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Welcome to the Indus Towers Limited's Fourth Quarter and Year Ended March 31, 2024 earnings call. [Operator Instructions] Present with us on the call today is the senior leadership team of Indus Towers, Mr. Prachur Sah, MD and CEO; Mr. Tejinder Kalra, COO; Mr. Vinod Rao, Business Controller; and Mr. Dheeraj Agarwal, Head Investor Relations.
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. Prachur Sah. Thank you, and over to you, Mr. Sah.
Thank you, Sunita, and a very warm welcome to all participants. Joining me today are my colleagues, Mr. Vikas Poddar, CFO; Tejinder Kalra, COO; and Dheeraj Agarwal, Head, Investor Relations, on the call.
I'm pleased to present our business performance for the quarter and year ended on March 31, 2024. We are pleased to have delivered a stellar year with our yearly tower additions being one of the highest, in fact the highest ever in our history. This has also helped us surpass the milestone of 200,000 towers in our portfolio. The progress we've made on each of the strategic priorities, which we had outlined at the start of the year, centered around market share, cost efficiency, network uptime and sustainability has been pivotal to this achievement.
Keeping with the momentum observed during the year, tower additions in Q4 were our highest ever quarterly mark, with additions continue to be aided by the accelerated rollouts by one of our major customers, especially in rural areas and significant increase in our share of customer rollout.
With regards to collections from a major customer, we sustained 100% collection against our billing during the year and also made some collection against the past dues. We are pleased to see the recent positive developments at the customer sent around respond rates, and we remain engaged with the customer for clearance of our paces. Before we delve into the details of our core business areas, I'd like to express my sincere gratitude to our field forces for their commitment towards helping invest bridge a digital demand.
In the quarter gone by, our field force exhibited successful perseverance to install 2 towers in the mountainous regions of Nilgiris District, which is situated at the highest altitude about seasonality level in Tamil Nadu. Enabling connectivity in the remotest of areas and difficulty terrains by installing huge towers is a truly remarkable and reflects on the commitment of our people on the ground.
The year gone by saw several encouraging developments on the regulatory front and reemphasizes the government commitment towards facilitating the swift rollout of telecom infrastructure across the country keeping sustainable view. The landmark Telecommunications Act 2023 aimed at easing line of rate challenges and ensuring network and infrastructure security among other things, came into effect during the year and was notified in Q4. The Green Open Access policy aimed at incentivizing the use of cleaner sources of energy has been notified by more than 12 states. Additionally, the composite scheme for multiple power connections, the option to apply for a power connection for telecom infrastructure through the Gati Shakti portal and mapping of different ministries to the Gati portal to apply for Right of Way for other key highlights of the year.
On the topic of 5G, rollouts by the top 2 customers operators continued at an accelerated pace in Q4. Taking the total down the 5G base transceiver stations already have deployed to over 435,000. The large rollout of 5G services by operators during the year have added to loading revenue and helped us deliver a strong growth. The wider adoption of 5G is expected to spur the demand for newer sites in order to facilitate network condition. We remain confident in our ability to make the most of the opportunity on our work, given our leadership in the massive infrastructure space. The accelerated pace of 5G infrastructure deployment is expected to be supported by swift adoption by users and statistics mentioned in the Nokia MBiT Index report 2024, and give guidance was the same. And per the report, the total 5G subscribers stood at 131 million in 2023 and are expected to grow to 575 million at 2026.
The device ecosystem for 5G is also progressing well, with 17% of the active 4G devices now capable of 5G. The contribution of 5G to traffic has increased from 1.7% in 2022 to 15% in 2023 5. The data consumption trend remained strong, underpinned by both the script or proliferation of 5G and online migration of users from 2G to 4G. For the top 3 operators, the average data consumed per user per month grew by 14% year-on-year to 24 GB in the December quarter, and the total data consumption grew by 24% year-on-year in the same period. The confluence of robust data usage and surging 5G adoption presents a compelling opportunity for the passive infrastructure industry. And given our core position in this space, we believe we are well positioned to cater to the demand.
As touched upon earlier, we delivered our highest ever tower additions in Q4 as well, in line with the trends of the year. Our macro tower and co-location additions for Q4 more than doubled compared to the same period last year, and our full year additions were more than 3.5x compared to the previous year. In Q4, we added 7,961 micro towers and 7,909 corresponding colocations, supported by a combination of strong customer demand and our ability to increase our share in the business of the customer. Total macro towers and co-locations in Q4 increased by 13.9% and 7.5% each on a year-on-year basis, to 219,736 and 368,500 respectively.
