Suyog Telematics Limited (537259) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the Q1 FY '25 post earnings conference call of Suyog Telematics Limited. Today on the call from the management we have with us, Mr. Shivshankar Lature, Managing Director; Mr. Tushar Shah, Business Head in India; Mr. Ajay Sharma, Chief Financial Officer; and Mr. Suyash Lature, Business Development Manager. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to quickly run us through the presentation of the company, the business and performance highlights for the quarter and the plans and the visions for the coming year, post which we will open the floor for Q&A. Over to the management team.

Hi, everyone. Welcome to Suyog quarterly call. First, I would like to admit, yes, we are doing it after a long break but going forward, we'll ensure we do it on a quarterly basis. I'll start with the presentation to brief everyone of you about the company. So we are a public listed company, we're into a telecom field where we create telecom infrastructure for all the top 4 mobile operator of India. Currently, we get revenue of around 49% from Airtel, 23% from Jio, 26% from VL and others is 0.4%, mainly BSNL. We have presence across India except Bihar, Jharkhand, and AP, where we don't have presence. Then we have close to 5,100 plus tenancies and 4,300 unique towers. Can we go to next slide? So these are exact Q1 numbers. We have presence in 26 states and UT. Unique tower count is 4,360. Our total tenancy is 5,144 as of Q1 exit, 3,818 is small cell out of the total tenancies and we are very strong, our USP is government and fiber. So we have 900 plus government tenancies and 5,000-plus kilometer of fiber network across India. Shivshankar Lature is our Co-Founder and Managing Director. I am Business Head, India. I have -- there is one more Business Head, Mahesh Rajure; and Ajay Sharma is our CFO. That's the core team of Suyog Telematics Limited. Our journey -- we started Suyog Telematics Limited on 20th July 1993/1994. We worked as a TSP vendor for many years for BSNL. We installed around 5,000-plus towers for BSNL. And then in 2008 -- 2003/2004 we started working for private operators like Airtel and Vodafone and Idea, which was a separate company at that point of time. In 2008, we started -- we got IP-1 license and we started working on IP-1 model, post which we have completely stopped EPC contract. Now all my revenue is 100% from IP-1 business. We got listed on 2013 and 2014, we were listed on BSE. Overall [indiscernible] the business model. We get a list of sites from mobile operators where they want tower across India. My team goes and finds suitable buildings or ground where we can install mobile tower. So based on our feedback, a technical team of operator will go, do a proper technical survey and share me a report stating whether it's on GBT sites or RTT sites based on which we'll sign an agreement with site owner and we'll invest CapEx and build the entire mobile tower passive infrastructure. And next, that could be handed over to mobile operator for running of active equipments. That's the entire process. So we take lease -- space on lease and we give space on lease to mobile operator. My scope is only passive, which is tower installation, power supply and fiber, all active parts are part of operator's equipment -- operator's scope. So this is a very key stat for all the investment. How do I get my revenue? So we have signed a master service agreement, which is for 15-plus years with all the 4 mobile operators, Airtel, Jio, BSNL and Voda Idea. Master service agreements has 4 catergories of revenue charging. One is IP-1 fees which is actual revenue, which is for CapEx which an investing operator will pay me IP fees month-on-month basis. Now IPC is already predefined in MSA. If there is a 30-meter ground-based tower, IP would X. If there is rooftop tower with T2 tenancy, IP fees would be Y. It's already predefined. I don't need to go and negotiate for each tower. It's predefined in multiple categories. Second part is site rental. So whatever I pay to site owner as a rent, gets reimbursed from operator on a back-to-back basis on actual basis. Third is loading charges. Suppose my all sites if you see before 1.5 years were 2G and 3G sites. Now since last 1.5 years, they are loading 4G and 5G. So if they were to add any antenna, if they have to add any weight, any new technology, they need to pay me loading charges, which finally becomes part of IP fees, which is also recurring charges. Again, it is predefined in MSA for X weight, X number of antenna, X technology they need to pay me out. And fourth is utility charges, which is nothing but electricity and diesel. It's passed on to -- on actual basis to mobile operator. IP fees, site rental and loading charges are part of my topline. Utility charges is just an actual reimbursement, which is not part of my topline anymore. The best part of this model is, from the day 1 before even I invest even INR 1 on my tower, I know what is my ROI because all charges are predefined in MSA. So we don't need to negotiate for every tower. So this is one of the few models where you are aware of your ROI before even investing in the tower. And we have 2.5% in-built escalation year-on-year for the IP fees. So as I earlier said, my USP is government sites. We are very strong in government sites. We have a lot of government tabs, with BMC we have government tabs from multiple wards. We have exclusive rights on MMRDF, footover bridges, skywalk across Mumbai. We have signed pan-India agreement with National Highway Authority of India in Mumbai. We have done an agreement with BST. And we are doing same government sites replication in West Bengal, Gujarat. And now even we are trying Madhya Pradesh. So there are multiple states where we have government tabs, which are very important sites for mobile operator because of their locations. And we have one of the biggest government portfolio among the industry peers. Well, we keep doing a lot of innovative sites year-on-year. One