Indus Towers Ltd
NSE:INDUSTOWER
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Indus Towers Ltd
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Good afternoon, ladies and gentlemen. I'm Rajyita, the moderator for this conference. Welcome to Indus Towers Limited First Quarter ended June 30, 2021, Earnings Call. [Operator Instructions] In case of a natural disaster, the conference call will be terminated post an announcement. Present with us on the call today is the senior leadership team of Indus Towers. Before I hand over the call, I must remind you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. I now hand over the call to our first speaker of the day, Mr. Bimal Dayal. Thank you. And over to you, Mr. Dayal.
Thank you. Thank you very much, and thank you all for joining us on the earnings call of Indus Towers for the quarter ended June 30, 2021, and a very good afternoon to each one of you. Joining me on the call today are Mr. Vikas Poddar, our CFO; and Mr. Kaustav Neogi, Finance Controller and currently handling Investor Relations. Whenever we remember the first quarter of FY '22, we will remember the tough times of wave 2 of the pandemic that we all witnessed. At the peak, there were almost 442 live cases in the Indus family, who were all well supported by Indus. We did lose some of our brave hearts and each one of them is and will be missed. We are and we will certainly stand by the bereaved families and support them for their wellbeing, true to the purpose of our existence. The current pursuit is to vaccinate all, and we are encouraging and supporting this activity. This, as you know, took away a good part of quarter 1. While we were addressing the challenges presented by the pandemic, we were hit by 2 cyclones, Tauktae and Yaas. These cyclones were unprecedented in scale in recent times and impacted areas that were not earlier prone. This can be very well seen in the fact that while cyclones in quarter 1 of financial year '21 impacted 4 circles, this time 13 circles bore their brunt. Despite these challenges, the Indus field force enabled connectivity by maintaining the network, which served as a lifeline to the society. There have been several stories, really heartwarming stories of our brave hearts from the field who battled the flooded areas amidst the pandemic, armed with boats and their passion to reach the towers on time and make sure that the network does not go down. I salute their efforts in maintaining the vital connectivity for the larger good of society. While all this was played out on one side, Indus team came together to deliver the critical step towards completion of the merger, which is the integration of IT platforms. I'm very happy to share that in a short span of 8 months, the team has brought all the 22 circles to a common platform, tools and systems. We are now truly one company operating with uniform processes, uniform IT platform and uniform ways of working Pan Indus. On the operational and financial front, this has been a good quarter, even though the lockdown brought all the activities to a standstill for a good part of the quarter. We added 1,772 towers and 2,917 co-locations with a healthy year-on-year growth of 7% and 5%, respectively, and a steady tenancy ratio as well. Our tenancy ratio at the end of the quarter 1 stands at 1.8. Let me touch up on the market now, starting with the demand. Replicating the first quarter last year, the pandemic again posed significant challenges during the first 2 months of the quarter with June witnessing a much anticipated pickup in the economic activities with the reopening of the economy. The active subscriber base of our customers have increased by 997 million in April and 986 million in May 2021, up by 2% as compared to the last year. What is interesting is to look at the data growth. India continues to witness a strong data growth trends with an overall data demand growing about by an astounding 32% year-on-year. The base itself is fairly large, so this is very respectable growth. This is commendable since data volumes have grown exponentially in last 4 to 5 years. I think the CAGR here is almost 72%. This is a surrogate test for industry like ours, and this augurs very well for our industry. Another positive development is 5G, wherein trial spectrum was allocated by DoT across various bands including 700, 3.5 gigs and 26 [ gigahertz ], and all the operators are conducting test trial in various metro and Tier 1 cities. The commercial rollout will require investments in infrastructure and we as a company are ready to cater to those requirements of our customers and support them. We saw some activity in IBS space as well, which we believe is the precursor to 5G rollouts. Coming to the recent AGR ruling. While this was an adverse impact on the sector, our belief in doom and gloom consolidation scenario is relatively less. We believe that telecom sector will continue to remain a 3-player market. The recently announced tariff hike by one customer could end up being a positive for the sector. With this, I would like to hand over to Vikas to take you through financial results. Over to you, Vikas, and I look forward to this interaction in your question. Thank you. Over to you, Vikas.