On a full year basis, tower and co-location additions were at 26,862 and 25,757, respectively. Our industry-leading tenancy ratio stands at 1.68. In terms of linear towers, co-location additions were at 692 in Q4, resulting in the overall base increasing to 10,686. Including linear towers, our net colocation additions were at 8,601 in Q4 compared to 8,568 in Q3.
Moving on to a progress update on our 4 key strategic priorities, namely market share, cost efficiency and network of time and sustainability. Firstly, our market share, as I alluded to earlier, our quarterly macro tower and co-location additions more than doubled over the same period last year. This was underpinned by a substantial improvement in our share in the business of a major customer whose aggressive rollout continued in this quarter as well. At the beginning of the year, we focused on improving time to market of our products further in order to increase our competitiveness.
To this end, we found a dedicated team to inspire the deployment process through continuous monitoring and proactive logistics management. Supplementing this have been our efforts towards centering our ecosystem system, systematic resource planning, streamlining our product offering and the digital interventions we have been taking across our balance sheet. We expect the rule of rollouts or rollout of our major customers to continue in the near term, at least, providing us a significant headroom for growth.
Secondly, regarding cost efficiency. We remain focused on optimizing both operating and expenses. One of the major contributors to our operating costs is, and we have taken various initiatives to reduce consumption. These measures include organization of our early storage solutions, increasing the ease of renewable energy solutions and conversion of sites from indoor to outdoor, which helped us reduce the energy consumption by 6% in Q4 on a year-on-year basis. With a sharp focus on expanding our renewable energy portfolio, we more than doubled our quarterly run rate and added more than 8,000 solar in Q4.
In terms of CapEx, we have been focusing on various aspects such as product and addition, resource planning to optimize spend for site and existing in the structure for efficient upgrades. Supplementing this was the technological interventions, including the automation of processes and use of artificial intelligence and machine learning to enhance the life cycle of the system.
Thirdly, moving to network of time, a metric which is critical to customer satisfaction. In Q4 of this year, we managed to further improve our industry high uptime to 99.97%. We were able to achieve these numbers despite the heavy rains seen in areas of Uttar Pradesh and Northeastern states, as well as the power outages caused by severe heat in the areas of Punjab and Haryana, which underscore the perseverance and determination of our field force.
Coming to ESG, a strategic priority for the organization. We want to create an agile and future-ready business model that preserves the environment, promote inclusive culture, standard communities and create resilient value chains. To this end, in the year, we launched a 0, is a target campaign with the aim of achieving 0 emissions, 0 harm, 0 based, 0 bias, and 0 progress to noncompliance. On the environment front, we are driving multiple intervention to reduce our GHC emissions by increasing the share of renewable service of energy in our oral energy portfolio and reducing our diesel consumption.
During the year, our solar portfolio increased more than tenfold to 14,731 sites. We reduced our diesel consumption by about 7% during the year despite increase in overall energy consumption. We also participated in the CDP that is carbon disclosure project day, which is nature of company's performance and environmental action. We are pleased to have scored B-, which underscores that we are addressing the environmental impacts of our business and ensuring good environmental management. We are pleased to see gender diversity almost double from 6% at the beginning of the year to close to 12% at the end of the year. We have always been dedicated towards creating a workforce with women through our focused hiring programs, including policies and the [indiscernible]. And we will continue to work in this space, along with our entire ecosystem to continue valuing this program.
Our CSR initiatives had a positive impact more than 40 million lives across India through our flagship program, Akshar and Pragati, which focused on girl child education, digital literacy and lively promotion amongst. To create a safer work environment, we launched electrical and road safety campaigns for our field force and ESG training for entire workforce, including partners.
During the quarter, we also launched a sustainable procurement policy, which reiterates our belief that the sustainability practices of our business partners play a major role in the long-term success of our business. We believe these programs will cohost practices and a deeper appreciation of environment, social and governance issues.
Our efforts towards GHG are being relied as we were just the emerging company of the year as the procedure transformers phones. We are also pleased to have done the open Award for the 11th connective years.
I will now request Vikas to take you through our financial performance for the quarter and year ended on March 31, 2024 report, and I look forward to your questions. Over to you, Vikas. Thank you.