of our best innovation was CCTV sites, which we had done 1.5, 2 years back. We're starting a project of CCTV sites, where we install 12-meter pole on board, we install 6 meters -- CCTV 6 meters at our own cost and hand it over to local BMC and Police Station. At 12-meter height, we install the small cell, which is subleased to mobile operator. This model was so hit that Gopal Vittal himself came on one of my site in South Mumbai and he asked me to replicate this model across India. That's how we entered Maharashtra and West Bengal in a CCTV model. Benefit of this model is police is dependent on your pole. So no one will terminate these sites. Plus, the locations are the location where we're not able to get any normal site. So people have a high tenancy ratio because it's a very needed site for any operator for many years now. Again, we are -- we work on a niche area as per our strength. We don't go and fight with Indus tower on all these sites. Slum area is my biggest strength. If you see Mumbai, 70% is slum. West Bengal, there are high slum areas. Maharashtra, there are slum areas where no other IP company enters, we go, build a site and sublease it to mobile operator. And if you see the revenue of mobile operator, if you take any site in Nariman Point, that will not have very high revenue, but a site in slum like Dharavi or Malvani will have very high revenue because mobile is the only source of entertainment or study. They don't have WiFi in their slums. They don't have landline. So only thing -- for everything, they use mobile. And that's why our site in slum will have a very high revenue compared to out site in Nariman Point where we have WiFi, we have landlines and everything. So all my sites will have higher tenancy because of the locations. Again, small cell. We were the first mover in small cell. I started installing small cell across India for Bharti Airtel, even before any other competitor including Indus started. For 1 year, we were almost only IP company to deserve small cell on hybrid model. That's how we expand from Mumbai, Maharashtra, to Pan-India presence we got because of our small cell roll out. We were very first mover in this industry. And we have highest number of small cell, which is now 3,800-plus small cell across India. And small cell is future for 5G, 6G. Operator wants to be more and more closer to customers. So along with the macro site, they will also roll on small cell in high numbers to give you better 5G services, and we are master in small cells. We have everything in our portfolio. For mobile operator, we are a one-stop player, like if they want ground-based tower, they want rooftop tower, they want -- now we've also started fiber and FTTH. So whatever operator wants to create a stable and healthy network, we will have everything in our portfolio. So they can just come to Suyog and say we want XYZ thing and we can deliver to them. So as I said, we work with all the telecom operator, Airtel, Jio, Voda Idea, Tata for some B2B link and BSNL. So, this is a key set for today's call, what is my near-term strategy. So we are sure we are going to deliver 4,500 plus sites in current financial year, which is FY '25. We have planned around 3,000 plus macro tower for Vodafone and BSNL, of which more or less, we have confirmed agreement with both of them, and we are sure we will deliver that. In Mumbai, since it's an MTNL, we have already got 500-plus list and we may go up to 1,000 also for MTNL Mumbai. Other than that, we are working with all the operators for small cell roll out, which would be 1,000 plus. So right now my tenancy is 5,100 plus and in -- by end of FY '25, we'll be very close to 10,000 tenancies, which will be almost doubling my tower, so in same proportion even my revenue will boom and these we are surely delivering. And if you see a longer vision of our company, we already have mobile towers in urban city. We are very aggressive in rural market with Airtel and BSNL, where we have installed 500-plus rural sites across India, even this year with BSNL, we are going ahead with the rural strategy, where no other IP wants to enter right now. We have already started FTTH vertical, which is just-born baby. And we are sure FTTH will be a big boom after 2 to 3 years down the line because everyone will need fiber inside their home for security surveillance, for internet connectivity, for mobile connection. Then we have already signed term sheet with few of the IPs, few of the telecom operators. And we'll go very aggressively on FTTH and fiber, which is a backbone of any 5G and 6G network. We assume our 10% to 15% of revenue down the line 3 years will come from our new-born baby which is FTTH and 5G -- fiber. As I said, BSNL is one of our very key customers for coming down the line 2 or 3 years. I have never seen government supporting BSNL like they are doing right now. BSNL is run like a professional private company. We have already entered into agreement with BSNL with a 10 years lock-in from FY '25 onwards. We have got 10 years lock-in from BSNL. We are only one of the few IT companies on which BSNL is backing for a massive network roll out. They've already placed 1 lakh tower order through Tejas networks out of which 40,000, 50,000 are new build towers and we're expecting a lion's share of the BSNL roll out across India, which now includes also Mumbai and Delhi Circle because on ground, they have merged Mumbai and Delhi with BSNL. So this -- the BSNL, as I said, we have signed 15-year agreement. We have 10 years lock-in, including Mumbai and Delhi and the other 0.4% revenue which we have seen in [indiscernible] will change drastically. We will see a big jump in revenue from Vodafone and BSNL for next 2 financial years. Our growth drivers are same, mobile towers in urban, in rural, FTTH and fiber. We are going to work on all these 4 verticals and will surely have a massive growth in coming years. I think, Vinay, everyone will have seen financials by right now. So if you want, we can move to question and answers session directly.