Thank you, Bimal, and good afternoon, everyone, and thank you for joining this first quarter earnings call for the results of Indus Towers. As Bimal mentioned, despite the challenges of lockdown and the natural calamities in most parts of the country during Q1, we have seen a decent commercial momentum that has translated into a stable quarter 1 in terms of financial performance. So I'll be covering some of the key financial outcomes for quarter 1, following which we can move into the question and answers. So we have seen a good growth in revenue and earnings in quarter 1, both from a sequential as well as from a year-on-year perspective. It is worth noting that the strong year-on-year growth rates in our numbers are related to Q1 last year and also reflect the impact of some of the accounting practices that were aligned post merger. So starting with the revenue, our revenue was up 11.7% year-on-year to INR 68 billion. And within this, our core revenue, that is driven by rentals, was up 8.1% year-on-year. Even on a quarter-on-quarter basis, that is more comparable, our core revenue has grown 1.7%. Our EBITDA was up 13.1% year-on-year and 3.4% quarter-on-quarter to INR 35.3 billion. And this is with the continued focus on driving operational efficiencies in the area of rentals, network cost and energy. This was also despite the fact that the energy margin in our business continue to be in the negative territory as we continue to be in pass-through model in quarter 1. We are still negotiating with our customers to revert to the fixed energy model. Our profit after tax was up 26.3% year-on-year and 3.8% quarter-on-quarter to INR 14.2 billion. The company generated OFCF, operating free cash flow, which is defined as EBITDA less CapEx, less repayment of lease liabilities of INR 20.4 billion in quarter 1, which was approximately 36% higher compared to previous quarter, and this was mainly due to lower CapEx in quarter 1 and also slightly better EBITDA margins. However, our free cash flow after working capital changes was lower than expected due to increase in trade receivables, which was partly due to some timing issues that have subsequently been resolved in July. And then there is one of our customers who is taking additional time to make payments. We are working closely with our customers to ensure that there is right level of support to manage this. Furthermore, we also have the security package and hence, we believe, it's a timing issue for now. Our return on capital employed for the quarter, based on trailing 12 months financials, stood at 22.9%, which was higher both on Q-on-Q and year-on-year basis. This was based on earnings growth that included the one-off benefits or the adjustments on account of the accounting practice alignment that happened post merger. The post-tax return on equity, on the other hand, has been broadly stable at 30.4% in quarter 1. So overall, in summary, a stable quarter 1, as Bimal mentioned. And with this, I would like to turn it over to your questions, please. Thank you.
[Operator Instructions] The first question comes from Kunal Vora from BNP Paribas, Mumbai.
My question was partially answered, but the spike in receivables from [ INR 30 billion ] to INR 53 billion. You already have about 2,400 crores received from VIL. Can you explain why the receivables have increased despite this? And also, regarding the security package, if you are not able to collect the dues, at what point will the corporate guarantee be triggered? So if you can answer this, I'll go to the next one?
Sure. Thanks, Kunal. Vikas, maybe you can take this one.
Yes, sure. So thank you for the question, Kunal. So I think, as I said in my opening commentary, the receivables have gone up. And part of the reason is the timing issue, as I was mentioning, which has been subsequently resolved in July. And then, of course, there is some additional time that one of our customers is taking. So I think currently the fact that there is a bit of financial stress in the sector is well known and that is impacting our situation as well. However, I think we are working very closely with our customers to manage this. And we also have the -- certainly the comfort of the security package. Coming to the security package, I think while it is in the best interest of our company and for the sector that we work together with the customers to recover the dues in the normal course of business, I think we are ready to use the security package at an appropriate time in an appropriate manner. I think also worth mentioning that there are conditions embedded in the contract that ensures that both parties are sort of their concerns are addressed and -- before we resort to any sort of any security. So I think that's where we are, Kunal.
