Indus Towers Ltd
NSE:INDUSTOWER
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Indus Towers Ltd
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I'm Ragusa, the moderator for this conference. Welcome to the Bharti Infratel Limited Fourth Quarter and Full Year ended March 31, 2019 Earnings Call. [Operator Instructions] In case of a natural disaster, the conference call will be terminated with an announcement. Present with us on the call today is the senior leadership team of Bharti Infratel Limited. Before I hand over the call, I must remind you that the overviews 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. Akhil Gupta. Thank you. And over to you, Mr. Gupta.
Thank you, and welcome to all of you on the earning call of Bharti Infratel for the fourth quarter and the full year ended 31st March 2019.As you all know, this was a year of exponential data growth for the Indian telecom industry, and also a year when a massive consolidation took place in the -- within the operators. This resulted in shutdown of a few operators and [ breakeven ] of Vodafone and Idea merger. As a result, the tower company that is Infratel and Indus and indeed all the other tower companies saw very significant exits of co-locations. Roughly 20% of the organic co-locations was lost during the year, translating to about 75,000 co-locations on 100% basis and about less than the 40,000 on consolidated basis. Our silver lining in this entire turmoil has been a very favorable industry structure which has emerged. From the peak of 14 operators at one point, we are now stabilized at 4 operators, 3 private and [ via terminal end payment ] on the common side. We believe this augurs well for the telecom industry in the long run.In the year gone by, we have seen an all-time high 4G [ BT deployment and most deployment for ] operators, but most of them were on the existing towers. We are now seeing healthy gross count additions, and that's a good indicator of the co-location demand in times to come. I think an important detail that I have mentioned, 20% of these co-locations were lost, but the business model has been such that it has only resulted in an EBITDA loss of just about 6% year-on-year for the full year as compared to last year. Profit after tax at INR 2,494 crores was largely flat. And the operating free cash flow at INR 4,237 crores, that is EBITDA minus CapEx, actually grew marginally by 1% year-on-year.As I look at quarter 4 versus quarter 4 of last year which is the more important indicator, I see that the EBITDA is down by only 4%. The profit after tax at INR 608 crores is exactly the same as last year. And the operating free cash flow for the quarter was INR 1,154 crores which grew 14% year-on-year. As a result, the return on capital employed pretax and ROE post-tax remained very strong at around 32% and 16%, respectively.I'm also pleased to inform that the board yesterday declared a second interim dividend of INR 7.5 per equity share for financial year 2018/'19. Thereby, the total dividend for the year is now is INR 15 per equity share which includes the first interim dividend of INR 7.50, which was declared earlier in October 2018. The merger process of Infratel and Indus is on track, and I am hopeful that it should be completed in the next few months.On the business side, I would say that we do believe that the big backdrop of the new policy, which does lay an impetus on sharing infrastructure, coupled with that with rapidly growing data demand and the future developments on 5G being visible, we believe the future potential is bright. We are fully prepared to exploit this potential. We also yesterday made an important announcement with respect to DS Rawat who has very ably and successfully led Bharti Infratel for the last 9 years. He has informed the Board yesterday that he intends to continue post the merger of Bharti Infratel and Indus Towers within Bharti group in a senior role for global accordingly, wouldn't like to be considered for the role of MD and CEO of merged entity. He, however, has committed to continue in his current role as the MD and CEO until the merger is completed and would be actively engaged in ensuring smooth integration of the 2 entities. Having worked very closely with DS, I have to say that I will respect his choice, the choice that he has made -- he is making because I know this choice has been made with the aim and with the view of re-creating something which we were able to create [ as he ] came back in this tower company. And I'm sure whatever he is going to do within Bharti Group, he will be able to reproduce the same success and same re-creation as he had done in this present role. I have no doubt that all of you who have had the pleasure of dealing with DS over the years would join me in thanking him for his immense and actually immeasurable contribution to this company which, ever since its inception, has gained new heights and has set global benchmarks under his leadership over the years. I wish him all the best. Thank you all. I will take your questions now.
[Operator Instructions] The first question comes from Mr. Manish Adukia from Goldman Sachs Mumbai.
