite-based communication could pose a threat to the telecom tower business in the long run. This could potentially reduce the need for ground-based infrastructure in the form of towers for communication. Both domestic players such as OneWeb, Jio Satellite Communications and foreign players such as Starlink and Kuiper are already making progress towards o_ering satellite communication services in India.

Unfavourable terms for contract renewals: Renewal of the contracts with customers possesses a risk of impacting the Companys financial performance with a change in contractual terms such as pricing and annual escalation . Our current contracts are typically for a 10-year period, and any unfavourable modifications could have a direct impact on our future revenues.

EMF radiation norms: EMF radiations are the invisible electric and magnetic forces arising from the active infrastructure installed at telecom towers. World Health Organisation (WHO) has referred to the International Exposure Guidelines developed by International Commission on Non-Ionising 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 (1/10^th) 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 e_ects due to which securing a site for new tower addition has become di_cult in few pockets. If proper information is not disseminated to public, it might a_ect tower infrastructure business adversely.

Strategy/Outlook:

The Company has clearly identified its key strategic priorities which are critical to its growth, competitiveness, and customer satisfaction. These strategic priorities include increasing the share in the business of its customers, optimising costs, maintaining a high level of network uptime, and achieving progress in its sustainability initiatives. The Company is pleased to have achieved significant progress in each of the priorities.

On market share, the Company formed a dedicated team to smoothen the deployment process and optimise delivery time through a real time tracking mechanism and logistics alignment. By way of digital intervention in its Pan-India partner and supplier ecosystem and close coordination with customers to align with its requirements, the Company has furthered its competitiveness helping it secure more wins, resulting in one of the highest tower additions in its history.

Regarding cost optimisation, the Company has been taking initiatives towards increasing the use of renewable sources of energy, standardising its tower designs, automating processes and taking digital interventions across its Pan-India partner and supplier ecosystem among other things.

Maintaining a high level of uptime is a critical focus area for the customer, and naturally continues to be one of the key priorities of the Companys strategy as well, and the perseverance of the teams on the ground amid di_cult weather conditions was crucial towards achieving the same.

On sustainability, the Company launched ‘Zero Goal Hai or ‘Zero is the target campaign during the year with the aim of achieving zero emissions, zero harm, zero waste, zero bias and zero tolerance to non-compliance.TheCompanyhasbeentakingvarious initiatives to reduce its diesel consumption and adopt more renewable sources of energy, improve its gender diversity, promote a safe working environment for its employees and partners and improve waste recovery. The Companys commitment to delivering competitive services stems from the belief that faster deployment, cost-e_ectiveness, and reliable uptime are essential for customer success. This focus on core values aligns perfectly with its long-term vision to strive for customer delight through continuous innovation.

Financial Results & Operations:

The Companys macro tower portfolio increased to 219,736 and macro colocations increased to 368,588 as on March 31, 2024. Total Co-locations on leaner towers stood at 10,686. For the year ended March 31, 2024, the closing sharing factor stood at 1.68 times per tower.

The consolidated revenues for the year, at C 286,006 Mn grew by 0.8% over the corresponding period last year. EBITDA grew by 50% Year-on-Year to C 146,939 Mn, representing an EBITDA margin of 51.4%. EBIT increased by 96% Year-on-Year to C 84,967 Mn and the net profit for the year grew by 196% Year-on-Year to C 60,362 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 together with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and as amended by the Ministry of Corporate A_airs (‘MCA) from time to time.

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 and the Interest Coverage Ratio increased due to the base e_ect of the previous year, during which the Company had adopted a stringent accounting practice to make provision for doubtful debt in respect of overdue recoverables from one of its major customers. The Company faced challenges in collection from the customer and decided to de-risk its balance sheet by making these provisions, thereby impacting the profitability numbers in the previous year.

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 part of its debt.

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 e_ective corporate governance and development of a sustainable business. The Company has a robust process to identify key risks across its operations and prioritise relevant action plans that can mitigate these risks. Key risks that may impact the Companys business include:

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, and b) Tenancy churn c) Non-renewal

Risk of Sustainability of Business in The Long Run

There may be risk of business sustainability in the long run if we do not focus on -a) Diversification - New sources of business b) Adherence to the ESG targets defined by the company and adequate actions to address the climate change risk

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.

Natural Disasters Damaging Telecom Networks

The Companys telecom 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 o_er seamless service to our 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.

We dont foresee any risk in near future and the Company 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, we are ahead of our competition.

General Economic Conditions in India

A significant change in 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.

Cyber and Data Security

As a company we have reached a level where processes are enabled and there is continuous upgrade of IT processes. The significance of data security is considered critical and accordingly addressed focusing on sensitivity of data and financial impact of data leakage. Cultural change is being driven from the top. 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.

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 interests.

Internal Control Systems

The Chief Executive O_cer (CEO) and Chief Financial O_cer (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 e_ectiveness of the internal control system across the Company.

A CEO and CFO Certificate signed by the Managing Director & CEO and Chief Financial O_cer, is included in the Corporate Governance Report which confirms the existence of e_ective 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

Human Resources

Indus Towers prioritizes 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 (11 years running). Were committed to building a future-ready, resilient, and agile workforce. Our talent management strategy focuses on attracting the best talent, retaining high performers, and developing future leaders.

The past year was a period of significant transformation. To meet evolving customer demands and explore new business opportunities, we underwent a strategic restructuring to ensure swift delivery with clear lines of accountability. Recognising the importance of a skilled workforce, we invested heavily in talent development. Leaders and subject matter experts delivered various training interventions and awareness sessions, equipping our employees with the knowledge and skills needed to excel.

To cultivate a high-performing and motivated workforce, Indus Towers prioritizes 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. This aligns with our strategic focus on growth. Additionally, weve invested heavily in digitisation and automation to support work processes, boost e_ciency, and enhance overall productivity.

Recognizing and rewarding exceptional performance is central to empowering our team. We revamped our Reward & Recognition Framework and established the "iAwards" programme. Alongside these initiatives, we prioritize continuous learning and development for our employees. We o_er a comprehensive blend of virtual, online, and classroom training programs, ensuring they possess the skills and knowledge to excel in their roles and stay future-proof.

Furthermore, we understand the importance of a skilled frontline. This year, the Daksh Learning Academy was launched specifically to strengthen the skillset of our Technicians, Field Support Engineers (FSEs), and Area Operations Managers (AOMs). We actively encourage employees to pursue external certifications and participate in Management 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 organisation. It also includes requirements for the assessment and treatment of information security risks tailored to the needs of the organization.

Development Programmes (MDPs) for holistic development. Additionally, programmes like "Saarthi" (leadership coaching) and "Udaan" (Hi-Potential Development Program) nurture and develop our talent pipeline. By fostering a culture of recognition, continuous learning, and targeted skill development, we empower our employees and strive to be a leader in the telecommunications industry.

We prioritize 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 3,554 employees across our 22 circles. They prioritize employee well-being and o_er 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 launched "Samvad - An Employee Connect Initiative" to strengthen in-person connections between HR and employees. Throughout the year, the leadership team demonstrates their commitment by valuing employee e_orts and providing all necessary support.

Diversity and Inclusion (D&I) are core values at Indus Towers. Were committed to creating a safe, equal, and inclusive work environment for all genders. Our dedication to fostering a diverse workforce is yielding impressive results. Female representation across the entire company increased to 11.8% in FY24, a significant jump from 6.3% in FY23. Were particularly proud of the strides made in our field workforce (0.9% to 2.5%) and senior management (6.6% to 13.9%). We remain committed to achieving our long-term goal of 30% female representation.

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 create a more innovative and successful organization for the future.

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