Just wanted to get a clarification. You already have received advance payment. Why is that not being used? Why is an adjustment not being made against that?
I think we disclosed this in the previous quarter that the advance payments were fully consumed.
Okay. Fully consumed. Okay. Understood. And my second and last question is on the energy cost. What is the variable cost assuming that instead of 2 tenants, if there is a single tenant, is it fair to assume that there will be no impact on your energy margins? And also, would the energy cost go down like by almost 50% if there is a single tenant on a tower instead of 2?
Kunal, I don't think -- this is Bimal here. If I understand your question right, you're actually looking at how, if this tenancy ratio changes, how would the energy cost would go up or down? Obviously, here, the bigger thing is the actual consumption and actual set of sites as well, which are going up or down as well. So using a thumb rule here might not be a right measure. Needless to say that with one tenant going out, obviously, substantial cost also comes down as well, but I don't have a measure.
Well, I just wanted to get some sense, like, say, currently, you have a 2%, 3% negative energy margin. Hypothetically, if a tenant goes, would that 2%, 3% go up? Or would that 2%, 3%, hold, let's say, at current level or at least very close to current level?
Yes. I think really, the 2%, 3%, first of all, is basically an aggregate energy margin. And in percentage terms, I don't think it will change much unless we move to the fixed energy model. So I would say it's less dependent on the 1 tenancy or 2 tenancy. It's more about whether we continue in the pass-through or move to fixed energy. What will happen under the fixed energy model is, of course, they will be more focus on energy saving initiatives and investments, which will then drive the margin in the positive territory.
But would you be willing to incur the CapEx in the current situation when there is uncertainty about sustainability of one of the tenants. I mean energy model -- fixed model will require CapEx from your side, right, and you have to build in that certain amount of tenancy will continue?
So this is Bimal here. If I take this discussion back to the fixed energy regime, I think there we have been saying that this becomes a win-win situation because what we do is we spend good CapEx. We bring the energy costs down as well through the CapEx intervention, and we actually share what we save with the customers and for us as well. Hence, irrespective of, let's say, the tenancy or anything, there is a good opportunity of going into the FEM regime and obviously abating the current negative results as well on the energy.
The next question comes from Mr. Sanjesh Jain from ICICI Securities, Mumbai.
A couple of questions from my side. A little bit more clarification on the receivables. You said that the increase was on account of 2 costs -- 2 count. One is there was a timing difference and the other one was delay by a customer. So can you quantify how much was it because of the timing difference, which you said got resolved in July out of the increase we have seen?
Thank you so much. I think I would say broadly 25%, I would say, was driven by the timing difference that has got resolved and the rest was the extra time, which is being taken by one of our customers.
Have you also changed the provisioning norms for the receivables in this case? Because now we have voluntarily allowed them or we are ready to support them. In that case, are we changing the policy for the provisioning also in case of receivables?
No. The provisioning norms remain the same. So there's no change. If there's any change in the accounting policy or practice, we will certainly let you know.
Okay. Okay. That's helpful. Second, on the cost side, this quarter has been quite difficult on the cost side because of the hurricane and all, but it really doesn't show in your P&L. P&L shows much better situation. Our other expenses were down 57%. The increase in repair and maintenance was just 5.7%. What explains this cost movement?
I think the details, maybe Vikas can fill in, but I think on the support part side, there has been less activity, and I think there is some amount of deferment in that cost as well, which we would probably see coming in the coming quarters because I think this was more of 1 month of support. I think one of the things which the cyclones have done is increased our costs when it comes to power and fuel. So these are the places where you would possibly see the increase of cost.