Thank you, Prachur, and good afternoon, everyone. I'm pleased to share with you the financial results for the quarter and year ended 31st March 2024. Before presenting the financial performance, I would like to reiterate our exceptional operational performance during the year with a large number of tower additions recorded each quarter.
Coming to the financial performance for quarter 4. Our reported gross revenues were at INR 71.9 billion, growing by 6.5% year-on-year. The core revenues from rental grew by 7.7% year-on-year to INR 45.8 billion, aided by strong tower additions and 5G loading. On a quarter-on-quarter basis, our reported gross revenues were almost flat, while core revenues from rentals were up by 2.2%.
Moving to profitability. The reported EBITDA for the quarter 4 grew by 19% year-on-year and 13.3% quarter-on-quarter to INR 41 billion. EBITDA margin was up 6 percentage points year-on-year and 6.7 percentage points quarter-on-quarter to 57.0%. Similar to the previous quarter, we recognized a collection of more than 100% of average monthly billing against the past overdue from a major customer, resulting in write-back of provisions for doubtful debt. Adjusted for these factors, EBITDA increased by 8.5% year-on-year and 3.3% quarter-on-quarter.
Energy margins improved sequentially from negative 2.7% to negative 2.1% in quarter 4, driven by seasonality and also initiatives we have taken to reduce our diesel consumption and other energy expenses.
Our reported profit after tax stood at INR 18.5 billion growing 32.5% on a year-on-year basis and 20.3% on a quarter-on-quarter basis. Please note that quarter 3 FY '24 PAT, profit after tax, was impacted by matters pertaining to tax resulting in an increase in depreciation and interest cost. Normalized for this and other aforementioned factors, the profit after tax increased by 5.2% year-on-year and 4.3% quarter-on-quarter.
I will now move to the full year performance for fiscal 2024. Please note that FY '24 included the one-offs, I mentioned before. And as a reminder, FY '23 included onetime revenue recognition of about INR 11 billion from settlement of old dues and its profitability figures were marked by the provision for doubtful debt of about INR 53 billion, an impairment of revenue equation reserve of INR 4.9 billion.
On a full year basis, our reported gross revenues grew 0.8% year-on-year to INR 286 billion and core revenues were up 1.7% year-on-year to INR 177.3 billion. Adjusted for one-offs, gross revenues and core revenues were up by 4.7% each year on a year-on-year basis. On a reported basis, EBITDA increased by 50.4% to INR 146.9 billion, and profit after tax grew to almost 3x to INR 60.4 billion. Again, adjusted for one-offs and provisions, EBITDA was up by 4%, and profit after tax was down by 1.2% year-on-year.
The reported pretax return on capital employed and post-tax return on equity for the rolling 12 months were at 19.4% and 25.1%, respectively. We generated free cash flow of INR 3.3 billion in quarter 4, and our total free cash flow stood at INR 1.8 billion for the year. On account of accelerated rollouts by our major customer, our CapEx remained elevated in Q4 as well. We believe that the investments we have made to capture this growth opportunity will stand us in good stead for the future given the long-term nature of our business and will help create value for our shareholders.
Our trade receivables increased by INR 4.3 billion, mainly due to the timing difference as the provision write-back occurred in quarter 4 while the collections against the power dues were made in April. With regard to the outstanding overdues from a major customer, we are pleased to see progress in its fundraising. We expect that these developments will help the customer clear our past dues and also provide us with a growth opportunity given the customer is planning to make investments in its network expansion.
To conclude, we are excited to have delivered a solid operational and financial performance during the year, with the latter being also aided by steady collections and past clearance of the past dues from a major customer. We expect the rural expansion of a major customer and 5G rollouts to continue to act as significant levers of near-term growth. The positive development around the financial situation of 1 of our major customers is another pleasing aspect that we expect to benefit from.
So with this, I would now request the moderator to open the floor for question and answers, please. Thank you.
[Operator Instructions] The first question comes from Mr. Sachin Salgaonkar from BofA, Mumbai.
Congrats for a great set of numbers. I have 2 questions. First question, I just wanted to understand, and you guys mentioned about 1 of your customers raising fund. So from that aspect, any changes in outlook, any color you could give in terms of how tenancies and rentals for you guys could improve? And as far as the pending deals are concerned, should we expect some kind of an amount to come every quarter with an interest agreement? Or is it that you might get one-off amounts on a regular basis? And second question is, I would love to know your thoughts on outlook for CapEx as well as dividends.