[Operator Instructions] We'll take the first question from Mr. Sudhir Beda.

And congratulations for a good set of guidance you have given. Sir, my questions are like your current towers are 4,360, right?

Right.

And out of that, 3,800 are small cell towers, right? So...

5,100 tenancies, 3,800 is small cell tenancy.

So what are the other towers apart from the small cell like...

Which are micro sites, which are full sites, which you see on a terrace or the ground-based tower, all other are macro sites. So towers are divided into 2 parts. One is macro, one is small cell, balance is the regular macro sites.

Okay, balance sheet is regular macro site. And the current year addition, you have projected at 4,500, right? So 3,000 you are projecting from Vi, Vodafone and BSNL. So out of this 3,000 and 1,000 you have not given anything tentative plan? So...

So I'll explain you, 3,500 are the macro site, which will majorly come from Vodafone and BSNL. 500 is MTNL. So put together, 4,000 sites will come from BSNL plus Vodafone. BSNL is rolling out only macro site right now because they are doing 4G rollout. And out of this 4,000 even are -- we have considered only macro site, the 1,000 which I am saying is small cell sites which will majorly come from Vodafone and Airtel and Jio. So they are only for small cell sites right now.

Okay. So in altogether, we'll be installing 4,500, which will be like doubling of the tower capacity. So just not to go for '25 revenue because then on the latter half -- because first quarter, there were not much execution that we can see from the revenue because revenue has not gone up substantially. So that means 4,500 you will be installing in the next 3 quarters, right? Second, third, fourth?

Right, right.

So that will have a full year impact on '26. So what is the '26 number will be look like? If you can throw some light on that?

Higher than INR 320 crores.

So we are expecting FY '26 to cross INR 300 crores. We are estimating to be INR 320 crores as a top line for FY '26.

