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

ICRA has revised the outlook on the telecom tower industry to stable from negative, citing healthy collections from customers along with receipt of overdue payments. It noted that the industry was earlier facing headwinds owing to elongated receivables, on account of delays in payments by some of the telecom service providers, but that the the situation has improved materially.

This was due to consistent timely payments to the tower companies resulting in reduction of receivable days to around 45-60 days, lower than the ICRA's negative outlook threshold of 80 days.

"This coupled with recovery of the past overdues has enhanced the liquidity profile of the telecom tower industry and moderated the reliance on external debt, which is likely to translate into improvement in the return metrics of the industry," ICRA said in a release as it revised the outlook for telecom tower industry to stable from negative.

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

"Moreover, there has been clearance of a sizable amount of past overdues, which has resulted in reversal of provisions made earlier in FY2023," he said.