I'll take the first question and then ask Vikas to take the second question on dividends. So on the customer's question on dues and tenancies at this point of time, I think we are currently working with the customers to define how this is going to work, but we expect our dues to be cleared, right? I think the cons of that and how in touch our customer to do that. And of course, as we -- as the dues are getting cleared and the expansion activities happen, we expect that tenancies to grow positively. At this time, it's too early to commit on the numbers as we are in discussion with the customer. Vikas?
Yes, sure. So on the CapEx outlook, I think the -- we have seen almost 3 to 4 quarters of very strong tower rollouts. I think the momentum has not slowed down. So we do expect the momentum to continue for a few more months and quarters. So from that perspective, I think there will be sort of a high CapEx fees for some more time. On the dividend outlook, I think, as you can see from the results, our -- the free cash flow performance for the FY '24 has been low and that is largely because of the elevated CapEx, which in a way is a good thing because CapEx is really for the long-term growth of the business.
It's an annuity business, as you know. So whatever we invest today will certainly give us the cash flow for the next 10 years. And because it's a long-term contract, and it's always good to capture the business upfront. So I think this year has been a year of low cash flow, but as Prachur said, I think we are engaging with the customer and especially after their good development on the fund raise and so on, there is a possibility that our cash flow situation might improve in FY '25. In which case, certainly dividend will be an important consideration. And our Board will take the call at the right time when the time comes, Sachin.
Just a follow-up out there. By what time could we get more clarity in terms of the incremental business you guys are getting or when the pending deals will be cleared? Is it a few months? Or there could be a rest that this might move down to maybe a few quarters?
So I think it's again, we will -- we are working with the customers, so I can't commit a time. But from our point of view, now that the funds raise has occurred, we expect the discussions to happen sooner than later. So I think we are already in touch with them. So we'll keep you posted as it comes. I can't give you a time frame right now. But it should be quick.
The next question comes from Mr. Manish Adukia from Goldman Sachs, Mumbai.
My first question is when you comment around market share where you mentioned that you've had an increase in market share. I just wanted to understand this is pertaining to 1 large customer of yours or is it at an industry-wide level? What I'm trying to understand is, are you also seeing share across the #1 customer also in the industry? Is it just special from Bharti Airtel. That's one. And the second question on new rollouts from Vodafone Idea post their fund raise. Is it safe to assume that most of these new rollouts will be in the form of incremental tenancies and you are unlikely to need to set up new towers for Vodaforne Idea? Just your thoughts on that.
So Manish, on the first question, I think the market share comment stands for the entire market. I think, to be honest, all the new tower growth is primarily driven by the on-label customer, right? I think -- so I would say the market share comment is holistic. So I think have been built in the market, we have taken a larger portion of the shares because it's been driven by the 1 customer.
From a second point of view, I think as I told earlier to Saas well, but I think it's too early to say whether the roll out of new towers, new tenancies and then the use will get there. So I think let us understand what the customer strategy is, and then we'll be able to give you a better position in terms of whether it's going to be in new towers or tenancies. So I think we -- once we have the clarity, we'll come back to you.
Sure. Thank you for the color. Just a clarification on the first response of yours. So from our understanding the last 10 months have also been a period of incremental rollout on 5G for Reliance Jio as well. So basis your comment, like I'm just trying to understand because you also would have rolled out a number of towers in last 12 months. And your rollouts are for digital only 1 customer. So how will that to industry-wide market share just trying to reconcile that?
So I think, Manish, I think there are 2 separate aspects. One is the new build rollout, which is not driven -- which is not that driven by the 5G rollout. There are 2 aspects of the rollout. One is the 5G rollout, which typically happens on the towers that are already on the ground, so which is coming in the form of loading. That exists -- that happens on the existing towers, so whichever customer be on our towers, we have rolled out 5G for both the customers wherever we have tenancies. When I'm discussing market share, I'm talking about the new build rollout, which is not directly correlated to a 5G, but a regular rollout itself, the 4G and 2G customers. So I think that's the market share I'm talking about is the new build towers.
The next question comes from Mr. Arun Prasath from Avendus Spark.