Yes. I have 2 questions. Firstly, if I look at this quarter, Bharti Infratel at the consol level saw a [ dip in gross tendency ] and also a pickup in exits. Now how should we read this? You had talked about gross entries ] picking up going forward. So should we see this quarter as a one-off and then how do you look at the upcoming quarters in terms of growth [ and see I can also see exits ]? And second, in the past, you talked about potential fiber-sharing initiative. Can you provide an update on that? And do you think Jio's plan to lease out towers and fibers creates new competition for you in the space?
Manish. [ This is hard to decide ]. Indeed, we did see a lesser number of co-locations as compared to the previous quarter. However, we are seeing uptake on the new towers built out. We've seen that increase from the first quarter consistently moving up. In case of the standalone Infratel, that's reflected in the tower growth that we are rolling out. However, we have not yet seen Vodafone-Idea rollouts figure in these numbers. We are hopeful that once the equity rate is down, we will see some announcement of that growth coming in as we look forward from here on. So these numbers are pretty much the numbers that are there without Vodafone-Idea's new rollout that's coming yet into these numbers. The focus still remains from operators to see that 4G rollout completion is done. Exits, too, like you mentioned there, we have seen the [ payment of existing come in ] again finally on account of Vodafone-Idea trying to consolidate their network. We hope that this is the last of it, but then these are dependent by the operators in terms of how they plan their network. We are happy to support them whenever they want us to roll out either more towers or to come in as co-location. That is to say, is currently we are seeing a focus towards making sure 4G is enabled in pretty much all the sites. Your question on fiber sharing. Yes, that remains in terms of connectivity, we have said for this particular company, currently, the last mile fiber to the tower is an area that we are trying to work on, nothing significant to report in terms of numbers of revenue right now. These are [ markets ] that we're trying to discuss with the operators. There has been some traction in [ Midwest ] to say that we should connect the nearest point of presence to all operators with our towers whereby they could then connect their 4G, 5G sites into the towers itself. On Jio's announcement, we continue to watch that closely. We've yet to see impact of that on ground or to even myself in terms of what is the likely impact for some of these things because the full picture has not yet emerged on what and how the sharing model, it would work. So we will wait and watch and pray that it comes down. We have said that in the past the tower capacity is not [indiscernible] capacity and hence, we do see that incremental growth in the market will continue given our large footprint of towers. And we are hopeful that there should not be a significant impact on any new tower company coming up and sharing their towers.
DS, I guess just one quick follow-up. Akhil in his opening remarks mentioned that the industry is moving towards a favorable structure. Now I mean today obvious because I'm not rolling out as many tenancies as they are, they are in the middle of fundraise? So when do you see them even -- or when do you see the favorable industry structure start benefiting Bharti Infratel? Should we see that happen in the next 12 months? Or is it slightly longer-term out?
So just like to add to that -- as we said, as a company, we are geared up, given our balance sheet, our ability to roll out, we're all geared up to whatever increased demand there is from the operators, but we are hopeful that with the huge amount of data growth that is happening and the pressure on quality of service that we see on operators, with 3 solid plans as they compete on [ solid ] differentiation, the lead will start to come up immediately. So these are -- they're ready with our assurance to operators, saying they're happy to roll out as and when they want. It is more an operator call of when they want to start. I did said I did see a small uptick on towers build out. I'm just hoping that these are initials wins through, that we will see an upsurge from here on.
And also Manish, as you have noted, the rights issue of Vodafone-Idea is already successfully completed. [ Bharti Infratel ] is going to open soon, and I think this augurs very well because with these fresh funds, I am sure the uptick in terms of network rollouts will be taking place.
DS, all the best for your new role.
The next question comes from Mr. Srinivas Rao from Deutsche Bank Singapore.
Srini here. Can you hear me?
Yes.