Yes, yes. And great. And the last question from my side is, what would be the CapEx for next 2 years? I mean FY '25 and FY '26, to achieve that kind of turnover, INR 300-plus crores?

FY '26, we are -- as of now we have planned around INR 450 crores, INR 475 crores of CapEx. And FY '26 should be a very similar, INR 300 crores, INR 400 crores CapEx.

We'll take the next question from Moksha.

Sir, am I audible?

Yes, Moksha, you are audible.

So my first question is how does an increase in tenancy affect the revenue growth of the company? Does the revenue like double when we add a new tenant to an existing tower. Is there just a slight increase after the addition of a new tenant? How can we look into this?

So whenever there is a tenancy addition, there's a massive growth in revenue. If you see our macro site, we give only 10% discount, which is around INR 2,000 per site for additional tenancy. And in small sites, INR 500 discount per month. So if you -- even if there's an additional tenancy still revenue grow more than 90% on the tower. So with increasing tenancy, even EBITDA impact will improve because CapEx is lower while the revenue generation is very high.

Okay. So is there a statistical number on how the growth will be in the tenancies that increase?

In terms of number, actual amount I can't share with you, but yes, in terms of 90% if you see, whatever is IP fee right now on macro site, there is a 90% growth. So when I am predicting INR 320 crores top line for next financial year, so it's around adding INR 150 crores for full year if you take the effect of full year for an additional 4,000 to 5,000 tenancies. So you can average out per tenancy cost and see.

And what exactly is the site running expense, which is a part of cost of raw materials?

So site running expense is majorly by technicians and my spare materials which we replace like battery bank, SMPS and eveything. It's an O&M expense for running the site because we have to also SLAs. We have committed uptime of 99.97% to operator in agreement. So to maintain that uptime we need to keep replacing battery cells and everything as and when required. So these all are operation and maintenance costs.

And what is the difference between the lean towers and small cell towers?

So lean tower is more or less a macro site with a higher power requirement, with less number of GSM antennas while small cell towers will cover only 150, 200 meters of distance. Lean tower will have an average coverage of 500 meters. So lean towers are more or less similar to macro sites.

So how does the yield of small cell and lean towers differ?

See, when you plan a network infrastructure, since it's not a greenfield network, it's a brownfield network where there's an existing tower, so there will be 2 layer of network. One is macro site, which will have an umbrella network in the area. Second one would be based on capacity requirement when there is a high capacity requirement they will go and put small cell tower to take care of capacity and adding grey area in coverage if it is there. So umbrella network would come from macro or lean tower and then a second layer of network would be from small cell, for proving you a very seamless network for 5G.

Okay, so like Indus is planning to -- planning hard on the addition of lean towers. Are we planning to add those?

Yes. So we are in the final stages with 1 or 2 operators to close the agreement for lean towers. And out of this 4,500 what I have said, 3,500 would be macro and lean put together and 1,000 would be small cell. So more or less, lean tower will come from VL and macro sites will come from BSNL and small cell would be between all the operators.

We'll take the next question from Prathamesh.

Am I audible, sir?

Yes, you're audible.

So just a couple of questions. Firstly, how is the progress going on the 5G rollout?

Prathamesh, 5G rollout, see Airtel and Jio have already completed more than 50%, 60% of 5G rollout. If you see current scenario, VL is the one who is very aggression on 5G rollout because they're just starting. And their main rollout will come from September onwards while BSNL will be doing 4G rollout right now. And after 1, 1 5 years down the line, they will also do 5G rollout.

Okay. And sir, we are hearing that BSNL has delayed their execution by 3 months. So what's the update on that?

No, I think it's the old news where if you see VL and BSNL had installed 4G towers almost 6 months back and there was a problem of the stability of Tejas network, mainly micro connectivity, which has now been stabled and it's working actually fine. And BSNL has started pushing rollout from August onwards. So they are planning a very aggressive rollout September onwards itself. Because the issue with Tejas network of micro connectivity has been resolved, which was in Punjab mainly they started a launch pad in Punjab and all the issues of Tejas equipment have now been sorted out.