Yes. And just to add to what Bimal said, Sanjesh, in terms of a bit of details and color. I think the network maintenance cost is lower partly because we have been really focusing, as I was saying, on the operational efficiencies. So we have been focusing on bringing down the cost in network maintenance, plus, I think, somewhere there's also a bit of timing benefit because of the lower level of activities given the lockdown situation. Other expenses is lower mainly because we get most of the municipal taxes towards the end of the year. And that's -- those were not reflected in quarter 1. And to your point, I think the cost of the cyclone impact, et cetera, was manifested largely in the power and fuel, as Bimal mentioned.
Got it. Got it. No, I was looking at other expenses more from Y-o-Y basis that has been sustainably coming down. So in our pro forma, what we have disclosed for Q1 '21 that was close to INR 2.7 billion, it came down to as low as INR 1 billion, but we called off telling that there was a one-off in 3Q '21. And then again it went to INR 1.5 billion in Q4, now again INR 1.2 billion. Just wanted to understand what is the steady state other expenses for us to build in our modeling?
Well, in terms of the year-on-year, we also had some bad debt provisions in the same quarter last year, which were captured in the other expenses. So you do see a drop with bad debts coming down, et cetera. And in terms of the steady state, well, I think the -- pretty much it's a steady state. What really makes the difference is the municipal tax bills that we get, not on a regular basis. So otherwise, I think from an underlying business perspective, this is pretty much steady state.
Got it. I got 2 more questions, if I can?
Well, we can revisit, Sanjesh, if we have time, if that's okay with you?
Yes, that should be fine with me.
The next question comes from Mr. Vivekanand Subbaraman from AMBIT Capital, Mumbai.
If I add the churn of tenancies during the current quarter and the notices received for which exit hasn't yet happened, I get a number of 4,741 tenancy. This compared to the quarter notices received, but exits not being recorded of 4,711. So does it mean that during the current quarter, the exit notices for only 30 sites were received?
So I -- look, I think these are running numbers, and I don't think -- I can only add a high level color to the exits here. We did receive -- or we did see a lower churn on the substantiation of this number. Maybe I will request Kaustav to give you a little bit of details here. Kaustav?
Yes. So I think the way to look at it is that if you like -- like a bucket wherein you get fresh churn coming in. At the same time, we'll have actual churn happening. As you know, our practice is to report churn on the basis of notice received. So I think looking at the net movement may not be [ proper ], having said that, yes, there are timing issues, which is always there, here, there. Notices have been received and the actual exits have not happened. So to assume a 31 is not right, but the actual churn numbers of this quarter is also low. We can take it offline if you want the exact reconciliation.
Sure. Just one small follow-up, Bimal, just to understand this better. Directionally, where do you see the churn from operators that are currently realigning their network?
So look, I think I would like to answer this question, looking back. I think we had major concerns few quarters back when, I think, churn became extremely significant. I think where we stand we have lowest churn, which we are declaring in last few quarters. What does it tell us about the network? I think large realignments are behind us for now as well. And I think there is some amount of stability where we sit. Now drawing a line and saying we would remain at this level might not be right, but I can only say looking at the hindsight, yes, the worst of the previous realignment is over, and I think we are sitting at a good spot right now. But I would not hazard a guess whether we'll remain here going forward.
The next question comes from Mr. Pranav Kshatriya from Edelweiss, Mumbai.
A lot of my questions have been answered. I just want to understand how much time do you think it will take for us to get clarity on this energy margin thing. I mean are we moving to fixed price or pass-through model will continue? And second, in that, I just also want to understand whether -- I mean if we move to fixed price, will it be more retrospective or we will possibly be looking at a prospective?