Yes, so I wanted to check one first. The issue of your -- what you call, onetime or income which you're getting every quarter of around INR 900 million which you've talked about last quarter. Does that reflect in your P&L directly because that has essentially some kind of financing. So the [ reach ] revenues or interest posit -- shows up on your interest income. If you can help us understand the P&L impact of that, that will be helpful. And based on your reporting [ base ] obviously, again, a small onetime income this time. So how does that number show up in revenue and then in your rest of the P&L? And that's my first question. My second question is if you can again help us understand that during the merger process, you did talk about the net debt-to-EBITDA of the merger could be going up to almost 3x on an aspirational level. But do you have greater visibility of how you would be able to achieve the increase in EBITDA -- net debt-to-EBITDA? Those are my 2 questions.
So on exit charges, you mentioned that onetime -- at which comes every quarter, so it's obviously not onetime, it's a recurring one. And I would say you must treat it as a regular revenue as far as this company is concerned. The amount is approximately INR 90 crores per quarter, so that's a regular revenue like any other revenue coming. I don't know, is there something one-off for this quarter, Bala?
There has been one this month that [indiscernible] have or may not would be -- operator [indiscernible] So you did say, that's just small.
It is small, I think, INR 4 crores or something like that. But other than that, we gained INR 90 crores is what I think you should treat it as a recurring revenue. In fact, some of the results reported we have seen today have mistakenly taken it as onetime. And I think this exit income which we are getting is to be treated as recurring income, as regular income. On the merger process, well, the aspiration is that with a lot of capital required for linking of the towers and fiber and many other [ access and thing ] which we would plan in the merged company, I think the net debt-to-EBITDA should go up. It was great to see that Idea chooses -- Vodafone-Idea chooses to send their stake in cash, that should also increase some debt. But it's not going to go to 3x, it's a [ great money ] but yes, that does remains an aspiration that we should have a decent amount of leverage over a period of time since very large at entire -- this disposal, there would be opportunity for this company to raise debts.
If I can ask one more question. Akhil, I mean, the issue is in terms of your, as you said, leverage. Since you don't have [indiscernible] of fiber within the company or any major options of rolling out fiber, what -- because I mean besides potentially buying the fiber assets of Bharti or -- and Idea-Vodafone seemed to have obviously indicated they would sell. Are there any even midterm opportunities to actually keep the EBITDA up -- net debt-to-EBITDA up? And as in midterm, I mean about the 2 years? That's my first. And again, so and the other was I'd wanted to ask was there is now at least in public domain given the Jio's infrastructure. There is an implied valuation for Jio's fiber assets. We also have kind of an implied valuation of Bharti's fiber assets in public domain. Your thoughts on that if at all will be very helpful.
Okay. So on the net debt, I would love to return more money to the shareholders but -- and the company there are limitations. We do give the maximum possible dividend. But yes, we do have plans for putting more money into the business in the [ accesses, maintenance ] and fiber-izing the towers and so on. Too early to give you the exact plan on that. I think there is still some work in progress there. On fiber, I think it would be the valuation needed [ to be available ] to the EBITDA which you are transferring to the new company. So that's not a rocket science. Whatever is the revenue, there has to be an [ MSA ], and whatever is the EBITDA going there, the valuation would be a multiple of that. Now what that multiple is, I think the market discovery would have to happen.
The next question comes from Mr. Rajiv Sharma from SBICAP Mumbai.
Just a couple of questions from my side. First is, if you can provide some color on the new potential tenancy declines which can be there in the next 9 to 12 months, in addition to what we've seen over the last few quarters? And second is quite possible that even after the recent fundraise, Vodafone, Idea will not add new tenancies, then Bharti have demand. So will you be fine with building tower for one operator? And that could mean incremental ROE thereof. So your thoughts on that thing.