Sir, my first question is on the -- you mentioned that there is a revival increase mainly because the collection happened in April. So can you just clarify this, isn't this the case in the last quarter also, you made building quarter end and the collection will happen in the next. So is the recurring one? Or is there anything onetime, which has led to a receivable increase?
Yes. So Arun, I think just to sort of refresh the memory, last quarter, there were sort of 2 things that happened. We collected some part of the overdues or dof backlog and at the same time, there was an interest adjustment. And as a result, there was basically an increase in receivables on account of that interest adjustment as well. So this time in this quarter, there is basically -- there is not much of that interest adjustment. It's more about the collection, which has happened in April. But the implication of that on our provision has been recognized in quarter 4 itself. So that is why you see some amount of receivables increasing, but that's only timing because we have already collected the amount in the month of April.
Okay. Just to get better clarity. I suppose you're billing is for 100 and if the customer is paying, say, 105, 100 you will collect it in towards the current invoice and 5, you will reverse the previous position. Directionally, is this the right way to think?
Sorry, could you just repeat that again, Arun?
So the billing is happening for INR 100. And the collection is happening for the INR 105. That INR 5 Will be the reversal in the provision. Is that the right way to think directionally?
Yes. So anything which is more than 100% is being supplied towards the old receivables for which we are carrying provision. So that leads to write-back of provisions.
So your 100 percentage calculation is on the amount due or the amount invoiced?
Yes. Arun, I think basically, this 100% is based on the average billing. So there are certain nuances in this. I suggest maybe we can take you through the reconciliation offline. But all I want to mention is in this quarter, we have collected more than 100%, and that has resulted in some provision write-back, as you can see in our P&L.
And maybe so far in the last -- since the receivable issue started, we had provisions cumulatively on INR 5,500 crores. Of that, we have collected around INR 370 crores in this quarter. That is the bottom line, right? And we'll expect to collect more out of this INR 5,500 crores in the coming quarters?
So I think broadly and directionally, you're right. But like I said, I mean, if you want a very specific recon of the numbers, we can take it off-line. But yes, directionally, you're right. There is a reduction in our provisions. The original number was INR 57 billion. It is now down to INR 54 billion.
Understood. Now secondly, if you look at the -- 1 of the large customer, if you look at the document, which is talking about the utilization of the funds. It doesn't talk about the repaying operational vendors like us. It is talking about future CapEx. So where is this confidence that we will be able to collect? Is it because it doesn't look like it will be paid through the fund raised. So it has to come from the natural operational cash flows for the customer? Or we have some other as a way of collecting this?
Arun, to be honest, I think I would not guess on behalf of the customer in terms of how the overdues will be cleared. I think, we are working with them on how the overdues will be cleared, but where the cash comes from, I don't think we will be able to comment on that one. So our confidence comes from the fact that we are engaged with them to see how the overdues can be cleared, and we'll keep you posted.
Okay. Okay. Okay. And lastly, on the growth that we are anticipating because the customer will do more. That's expansion. From our side, all our towers, which we have done in the past, does it require some additional CapEx to support the more loading in anticipation of this customer expanding or that part of the CapEx is done and we just -- the CapEx is more towards new sites?
I think even in loading, based on a site configuration, there may be some CapEx required. So I think there is not a general statement that I can give. It is based on a site-by-site configuration of what is required on the site to provide the additional loading. So I think in some sites may be lower, but some sites will be higher as well. So I think it's a mix.
Yes. Arun, just to add on to what Prachur said. Obviously, very tower has a certain loading capacity. And with various tenants on the tower, different loading capacities are utilized. So depending upon what new requirement comes from this customer, either we strengthen or a little bit of incremental CapEx or no CapEx could be a situation, but it depends upon tower to tower.
Understood. Understood. So all this means that we have kind of new CapEx and possibility of saying the dividend will also be there given that uncertainty is more or less now reduced. That's the right assumption?
I think for the dividend, Vikas already answered the question. I think -- as you said, I think our elevated CapEx remains, and I think we have a visibility for the next few quarters as well where the rollout momentum will continue. And depending how you can or when the overages happens, I think that will be a discussion that will happen in the board in terms of how we can do the dividends.
The next question comes from Mr. Kunal Vora from BNP Paribas, Mumbai.
Sorry. I was on mute. Sir, my first question is on the average rental per tenant for FY '25. How should we look at that number trending? Directionally, will it be stable or increase or decrease based on like whatever renewals are coming up and your expectation on FY '25?
