| Tower Vision India Private Limited | ||||
| Rating Reaffirmed | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA-/Stable’ rating on the bank loan facilities of Tower Vision India Pvt Ltd (TVIPL).
The rating continues to reflect TVIPL’s established market position and healthy business risk profile in the mobile tower industry. The company has stable cash accrual supported by its long-term master service agreements (MSAs) with major telecom operators. The financial risk profile remains healthy with strong liquidity and debt protection metrics. The net debt to earnings before interest, tax, depreciation and amortisation (Ebitda) ratio was less than 1 time as on March 31, 2023, driven by steady operating performance and gradual reduction in term debt over the past few years.
TVIPL’s operations face risks with respect to counterparty exits from the telecom business given the competitive nature of the telecom services industry and the weak financial health of some telecom operators. However, in line with the MSA terms, the revenue per tenant needs to be adjusted upwards with any exit in tenancies thereby partially mitigating the revenue loss. The company’s ability to take such hikes, if needed, will be a key monitorable. The credit strengths are also partially offset by the capital-intensive nature of operations as well as moderately high working capital requirement because of sizeable receivables from two telecom operators with modest credit risk profiles.
CRISIL Ratings takes note of the change in the shareholders of TVIPL. On June 14, 2023, TVIPL was acquired by Ascend Telecom Infrastructure Pvt Ltd (ATIPL) and GIP EM Ascend 2 Pte Ltd (GIP). ATIPL has acquired 92.7%, while the balance is held by GIP. Post change of ownership, a common chief executive officer has been appointed for ATIPL and TVIPL.
CRISIL Ratings understands that TVIPL is exploring amalgamation options with other companies operating within the same industry. CRISIL Ratings will continue to monitor developments in this regard and will take appropriate action in case any such event pans out. Any impact on the company’s business and/ or financial risk profile in this regard will remain a key rating sensitivity factor. |
Analytical Approach CRISIL Ratings has considered the standalone business and financial risk profiles of TVIPL and adopted the cash flow-based approach to arrive at the ratings. |
Key Rating Drivers & Detailed Description Strengths:
As major telecom operators look to expand their network to provide 4G/5G services, the demand for higher tenancies per tower is expected to be healthy over the medium term.
Weaknesses:
That said, TVIPL follows a prudent policy of erecting a tower only when it has an anchor tenant, and enters into a long-term contract with exit penalties during the lock-in period. Therefore, the company is expected to continue to have good returns on investment. Moreover, healthy cash accrual and strong liquidity should be sufficient to fund any capex requirement, thereby limiting reliance on additional external debt.
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Liquidity: Strong TVIPL had cash and equivalent of Rs 412 crore as on June 30, 2023. The company does not have any working capital facilities and maintains adequate liquidity to meet operating expenses, capex and debt obligations. CRISIL Ratings expects steady net cash accrual of Rs 200-250 crore annually over the medium term which, along with the current liquidity on the books, shall be sufficient to cover the scheduled debt obligation of around Rs 100-110 crore in fiscal 2024 as well as the capex requirement. |
Outlook: Stable The business risk profile of TVIPL will continue to benefit from its established track record and long-term contracts with key clients while the financial risk profile will benefit from healthy cash accrual. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company TVIPL was incorporated in 2006 in New Delhi and was the first tower management company in India to operate as an independent unit. The company has received equity infusion from several private equity (PE) players over the years. On June 14, 2023, there was a change in the ownership of the company, with ATIPL and GIP acquiring 92.7% and 7.3% respectively. GIP owns 100% in ATIPL, and therefore, holds 100% shareholding (directly and indirectly) in TVIPL.
TVIPL owns and operates wireless communication towers of all types across India and had 9,170 towers occupied by 16,150 tenancies (spread across all telecom operators) as on June 30, 2023. |
Key Financial Indicators (CRISIL Ratings-adjusted)
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||||||
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Criteria Details
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