ICRA revises outlook for Indian telecom tower industry to ‘Stable’ on improved liquidity and timely collections

Credit rating agency ICRA has revised the outlook for the Indian telecom tower industry to ‘Stable’ from ‘Negative’, following consistent, timely payments from telecom service providers and the clearance’ of past dues.

The industry had previously been under pressure due to delayed payments, which resulted in elongated receivable cycles and liquidity challenges for tower companies. However, ICRA noted a significant improvement in the payment cycle, with receivable days now reduced to around 45–60 days—well below its threshold of 80 days for a negative outlook.

“The improvement in collections has eased the liquidity stress in the sector, reduced reliance on external debt, and is expected to improve return metrics going forward,” the agency stated.

ICRA projects a 4–6 percent growth in operating income for the sector in FY2026, with operating margins (excluding energy revenues) expected to remain healthy at 70–75 percent.

In addition, cash balances in the sector are estimated to rise to between Rs 5,500 crore and Rs 6,000 crore—more than double the previous range of Rs 2,200 crore to Rs 3,000 crore—due to improved working capital management and reduced provisioning.

“An improvement in the credit profile of key telecom service providers, who are the primary clients of tower companies, has played a major role in easing the working capital cycle,” said Ankit Jain, Vice President and Sector Head – Corporate Ratings at ICRA.

He added that a large portion of past dues has now been cleared, allowing companies to reverse provisions made in FY2023. This has further enhanced cash flows and overall liquidity. Going forward, ICRA expects collection cycles to remain within 60 days, maintaining a healthy receivables position.

This improvement is also expected to lower the industry’s dependence on borrowings. ICRA estimates net external debt to operating profit (OPBDITA) to moderate to approximately 3.4 times by FY2026.

With improved credit profiles and recent fundraising efforts by some telecom service providers, many are likely to resume capital expenditure (capex) initiatives. This is in line with the continued surge in demand for data services in India, which is driving consistent network expansion and upgrades by telecom operators.

The report concludes that these positive developments mark a turning point for the industry, bringing greater financial stability and supporting future growth.