So I think ARPT has been fairly stable. I think except for 1 factor, which is the -- within our macro also, we have different designs of towers. And as a result, there is a mix impact that we see. And obviously, the new rollout is leaning more towards designs that are more agile and nimble and as a result, carry a lower rental. So to that extent, there are some minor movements in the ARPT. But otherwise, ARPT, other than the mix is fairly stable. So no major movement anticipated there.
So for the old macro towers, are you like seeing some rental escalation every year? I understand the mix part that new towers are coming with it over rentals, but for the older tower?
The older towers are basically following the MSA construct, and we have the normal contractual escalations built in. So they go through the normal MSA process.
Which is what, around 2.5% annual escalation?
That's right.
Understood. Okay. And on CapEx, I understand you already discussed, but like just if you can provide like what kind of visibility do you have at any point in time? Is it for 3 months, 6 months, 1 year? So like do you look it at the beginning of FY '25 will get orders for 15,000, 30,000 towers put together, which are like the key tenant might be willing to add over the next 1 year? So if you can provide what kind of visibility do you have for FY '25 compared to FY '24? And also if the tower addition gets back to the run rate which you had earlier, which is what you had in FY '21, '22, '23, would the CapEx also come down sharply like 50% maybe in second half of FY '25 or FY '26? What kind of decrease you can see as and when the tower additions moderate?
No, I can tell you that normally, as any company, we want customers to give a forecast for the year. I think what as Vikas mentioned in the commentary, I think the order book looks very strong for the remaining part of the year. So I think the CapEx will remain elevated for the next few quarters. And by the time the year ends, we'll give you -- we'll get more understanding of the customer plans for the subsequent years. So I think FY '25 still remains a high year for us in terms of towers.
Understood. Understood. As strong as FY '24 or even stronger or like some color on this?
I think, Kunal, we hope to be stronger, but I think it remains quite.
Understood. Understood. Okay. I won't go further on that. Last question on -- if you can talk about like the MOU which you signed with NTPC and renewable energy based projects, how does it align with, what you are doing and what would be the return execute?
Yes. So I think, Kunal, the MOU that we have signed actually, as I mentioned, 1 of the key rivals both in terms of energy, cost efficiency and our ESG commitments, our plan is to increase the renewable portfolio. And as you know, the Green Open Access policy has been rolled out and 12 states have adopted it. So directionally, this MOU we are looking at, but not just with NTPC but other players as well on how we can get into an agreement with them on the Green Open Access based on the capacity they have and how we can get both the arbitrage and improve our. So I think it's an initial MOU, we'll see how we can deploy at scale and increase of renewable portfolio across the board.
Can you help me understand the financial implications, what kind of capital deployment might happen? Whether there'll be any revenue implications? Or is it like not really material from modeling purposes?
No, I think it will impact the cost efficiency. The exact number of CapEx and how much will be the cost is probably the next stage of the MOU, right, depending on which state will deploy, because every state has a different power structure. And also the agreement of the PPA price for the players. So I think I can't comment on exactly what the benefit would be, but as we move forward on the next stage from the MOU, we'll be able to go state by state in '25 on what benefit we'll get, so both cost efficiency perspective and the...
Yes. So just to add, I think these are a bit early stage as far as our initiatives on Green Open Access or renewable energy is concerned. So I think the commercials on both sides, on the renewable company side as well as on our customer side, they need to be sort of firmed up, and that's going to take some time. So that's work in progress. So I think in terms of the financial impact and so on, it's very too early to really call out anything. But as and when we sort of make progress on this, we'll update you.
Understood. Just maybe a follow-up on that, like because you had the older initiative you're talking on smart cities. Where is it now? I mean like over been many years now, we haven't really heard much about it. Is it having any impact at all or it's not something which is a priority now?
Well, I think to be honest, smart city and Green Open Access are not related. But just to give you an update on Smart City, Smart City is a project from even from the GOI, Government of India side as well as taken a little bit of a backseat. So whatever our commitments were made on the Smart City, we have executed and whatever revenue, but it's not material enough to get behind. But I think the Smart City initiative was very much dependent on what Government of India was planning to do. I think that has scaled down a bit. So I think whatever limited we have in terms of our scope, we are executing.