So Pranav, 2 questions from your side. One is around when do we get into the fixed energy model. And second, whether it would be retrospective. Look, I think, let me admit that our track record on saying when we would enter and what we have delivered on this one is not too good. We've been pursuing this very passionately with our customers. I think if I go back in time, both the customers, I would say, went and discovered their baseline and that I think the baselining is pretty -- activity is pretty much over. And that's what actually makes us -- gives us this confidence as well, besides the engagement of which we are having. I think some of the events which keep on taking precedence over such kind of closure of such activities is also not helping the cause here. Our belief, and I think it is quite strong belief, that with FEM, our cost is very clearly aligned. And obviously, there comes a time where you cannot save the energy cost till such time you actually inject capital and make sure that we put in solutions for the energy cost reduction. Hence, we are actually sensing every quarter, we are closer than before as well. But to be honest, it has not happened and our efforts only increase with our customers. So I don't think I would hazard a guess on this one because we did mention that we were hopeful of signing this the previous quarter as well. We would continue our effort. I would certainly say that this would -- could be a month or 2 retrospective, but I think these things are mostly prospective as well when we sign. So it depends on how this thing goes, but I don't see it largely retrospective, this signing off would be prospective.
The next question comes from Mr. Arun Prasath from Spark Capital, Chennai.
So first question is on the small cells. You also mentioned in the opening comment that IBS, there is some activity happening and the [ fastening of investment ] front. So on the [ small ones ] -- I mean despite the telcos have rolled out a lot of small cells in the last 3, 4 years, but they are mostly done in their own balance sheet rather than [ giving orders at telco ]. So my question is, what exactly does Indus needs to do differently prospectively so as to capture this opportunity?
So Arun, thank you very much for this question. If I understand your question right, I did allude to, in my opening speech around the 5G activity, wherein some of the activity in building space has popped up as well, which I think is in anticipation of rollout of 5G. But your question is more around small cells and IBS solutions. I think where we stand right now as Indus Towers and you are right, I think there is a large rollout which is taking place by the operators themselves. But I think there is traction happening on this side as well, though we don't get into how much of small cells, which we have rolled out, but we continue to increase our expertise and our engagement on this account as well. What is it that Indus can or is doing differently on this account? I think I will link it to 2 things. Only thing I would like to say is we are reorganizing ourselves when it comes to addressing of these new adjacent business opportunities as well with an extremely focused group within our group as well. However, I would like to park this question and take the focus to something which I have been saying, that while we have managed to tick most of the boxes when it comes to our merger, I think there is one box, which remains to be ticked, is the strategy box. And I think when we come and engage with you around this aspect, and I think we will reveal not only what we are doing in terms of our focus, how we will be aligned to gather a bigger piece of cake, not only in space of small cells or IBS or the adjacencies, we would address this as a holistic piece as well. And I certainly believe that while a lot has happened during this lockdown quarter, I think this is one thing which requires a lot of people to possibly gather, collaborate and agree on the strategy. So if we get a very clear 3 months of this quarter, we will certainly come back and give you more color and details. Rest assured that this is very high on our agenda, and we would share this with you soon.
Okay. All right, sir. We will be looking forward to that piece. My second question is that last year, Bharti Airtel added close to 20,000 towers, which is one of their best in the recent years. In one sense they still have quite a big gap with Jio. So considering all this, what kind of new tower orders you are looking, say, in '22 and '23? Any color on that?
Look, I don't think we give the forward on the numbers as well. If, let's say, our history is any surrogate to the future, I think I've been talking about historical addition during the pandemic. I've been actually talking about the data growth which actually continues. I think I did face questions here around the spectrum auctions and the impact thereof as well. And I think some of the answers are coming just within 2 lines when we actually share the actual rollout numbers as well. So my take is, I think as long as we have this robust demand. And in the same breath I did mention what is coming in, in the horizon, which is 5G and a very good competition on both quality and throughput as well in both 4G and 5G. Any such network activity really augurs well for us as well. And you can go into the history as well but I cannot give you any forward numbers here besides this.
The next question comes from Mr. Vishnu K. G. from JM Financial, Mumbai.
