Dear Shareholders,

The year gone by was a transformational year for the Indian Telecom industry with continued growth in subscribers, higher adoption of data services aided by spurt in Smartphone penetration and deeper coverage of data networks. During the year, the Government also successfully auctioned spectrum across multiple bands like 1800, 2100, 2300 & 2500 MHz and we also saw the launch of services by Reliance Jio that triggered the much-awaited industry consolidation. While several operators like Videocon and Telenor exited or merged into other operators; RCom, Aircel and MTS announced merger. Another major announcement was the proposed merger between Vodafone and Idea, the second and third largest operators.

As far as tower industry is concerned, such consolidation, especially Voda-Idea merger, which may still be some time away if it fructifies will inevitably lead to short term & one-time rationalization in tenancies. However, we believe that the consolidation leading to few but strong and willing participants is good for the tower industry in medium to long term, vis-a-vis large number of small or unwilling operators with no financial muscle or passion to invest in data network rollouts. In any event, we believe any reduction in revenue on account of the overlaps will be more than offset by the exit charges, as well as the incremental revenue on account of rapid rollouts by all operators.

As anticipated, the year 2016-17 witnessed strong network rollouts as evidenced by co-location additions of over 24,000 between Infratel and Indus and of 15,571 on a proportionate basis, which was the highest in the last five years. Total consolidated collocations as on March 31, 2017 were at 210,606, a co-location factor of 2.32 at closing. With broadband penetration still at ~ 20% and Government’s push for a digital economy, the prospects of mobile broadband in the country remain strong.

The Company’s financial performance during the year was strong with consolidated revenues for the year, at Rs, 134,237 Mn growing by 9% over the last year. Consolidated EBITDA improved to Rs, 59,420 Mn up 9% Y-o-Y, representing an operating margin of 44.3%. The Operating Free Cash Flow grew by 13% Y-o-Y to Rs, 37,209 Mn for the year. The consolidated profit after tax came at Rs, 27,470 Mn, up 22% Y-o-Y. The Company declared an interim dividend of Rs, 12/- per equity share in March 2017 and the Board of Directors have also proposed a final dividend of Rs, 4/per share subject to shareholders’ approval. Total cash outgo for the dividend for the full year, inclusive of tax on dividend would amount to Rs, 35,621 Mn, ~132% of the standalone PAT.

Foreign Institutional ownership touched an all-time high of 34.34% as on March 31, 2017 as compared to 8.65% at the time of IPO in December 2012. This includes 10.3% stake sold by Bharti Airtel to leading global private equity funds - KKR and CPPIB during the year.

Our focus on people development continued to yield results as we were recognized as the ‘Best Employer’ by AON Hewitt for the third year in a row and also recognized as ‘Great Place to Work’ for the first time in 2016-17.

We sustained our efforts to improve green footprint during the year and move towards more diesel free sites in the long-run. On a consolidated basis, over 38,900 towers or 43% of our portfolio are green as of March 31, 2017.

During the year, the consortium led by Bharti Infratel has signed the Concession Agreement with Bhopal Smart City Development Co. Ltd. for implementing Smart City project. We are now working towards a successful project delivery. We expect Bhopal Smart City to serve as a model for the Smart Cities initiative and expect other state governments to follow suit by way of Request for Proposal or RFPs. The project gives us a unique opportunity to experiment on several new opportunities, becoming available for infrastructure sharing like optic fiber rollout, small cells, IBS and Wi-Fi. We hope to pursue these opportunities going forward and do more Smart City projects in future. We believe that with India now decisively embracing the ‘digital world’, the demand for data would grow exponentially in years to come. This augurs well, despite temporary setbacks, for telecom industry & thereby telecom infrastructure industry in long term.

As an undisputed leader in Telecom & Tower Infrastructure space, and with a very strong Balance Sheet, we are very well placed to capture, what we feel is a significant untapped potential for growth in telecom infrastructure, which would require large capital.

Akhil Gupta


CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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