Indus Towers’ Africa entry may not add much near-term revenue.
Dividend payouts remain stalled since May 2022.
CLSA urges focus on payouts while Citi highlights attractive valuations.
Shares of Indus Towers slipped 5% in trade on September 3, after the company’s board cleared plans to expand into African markets, starting with Nigeria, Uganda and Zambia.
The move marks a strategic step to grow Indus Towers’ footprint beyond India. “These markets offer attractive prospects for revenue diversification, operational scalability, and long-term value creation,” the company said, stating that it will rely on its financial strength and long-standing relationship with anchor customer Bharti Airtel to establish a foothold in the region.
Now while the expansion may open new avenues for revenue growth, investors were not so enthused. Expansion could mean fresh deployment of cash into operations rather than payouts to shareholders, who have not seen a dividend since May 2022. Payments from Vodafone Idea, one of Indus Towers’ largest clients, remain delayed, a major factor that has kept the board cautious on rewarding investors.
Earlier this year, the company was expected to announce a bonus or share buyback. Instead, the board postponed the decision, stating that a committee would examine all options before making a recommendation. That delay unsettled investors, sending the stock lower. A resolution on shareholder returns remains pending.
Brokerages also remain divided on the impact of this expansion. CLSA, while retaining its ‘high conviction’ outperform rating on Indus Towers, cut its price target to ₹520 from ₹595. The firm flagged that Indus Towers’ Africa foray would add little in the near term, given Airtel Africa’s presence of fewer than 500 towers across the three chosen markets, compared with its total of 37,579. Instead, CLSA vouches for the management to prioritise dividends, calling the delay ‘unjustified.’
Citi, on the other hand, has kept a “buy” call with a ₹460 target. While it did acknowledge investor worries over dividend payouts, Vodafone Idea’s fragile finances and a slowdown in Bharti Airtel’s rollout, it still believes these fears appear overdone. Citi sees potential in moderating capital expenditure for Indus Towers, which could boost free cash flow, while stating that current valuations look attractive relative to peers.