Rajiv, first, I think it is difficult for me to say how much more exits in the future. And in fact, we believe whatever has to be played out has played out. Incrementally, in that business you do see some amount of readjustment of networks, and that is primarily driven by the operators. So we think the worst is behind and we hope from here on, we will look at the growth phase from all operators. They are only 3 operators who left, a very small exposure for us on BSNL and [, and when that comes ] so the growth would primarily come from the 3 operators as and when they ramp their growth plans from this point on. Their plans also keep coming in public domain about how they intend to deploy their CapEx. We do see them preparing for rollouts, and we are happy to support your question. Bharti, we continue to rollout, we believe that the 3 operators it's only a matter of time when others will do a catch-up on coverage. You cannot have huge differences between 1, 2 and 3 in terms of their coverage in the long run given that the spectrum bands are also now kind of getting distributed uniformly across the 3 operators in the current market scenarios. So if they want to stay at close to even kind of revenue market share, they really need to have similar kind of coverage. So any rollout for any one of the 3 leading operators, we are more than happy to build out for them and wait for an opportune time when the #2 or #3 operator would come down on those sites. So we are pretty much fine building, even if it means building a one-tenant sites for some of the leading operators.
And one last question if I could chip in that quite possible with the new [ limit ] structure, Jio may not give orders for the next 2 years or maybe 3, then what does that mean for your business plan, your growth of -- in the medium-term?
So we have explained the model of sliding scale, we think the construct gives advantage to someone coming as a second and the third tenant of an existing tower. As I said, I do not understand too many details about the infrastructure if that is locked for a certain number of sites or will that roll out new site requirements for Jio, too. It is not economical for an operator to run a single-tenant site of [indiscernible] versus other operators trying to share the site. And we have said that the cost of running the site even on the OpEx, if it is shared by 2 operators or more, it's significantly lower than keeping the site for one operator, both on [ renting even lodging ]. So we continue to see demand coming in from Jio. Wherever we have an existing tower, we are happy to accommodate them and rest is up to their plan if they want to continue and have single-tenant towers to be built adjacent to Indus as well as in Infratel towers.
The next question from comes from Mr. Kunal Vora from BNP Paribas Mumbai.
This first question are based on [indiscernible], you answered a few about this one. You have indicated that you have around 1 lakh 75,000 towers, like which is a number larger than Indus and Bharti put together. So why would you not [ enter ] the competition? Is there any difference you can highlight like in terms of footprint, in terms of like [indiscernible] infrastructure, anything which you think is different between the 2 tower companies? That's one. And second is, receivables seem to have been increasing. You have fiscal '19 ending around INR 200, INR 300 crore. It used to be about INR 200 crores, years back. Can you explain what's happening on the receivables? Has it something to do with exit [ quality ]?
Let me answer the first one, Kunal, via some of the sides, the Jio number of towers, yes, Jio continues to roll out towers. Initially, these towers were meant to be captive. The towers are between Vodafone structure at certain places. I do not say they're not a competition if they're going to sell these towers and tenancies on a sharing basis to the incumbent operators. But we think combined both these entities going in for rollout and the [ operators with that -- ], run-up for gaining market share over each other. We create certain differentiation by trying to be present, if not equal, exceed others in terms of their coverage and quality that they're able to offer to the customers. And hence, we believe the market is likely to expand, 2 or 3 tower companies we've had, those in the past too, and large-scale sites, we've also said that tower capacities are truly funded with capacity, while we might have certain amount of overlap, but there is a demand. You will need to establish. Come 5G, we believe that the inter tower site distances that will further shrink from the current levels, too. And that could be an opportunity for tenancies to be grown on the existing towers.
On the receivables, this is -- it's more of a temporary sale. We have been collecting the money subsequently, and we have released some of that.
Sure. Okay. Just one last question. Indus Towers -- [ tower B called condo, they would ] 500 towers. Has it something to do with Idea being [ disposed within certain towers benefiting ]? And could you...
Yes, please.
The next question comes from Mr. Ravi Menon from Elara Securities Mumbai.
You spoke about some near town tenancies that you're -- the additions that you're starting to see. So is this more for rural coverage? Or is this for increased capacity in urban areas?
Ravi, we are seeing a mix of both. We are seeing improvement of capacities in the towns or in the CBD areas where there is condition during the busy half. At the same time, we are also seeing rural reach being increased by leading operators to cover geographies that have not been covered. So it is a fair mix as of today in big cities, of course these are purely capacity led. Rural, we still see that there is coverage sites that are being built, some of these, of course, operators are building as part of the USO project, but this will continue to have demand for sites to be built in rural India.