So just on the security package. Could you remind us what are the security packages currently available? Because if I remember rightly, we had a primary pledge of INR 40 billion worth of share and secondary pledge is on top of it. Given the changes in share prices, is there any clause for what can be used to actually top up these shares as and when required. If you could update on that, it would be helpful.
Sure. Vikas?
Yes. Sure. So thank you, Vishnu. So I'll probably just recap on the security package that we had shared with everyone in quarter 3. So I think at the first layer, we have a primary pledge of 190 million shares, which are owned by Vodafone Group in Indus Towers. And then in the second layer, we have a secondary pledge owned by Vodafone Group and the -- these are basically pledge, which ranks behind the Vodafone's existing lenders who had lent against its Indian assets and the maximum liability cap under the secondary pledge that we have is INR 42.5 billion. So the first pledge is basically shares. That's obviously dependent on the market value. And then we have the secondary pledge. So that's basically broadly the security package that we have. In terms of the top up, there's no provision for any top up beyond this security pledge. But as we mentioned in the beginning, the security pledge currently adequately covers Indus Towers for any exposure.
Sure, this is really helpful. And my second question would be, there was this consultation paper by TRAI on sharing of active infra. Could you please update on the process on the consultation paper? And when do you see it being completed? That will be it.
So you mean the active sharing part and would it be in light of what Indus Towers is doing on that? Could you sort of be a little clear with your question, Vishnu?
Sure, sir. So I was looking more from a macro regulatory perspective. So right now understanding that the active sharing, there was a discussion on taking it forward at an industry level. Could you please update on -- I mean what are the regulatory challenges and what is the exact regulatory process on that?
Well, I would possibly turn this towards where we, let's say, Indus Towers stand as well. I don't think I would like to get into the regulatory aspects of it. I do believe that if past is something to be called out. I think the success factor of, let's say, active sharing has been fairly time bound and fairly low. We've actually seen this played out in our markets as well in the past. So I would possibly not lose my heartbeat to start with on this one. However, with the current proposition on the table, I think it changes things a little bit, which I would certainly like to keep it as the whole story unfolds. So I won't like to comment any further on active sharing, Vishnu.
The next question comes from Mr. Neerav Dalal from Maybank Securities, Mumbai.
Just on, actually, this is a repetition, just on the outlook going ahead, how do you see the tower addition panning out? And in terms of margins, we've seen smart improvement in margins, ex of energy, what -- how should one look at that going ahead?
Neerav, thank you for this question. If you go back in time, Neerav, I think we've been answering this question through our performance during these times as well. I think we've -- in last 2 quarters, having highest ever net addition of towers. I think this from a new tower rollout, I think is unprecedented. I think if you look at the pace of our rollout this quarter is certainly not [ skewed ] as it used to be, which will give you certain clues around the broad basing of our rollout which I think lays some fears around just a single towers. Now as the [ exits taper off ] we certainly believe that, we think, more and more broad rollouts will take place if -- and we do believe that the data requirement or data consumption continues with this kind of CAGR. I do believe that requirement can be certainly extrapolated as well. For how long, I think this is a question which no one can answer at this moment. With 5G on cards, the newer trials coming in and new used cases, which are being pumped in, I do believe that we have a healthy participation when it comes to growth of our infrastructure. Please pardon me, Neerav, but I don't think there is any forward numbers that can be shared the growth, but I am very optimistic around continuing march toward both.
Right. So should we assume that the momentum of the current quarter with some impact coming in from COVID not being there, we should be able to maintain?
Well, let me put it this way, I don't think I can comment on the forward, but I don't see any hump or impediment at this moment, which I should be sharing with you.
Sure. Sure. And then on the margin side, any?