[Operator Instructions] The next question comes from Mr. Vivekanand Subbaraman from AMBIT Capital, Mumbai.
[Technical Difficulty] operator has now received. When they expand their network, do they have a choice of expanding there network in terms of population coverage, expansion only through lean sites and not through macro towers? That's question number one. Secondly, as far as the overdue amounts are concerned, how should we think about that amount and the aging of that? I understand that there is some amount that is there in the trade receivables segment or reporting. And then there is a balance sheet provision also that has been made. So there have been amounts that are written off. So in your discussions with this operator, how are the payment terms being worked on? And is there any discussion on the accrued interest as well?
Vivekanand, I'll just take the first part, when you say whether they have a choice to do the expansions only through lean towers and so on. See typically different types of tower structures have a coverage need or a capacity need or what kind of terrain is to be covered. And since the operator will plan their network depending upon where they want to strengthen their network, I don't think it's 1 type of structure that would suffice. They would need multiple solutions to bring in that capacity or coverage need. And therefore, to our understanding, different types of structures would be required. We have a full portfolio. So whatever the customer needs to expand their network and coverage and capacity, we have all the solutions available to support them. And therefore, we are at least fully geared up to do that.
And the second question, Vivekanand, as I answered earlier, I think returns of payment and the overdue clearance, I think we are in discussion with the customer. I would share it as we know more firm answer. And as we get the overdues cleared, so I think I can't comment much on the structure per se at this time of time from point of view.
Okay. Fair enough. Just 1 follow-up on the macro towers versus new towers point. So currently, you have new co-locations of around 11,000. But when you look at the total towers that you have there around 2.2 lakhs. So from your vantage point, the green towers as a percentage of the total portfolio that you have is not very significant, right? So it's maybe just 5% of the portfolio. But as a percentage of, let us say, an operator's network, is this much bigger in percentage terms? Is it like operators now have 10% to 20% of their network on green towers? I'm just trying to understand the other side so that when we look at the rollout plans of, let's say, the third operator, now that they have the funding, how to think about the incremental tenancies for you on your macro towers where you're incurring large amount CapEx and on the green towers.
So let's put it this way, as I said, different towers have different capabilities. The macro tower gives a more -- a larger height. It gives a larger throw and therefore, depending upon what frequency they are radiating on, they will need the certain number of towers. They can do a wider coverage to a higher -- more height tower. Leaner towers obviously have much lower height. They have a smaller configuration, smaller loading capacity and so on. Therefore, depending upon where they are going to expand, whether it is rural or semi-urban or whatever, typically, macro sites are a better solution.
If 1 is just trying to add capacity into a dense area and so on, leaner towers is the solution. So as I said earlier, it will clearly depend upon where they want to focus, what pockets they want to densify and grow and therefore, different solutions for those kind of needs.
I think that the portfolio will remain balanced, I think they will need a macro...
That's true. We've not seen across operators a big swing in terms of lean versus macro. It depends upon where you want to add capacity or coverage.
Fair enough. Just pressing a little bit on the provisions and the receivable from this operator, right? So the way to think about collections from them now is to look at your trade receivable, which is there on the balance sheet and the amount that you provided for against bad debts, both, right. You are looking to recover, I'm just trying to understand that when you say that you're confident of recovering this amount? I'm trying to understand whether this includes the amount that you have written off from the balance sheet and the balance sheet recorded trade receivable? Or is it just the trade receivables on the balance sheet?
No, you're right, Vivekanand. And I think, obviously, the recovery will be the gross figure. By the way, I mean, technically, we have not written off any receivables. We only provided to derisk our balance sheet, but we are very much pursuing the full amount -- payment of full amount.
Right. Okay. That is very clear. I think there are some media reports that are perhaps carrying an erroneous number in terms of outstanding. I mean, if you clarify on this, then it will certainly help in the general public understanding of how much you can potentially recover from the said customer.
Yes, sure. I mean maybe offline, if you can let us know Vivekanand, which media reports you're referring to, we can certainly see how we can correct it.
[Operator Instructions] The next question comes from Mr. Sanjesh from ICICI Securities, Mumbai.
Yes, I have got a couple of them. First, on the ARPT, I know you touched upon it, but a little bit more clarification. This quarter, it was flattish quarter-on-quarter, despite a single-tenancy tower going up, and you have a strong 5G loading, which is adding to the revenue and not to the tenancy that is effective, it should reflect in ARPT. But despite both the things, we have a flattish ARPT. I understand that you said there's a change in the mix. But again, is the change so drastic that it is actually -- the rentals are lower than macro return to an extent that it is given the loading revenue effectively down in the ARPT conversion?