I would it be fair to say that, in your estimate as a tower company based on your footprint with population coverage still be between 90%, 95%, not really much higher than that?
In terms of population coverage, it's also a function of what frequency bands, what I'm looking at, at 900, yes, you would say that's reasonable, certainly that they are covering north of 90% of population, but if you're saying 2,300, I would have my doubts if that is the kind of population that is covered today. But again, this is something that is not my matter of expertise, as operators would be in a better position to say what population coverage that they are covering, and it's also a function of what capacity that you are able to load in a given area. So hard for me to say what percentage population is being covered.
Sure. Get that. And just trying to see if there is some headroom for more towers to come up in place -- I think as operators decide to increase the population coverage. Same...
I did mention that we are seeing an uptick on rollout of towers that is clearly something that is coming in. It's purely a function of what service quality you want to render. You need a higher densification of towers if you want to give good quality coverage across even village, rural or urban of what kind of coverage you want inside buildings and sites. So you could keep going and increasing towers given that in the past [ sustaining ] China Mobile has more than 1 million -- 1.2 billion -- 1.2 million towers that they have built. India, given outside, definitely, has room for far more number of towers to come in.
But I also believe that looking at the trend of the data consumption in rural areas is very good. And it's just a matter of time that all operators have got to go really deep into this country. You cannot leave some portion and some population percentages to just one operator. So I definitely believe there will be more demand for towers coming because of the expansion of footprint.
The next question comes from Mr. Sanjay Chawla from JM Financial Mumbai.
Just a follow-up question on the working capital based on receivables. So just confirming that there is no permanent increase in payment terms of receivable base that we are seeing because of this churn and consolidation which has happened. And that is first question. Secondly, the postmerger of -- on the consolidated balance sheet after the merger and after the cash payments are made to Vodafone and Providence, how much cash would you likely want to maintain on the balance sheet? That is the second question.
On the receivable, Sanjay -- on the receivable, I think it's more of a temporary. I don't think we have made any changes to be done [ by the -- I just want to plan. ]
So we expect them to come back to INR 2 billion on a sustainable basis from INR 15 billion currently?
I don't know when it will come, but definitely, we are working towards that.
It won't need that much guidance -- not from the levers. Why don't you check up, and I know who will give some clear numbers.
I'm sorry, we look on this cash...
On the sched, you want to keep -- given now that we've announced the dividend, too and if Idea was to exercise, I don't think we will be sitting on cash in this company, but we'd have to see how this plays out.
So assuming would Idea choose to take it in cash, we would have some deficit in Bharti Infratel standalone asset. In Indus, there is already [ fit ].
The next question comes from Mr. Himanshu Shah from HDFC Securities Mumbai.
So to quick -- just for the exit penalties which would be bought off revenue and therefore, rental per tenant, then -- as in terms of actually decline on a sequential basis, what could be the reason for this decline?
[indiscernible]
Are you referring to the ARPT?
Sorry?
Are you referring to the average revenue per tenant?
Yes, average revenue per tenant.
Guess it's gone up...
Yes, it has gone up, but if we adjust for the incremental exit penalty versus last quarter and if we adjust for the same, and then there will be a decline in rental per tenant.
Last quarter, in Q3 had one-off in the year. And as the tenancies increase, there will be some adjustment downward.
You would said this quarter actually the tenancy has also declined, and there was net negative addition.
It's very marginal, and I don't think it's suffering a very minimal -- because overall it's gone up. And as far as exit thing is concerned, this figure is part of the revenue.
Okay. No issues. So secondly, Vodafone-Idea [ and the subsidies ] approx 70,000 overlapping tenants, they are also guided for another 20,000, 25,000 exits. So is it -- are we saying and the tenancy decline could be on account of that, this particular quarter? And do we see that as a risk at least for -- and by June 20 when they're fully -- and look to integrate their networks?