Yes. I think, Neerav, basically on the margins, of course, excluding the energy, the margin does show an improvement. And as I was mentioning earlier, I think it's a bit of a mixed bag where we obviously are focusing on operational efficiencies and running a very robust cost efficiency program. And on the other hand, we also managed to get some timing benefits because of lower level of activities, et cetera. So the margins have improved. But as a company, we really don't give any guidance for future margins. All I can say is, certainly, the focus continues. We do intend to maintain a healthy level of margins going forward as well. But I think we need to just see how basically the rollout and everything else pans out. But we really don't give any guidance for the future.
Sure. And I guess you did mention that in the next 3 months, there could be some more talk in terms of strategy. But within the strategy, how do you see -- is there a play on fiber? And what are adjacencies would you be looking at?
So Neerav, obviously, we've said all what you are saying. Adjacencies, of course, fiber is certainly one and pretty much all what we also mentioned, the play in IBS, the play in the small cells, the services component in and around tower, the diversification opportunity, which we sit with and which we certainly have a good opportunity, all of this will be played out in our strategy session as well. And I think a good amount of groundwork has also happened. So I'm very hopeful that next time we should be able to share this, not only share this, I think the how part also we would certainly like to come back to you and now what is it that we would do differently than what we've been saying capture this market as well. And I think that's where the trick of conversion lies, so please bear with us here.
We do have a follow-up question from Mr. Sanjesh Jain from ICICI Securities, Mumbai.
First is on the gross tenancy addition which though is very stable, but it has come down from what we have done 5,000 towers in the last quarter. Is it more of an impact of the hurricanes and the disturbance -- natural disturbance? Or is there an element of operator buying a larger spectrum parcel in the previous auction?
So I think this is more like, as I said, we lost good part of our quarter as well. So I think that should answer your question because I think we could have done more had we had a good run of 3 quarters -- 3 months.
Okay. You are telling that we haven't seen any major impact from Bharti buying a larger spectrum parcel in the previous auction?
Sanjesh, we do not comment on individual operators. But as I mentioned, I think a clear run of 3 quarters (sic) [ 3 months ] would have been a better result.
Fair enough. Second question, again -- second question is on the energy margin. We did mention in my previous question that the increase in cost because of the disturbance -- natural disturbance was more captured in power and fuel. Is that one of the reasons why the margins came off quarter-on-quarter or we did larger loss quarter-on-quarter on the energy side?
Thanks for the question, Sanjesh. I think power and fuel, the sort of negative spread certainly shows a bit of increase. And in the pass-through model, the cyclone's impact does not really impact the margin because the cyclone cost is passed on. So what really impacts the energy margin is largely the fact that sometimes there are disagreements and disputes. So in the last quarter because we are focusing and we did manage to resolve some of the old disputes, we had some reversals -- accounting reversals, which gave us some benefit on the energy margin line, which we did not have in this quarter. So those differences are basically what is giving us a slightly higher negative margin.
At this moment, there are no further questions from participants. I would now hand over the call proceedings to Mr. Bimal Dayal for the final remarks.
Thank you. Thank you very much. Well, I think as we move into our quarter 2, we carry a very good momentum for quarter 1 with some kind of scars of the pandemic as well. I think it is a million-dollar question, call it, a billion-dollar question to predict whether we are going to get 3 clear months of the coming quarter. And what we look forward to in the coming quarter is almost a conclusion of the strategy on one side. I do believe that this 5G activity would intensify and our close working with the customers would also increase. I think we will certainly get more clarity around our operator situation and the industry situation as well. Hence, the way I look at what has happened, we've had a very good foundational quarter, which is quarter 1 for the full year. Quarter 2 is what will give us the momentum for the year and certain clarity events are also expected in quarter 2. So I do believe that -- I think it is going to be a very important quarter. I certainly enjoyed this discussion, your questions as well. I look forward to meeting you all in person if this travel starts to happen as well. Until then, please stay safe and take care. Thank you very much on behalf of Indus team today. Thank you.
Thank you.
Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to audio conference service from Airtel, and have a pleasant evening.