This Telecom Stock Adds 7,300 Towers and Colocations: Will 5G Rollouts Drive the Next Phase of Expansion?
Indus Towers is a telecom infrastructure provider that builds, owns and manages mobile towers used by telecom operators to deliver network services. Its business depends on operators expanding their networks, adding equipment to existing towers and increasing coverage to meet rising data consumption.
The expansion of 4G and 5G networks creates opportunities for tower companies as telecom operators require infrastructure to improve connectivity and network capacity. For Indus Towers, the key factors to watch are new tower deployments, additional colocations, order visibility and the ability to convert infrastructure additions into higher revenue and profitability.
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With a market capitalisation of Rs. 1,00,434 cr, the shares of Indus Towers Ltd closed at Rs. 380.70 per share, up from its previous close of Rs. 379.40 per share.
Indus Towers Adds 7,300 Towers and Colocations
Indus Towers added approximately 3,100 macro towers and 4,200 colocations during the quarter, taking its total macro tower base to around 267,600 and its colocation base to approximately 432,300. The company reported year-on-year increases of 6.3% in its tower base and 5.1% in its colocation base.
These additions speak to the investments of telecom operators into their network infrastructure. Co-location is especially significant for Indus Towers since it enables more than one telecom operator to mount their equipment at the same tower, earning more revenue from rentals without having to construct towers for each of them.
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Rising 5G Usage Could Support Infrastructure Demand
The growing adoption of 5G services could provide further opportunities for Indus Towers as telecom operators expand their networks and improve capacity to handle increasing data consumption.
During the earnings call, management highlighted that India’s 5G subscriber base exceeded 427 million by the end of Q4 FY26. The installed base of 5G base transceiver stations, or BTSs, increased by approximately 32,000 during the quarter to 563,000.
Furthermore, 5G usage increased 87% year-on-year and accounted for 43% of total data traffic in Q4 FY26, according to the data cited by management from the Telecom Regulatory Authority of India.
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This trend indicates the increasing demand for mobile network capacity. But to what extent this increases tower deployment would depend on the telecommunication operators’ plan for the network as well as their need for new tower sites.
Strong Order Book Provides Visibility
Management stated that Indus Towers had a firm order book providing visibility for the next three to four quarters. The company expects to continue expanding through network additions and the migration of certain towers from other operating arrangements.
Management also said that supply-chain disruptions affecting tower manufacturing during April had been resolved. It did not expect tower supply constraints to affect deployment in Q2 FY27 unless an unforeseen event occurred.
However, execution remains an important factor. Management noted that heavy monsoons could affect installations in some states, potentially influencing the pace of deployment even when customer orders are available. The company did not provide a specific tower-addition target for Q2 FY27.
Financial Performance and Profitability
Indus Towers reported gross revenue of Rs. 8,430 crore, an increase of 4.6% year-on-year. Core rental revenue rose 5.2% to Rs. 5,370 crore, while EBITDA increased 3% to Rs. 4,520 crore.
However, its EBITDA margin declined by 1.5 percentage points year-on-year to 53.6%. Excluding the impact of a prior-year write-back, management indicated that EBITDA growth was stronger.
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Going forward, investors will need to monitor whether additional colocations and tower deployments translate into sustained rental revenue growth. The pace of installations, operating expenses and the timing of new tenancies could influence profitability.
What Should Investors Watch?
The future growth opportunities of Indus Towers are reliant upon further investments in telecom networks, successful execution, and increased consumption of mobile data. The company’s visibility through orders gives short-term visibility in business, whereas growing 5G penetration creates a positive industry environment.
However, investors need to be aware of potential execution lags due to monsoon conditions, funding of network expansion by Vodafone Idea, and the effect of operational costs on margins. While increased 5G usage gives reason for infrastructure investments, it doesn’t mean faster growth in towers and profits.