Himanshu, the first set of exits, we have the ones that came in, I think, sometime in Q2, the large exits that we saw on account of Vodafone-Idea. That was the first lot. Subsequent to that, in the last 2 quarters, also we've seen some amount of exits come in. We believe we've won the fair share of the 20,000 that was made on the press announcement. We'll have to wait and watch if there is going to be any more gain because there's likely to come in. We hope that this is probably the last of it. But let's wait and see what one that means for us going forward.
Sure, sir. Just 2 more small questions. Can you provide some guidance like what will be the number of tenancies that would be expiring over next couple of years, maybe 2 to 3 years, that will be coming out of the lock-in period?
We do not give guidance as a company, and I'm sorry, that I will not be able to guide specific on tenancies that are coming up for renewal. But I will give you a broad comment that we said that we do have tenancies that were extended in terms of their tenure till 2022. Most tenancies, a large chunk of our tenancies is part of the [indiscernible] that we did in 2016. We have extended large part of the tenancies till 2022. So even if there are, that would be a small number that we might see coming up for renewal.
Of course, that's part of exit.
That's part of exit, yes.
Okay. And sir, lastly, any guidance on CapEx for FY '20?
There is no guidance. Generally, we don't give guidance. This year, we have spent roughly around INR 1,800 crores, that's linked to the level of business activity that we do. I explained by and large it should be in the same vicinity, a little more perhaps. [indiscernible] More business.
The next question comes from Mr. Viju George from JPMorgan Mumbai.
I just wanted to get in a question on operating leverage. Despite a fair bit of rationalization in the tenant side, your margins have held up relatively better. But do you think that one could see the results of operating leverage, which means the tenancy ratios would have declined a little bit further from here in the next 6 to 12 months? Do you think you still have enough in your model to hold up the margins? So do you think the margin should give away -- just if you look at the operating leverage that kicks in when the tenancy ratio improves?
So we did see large amount of exits and if we still managed to hold on to our EBITDA very well so operating leverage was much more intense when only tenancy falls away. If you're referring to tower additions causing energy margins to dip, of course, we see that as good investment to be made. And I said earlier, we do expect once we have built that out on the leader that subsequent tenants to come in much more rapidly and come back to our tenancy ratio of 2, which is what brings us to the current kind of returns that we are targeting on all towers. We consciously look at all these as part of our investments so we continue to work, operational efficiency that have come in, some of those are on account of energy margin that you saw, but mostly operating efficiencies that we had have been played in. Some of course will come in as part of the merger as we get into a larger merged entity as one Infratel. But we'll continue to work and see how we can reduce both our maintenance CapEx and also see that we reduce our OpEx on an ongoing basis. So we hope to hold on to the current levels sometimes, of course, we believe that most of the exits that had to play have played out, we should be able to hold on for the margins at the current level there.
And one other question was on Reliance Jio's ventures. I think they had indicated at their analyst meet that the kind of structure they're looking at for the [ indirect ] in terms of their OpEx or rentals to the [ indirect ] would be kind of sort of comparable with the rents that they are paying right now. The ones that they have got arranged with Jio, for instance, with AdCom. So I think that is significantly below the average rentals that you have. Do you think that, that's going to be the new benchmark to get external tenants then the operators that you have right now may be used more on that side, particularly if they have sold down stake in [indiscernible] substantially to become minority investor?
That is when we -- sale and lease that, you can with that you can actually lease that at any amount that you want, and nothing to do with the market rates because that's accordingly the amount you will get. For other operators, I have a very serious doubts that they would actually want their competitors to get it below cost. It doesn't [ release the cost ]. So I don't think this is going to happen.
The next question comes from Mr. Samuel Chen from Sanford C. Bernstein Hong Kong.
Just a couple of quick question. The first thing is about the new accounting standard or the India accounting standard 116. I'm wondering if the management can give a -- quantify the impact or just an outlook on the impact. Second question is on the employment structures between Infratel and Indus. I noticed that Infratel only support about 33 towers per employee versus Indus who can actually support 53 towers per employee. That's quite a big of a gap. I'm wondering if there is a fundamentally different operating structures between the 2 companies. And post the mergers, perhaps Infratel can improve and actually merge towards the Indus operating structure.
