ICRA tweaks outlook for telecom tower industry to stable, cites improvement in receivables

Credit rating agency ICRA on Monday revised its outlook on the telecom tower industry to 'stable' from 'negative', citing a marked improvement in receivables and liquidity position of tower companies.

The sector, which had been grappling with elongated receivable cycles due to payment delays by some telecom service providers, has seen a turnaround with timely collections and clearance of past overdues, ICRA said in a statement.

Debtor days for the industry have now come down to 45–60 days, well below the 80-day threshold that had earlier triggered the negative outlook.

This improvement has eased the working capital cycle and reduced reliance on external debt, the agency noted.

“Improvement in the credit profile of some key telecom service providers, who are the customers for tower companies, has eased the working capital cycle of tower companies,” said Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA Ltd.

Jain added that the industry had also witnessed a reversal of provisions made earlier in FY23, following the recovery of overdue payments.

“This has augmented the cash flows and liquidity position of the industry as a whole,” Jain added.

ICRA expects timely collections to persist, with debtor levels remaining below 60 days.

“This will also result in reduction in external debt, with ICRA projecting net external debt/OPBDITA at around 3.4x for FY2026.”

The industry is also set to benefit from renewed capital expenditure plans by telecom operators and continued 5G rollouts, which are expected to drive additional tenancies and improve the tenancy ratio to 1.35–1.40 times, according to ICRA.

Operating income for the tower sector is projected to grow 4-6% in FY26, with adjusted operating margins remaining robust at 70–75%.

Cash balances are expected to rise significantly to ₹5,500–6,000 crore, compared to Rs 2,200–3,000 crore in earlier periods.

“Technology upgrade to 5G and revived capex plans of some of the customers bring with itself a favourable demand outlook for the tower companies,” Jain said, adding that annual capex for the industry is likely to touch ₹10,000–11,000 crore in FY26.