If I take that, Sanjesh, I think we had sort of tried to explain this even some time back. So basically, in ARPT, there are, again, a lot of moving parts. So of course, there is 5G uplift that we see in the ARPT. But at the same time, there is a sort of downward pressure coming from the mix, as I was explaining, because most of the new rollouts that we are doing are low rental rollouts. There is also the element of every month, every quarter, some new tenants -- some tenancies coming up for renewal. And we are sort of following the same framework we had signed with our customers back in FY '22, whereby we had given them some renewal discounts and so on. So that is -- basically, there are some of these main factors which are creating downward pressure. And of course, the loading is helping us. So the net result is, broadly, we are seeing a very stable ARPT scenario.
Fair enough, fair enough. Just 1 more on that. What is the renewal tenancy expected to come up in FY '25?
We have roughly 8% to 10% of our portfolio getting renewed almost every year, Sanjesh. So we had a bulk renewal in FY '22 and thereafter until about next 2, 3 years, we have pretty much 10% to -- 8% to 10% or 12% coming of a renewal every year.
Okay. So that phenomenon will stay for, say, next other 2, 3 years at least, if not more?
It's an ongoing phenomenon, I would say, because I mean, typically, our contracts are 10 years, and the company has been in existence for longer than that. And every year, we have been building towers, so there will be some renewal or the other every year. So it's an ongoing phenomenon.
Got it. Got it. And this is getting renewed again for the 10 years, right?
Yes, that's right, yes. That's our...
So the cycle remains very smooth and stable?
Yes, that's right.
Got it. Got it. Second, on the leaner towers, so we have been seeing smaller companies being quite more aggressive on the small cell side. And we have seen numbers being quite strong for some of them. Where are we in this cycle? We earlier alluded that we were focused on rolling out macro sites. So do the small cells have for a while taken a back seat, and we were still evaluating the business which you want to establish in the small cell. Now that you expect macro rollout to be stronger even for next 2, 3 years, is it safe to believe that the small cell rollouts will remain same region as what we are doing today?
Sanjesh, I think, first of all, I think the rollouts for macaro will continue, as I said earlier. Now from a leaner tower perspective in small cell, we've 2 separate things. I think on the leaner towers. I think while you mentioned that the smaller company were working, but I think we have done quite a big rollout on the leaner tower this year as well with close to 4,500 leaner towers in place. So I would expect that we have bounced back very strong as far as leaner towers is concerned, and we expect to do even better in the coming years in terms of percentage of share.
Now if you talk about small cells and indoor solutions in that, I think maybe we were a little bit slower here. But I think our plan remains that we'll be remaining aggressive why we do macro as well. So it's not macro or leaner towers. It is macro and leaner towers. So we may have for the market share for entire portfolio.
Got it. Good. Just 1 last question from my side. Any plans for the new business introduction? We have spoken this earlier. I think you were also intended to do some strategic need to highlight the path for the Indus now that we will be generating a good amount of cash flow, do we have any more plans to build along any business across the towers?
Sanjesh, we -- as we mentioned earlier, we continue to look at all those opportunities and there a couple of them that have been currently discussed with the Board as well. However, given the fact that the current growth on the towers remains very strong. I think from an execution point of view, the focus remains to grab the market share and it's the business. And we don't want to divert the focus. But from a new business point of view, the time will come when we will need to look at more, and we are currently and we will bring to you in case we do something substantial on that.
At this moment, I would like to hand over the call to Mr. Prachur Sah for final remarks.
Thank you, Sunita. So to sum up, the year 2023-2024 was exceptional with record tower executions driven by customers' network expansion strategy as Indus' as a trusted partner. Looking ahead, we anticipate to continue the expansion in the near term, further bolstered by the ongoing 5G rollouts. We also look forward to the recent positive developments at 1 of our major customer. All in all, we have multiple growth levers in terms of new tower and co-location additions and increasing revenue and with improving collections against the past dues. We are confident in our ability to capitalize on these opportunities in a sustainable manner in a strong foundation. Again, thank you all for joining the call. Have a good day.
Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to audio conference presentation. Bye.