On the Ind AS 116 which is the new accounting standard on leases which has come on the effect April 1, 2019, we are still working on the number from the output that we would like to take [indiscernible] treatment. The standard for which [indiscernible]. And we are still evaluating internally which approach we should take. So at this point of time, we are not able to quantify it. But what does it actually mean from an overall impact levels is that, you will not find the [indiscernible] expenditure on the operating expenditure line. However, you'll see a higher depreciation from the lease effects and high interest charges on the lease obligations. How all activity -- and that level probably it will utilize on the current financial work you are seeing.
Samuel, to your point, this, I will decide on employee productivity that we declare as a KPI there. Yes, there is a fundamental difference in the way it does and the external model works. Infratel family does most of the work in-house, and that primarily works on a model [ cargo ME, department ] been large part of the rollout. So we are looking at what is an optimal structure. There are pros and cons of both, as a merged entity we will take that call. But this is primarily a difference that comes in on the [ key resolve ] that is going to work on a certain ratio whether they are with us or as [ of loan ] and move out. We need to set up the control structure to run operations and to manage [indiscernible]. So we will look at an optimized structure and come back and announce that to the team as and when that happens.
We have a follow-up question from Mr. Srinivas Rao from Deutsche Bank Singapore.
First, and I just want to say thanks for DS, I think -- if I am not so sure if this is going to be your last conference call, but the announcement of the [indiscernible] can dictate that. So taking this opportunity to thank you for securing company. My other actually question is on the rentals which you paid to -- for your towers to the landlords. Is there any linkage between that and the tenancy for the tower or revenue of a tower which means does your rental get impacted if the tenancy of the towers go up and down at all for your portfolio?
So Srinivas, firstly, thank you very much. Yes, I will decide that. Yes, there is. I have mentioned this earlier and in other calls that whenever a tenant is added to the site, we do increase the landlord rental by INR 1,000, INR 1,500. This is part of the profit share that goes to them. We are able to reverse that in most locations wherever there's been an exit. And that's why you do see a drop I think on the rental cost per tower that we are paying. And I did mention earlier too, not on this call, but earlier, there is a threshold beyond which, normally the rentals are passed on and shared by the operators. So at Infratel, we are insulated to a certain level, but we can do the work and see how we are able to keep that minimal in the best interest of operators and us. There is no other direct linkage for that new tenancy and sharing potential of a tower nor anything to do with the traffic. Traffic does have loading revenues that come in. And in those cases, there is nothing that has passed on to the landlord.
Understood. So I mean the tenancy exits which happen, there is some impact, I mean, some, let's call it the rentals fall, but obviously, they're not proportionate, right? So is it fair to say that your margins will be impacted a bit, as it's still the time the exits flatten out?
Srinivas, yes, that's true, because it takes time to go back to the landlord and do the negotiations and then settle it, so again there is a time lag between the exit and actually the landlord -- they renegotiate for these rentals.
No, no. I'm not asking about the timing business. If the tenancies settle down at a number which is obviously after it's sold, would you -- obviously your rentals cannot fall as much as the loss in the revenue, correct? Is that a fair understanding.
Yes. That's fair.
At this moment, I would like to hand over the call to Mr. DS Rawat for the final remarks.
Thank you. As Akhil stated despite losing 20% of the tenancies due to unprecedented consolidation during the year, we've managed to close the year with consolidated revenue of INR 14,582 crores, up 1% year-on-year and profit after tax at INR 2,494 crores. This establishes of the robustness of the business model. The year gone by saw unprecedented consolidation in telecom industry with now only 3 plus 1 operators remaining. The remaining operators that focus on their data strategy ensuring a strong 4G family of presence. This was visible with the increased 4G rollout throughout the year. Going ahead, we believe operators would want to monetize thereby increasing data consumption and the need for improving quality of the service. We are best placed to capitalize on these opportunities by playing a key role in building and sharing [indiscernible] common infrastructure with all customers on a nondiscriminatory basis. On behalf of the entire Bharti Infratel team, I thank all of you for your continued support. Thank you very much.
Thank you, sir. Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to audio conference service on [indiscernible], and have a pleasant evening.