Okay. Okay. And sir, just a last question on the unit economics of towers. I think as we are adding around 4,500 towers for FY '25. So how much is the revenue per tower and EBITDA per tower and also the CapEx cost per tower that we will be needing?

So see, in terms of revenue -- in terms of EBITDA, it would be maintaining the existing level of around 60%, 62% would be EBITDA on our overall portfolio. Revenue for macro tower would be around INR 30,000, INR 35,000 on an average, for small cell it is around INR 16,000 to INR 20,000 on an average. What was the third part? CapEx? On an average, we are seeing between combined portfolio of 4,500 sites, which consists of macro, lean macro and small cells, we would need around INR 10 lakhs CapEx per tower on an average basis.

Okay, sir. So I think INR 30,000 to INR 35,000 and INR 16,000 to INR 17,000 on small cells, this is monthly rental?

Monthly rental. Monthly IP fees and rental -- revenue.

Okay. And CapEx cost, can you please repeat?

CapEx on an average basis will be INR 10 lakhs for ruling of 4,500 sites, average per tower CapEx would be around INR 10 lakhs.

We'll take the next question from Akshay Jogani.

So my first question is, if you can help us understand the -- on the balance sheet, you have last year -- I mean FY '23 annual report, there are some related party transactions. Just sort of wanted to understand specifically two, one was reimbursement and second was loan given to a promoter entity. So if you could please help us understand what are they? And should we expect them to continue going forward?

See, in terms of reimbursement, I think it was in FY '22, where there was an -- '21/'22, where it was in COVID period, so as you know, all the [indiscernible] electricity supply and since all the office across Mumbai were -- across India were not working due to COVID restriction, we were paying electricity charges from the promoter private account and then we transferred that to promoter, which is not continued anymore. I think FY '23-'24 any major investment cost. It was because before that, because of COVID issue, we were forced to pay electricity payments from the prior -- because only 1 office for operations from which we were paying all the amount of electricity. So which is no more there and it's -- the reimbursement is now happening only from the company's account. And in terms of related party loan, it has been recovered. So it's no more there on books.

Okay. And we shouldn't expect that to continue, right?

It will not continue now. Since we already have a big CapEx plan, it will not continue.

Sir, second is, I wanted to understand that you said in one of the previous questions, that when one tenant gets added to an already existing tower, you give in a macro tower, you give a discount of 10%, which is INR 2,000. So does that mean that typically one macro site, a typical monthly rental is INR 20,000? Is that correct?

So that's not right, that's an IP fee. So see it will vary. So if it's a ground-based tower, it will be INR 3,000 -- INR 30,000 as IP fee, on an average INR 20,000 to INR 30,000. If it is RTT, it can be between INR 19,000 to INR 21,000 as IP fee. It will vary as per site type. But on an average, INR 2,000 discount goes. So it will be less than the 10%.

Okay. And that is IP. And then the loading charges typically how much?

What?

This is only a discount on the IP fee, you only give a discount on the IP fee. Is that correct?

Right. So loading charges typically on macro tower is INR 7,000 to INR 8,000, and small cell is around INR 4,000.

Okay. Sir, typically, a small cell can have only 1 tenant? Or can they have multiple tenants? Because...

They can have multiple tenants.

It can have, right. And what would be a tenancy in the small cell piece?

Right now our tenancy in small cell is 1.2 because it was only done majorly by Airtel and Jio. Now with Vodafone rolling out, we have seen it to reach 1.5 or something. Let's see how it goes out. But current tenancy is 1.2.

Sure, sure, sure. Sir, I have -- and I have one more broader question. Let's say, when a Vodafone or a Airtel or a BSNL or Reliance decides to sort of put CapEx and expand this network, right? It has a choice to go with its own towerco. And then it also goes with you or a cloud exotel or whoever it is, right? Just how do they go about choosing this? And what is the framework and how do we end up winning and which are the reasons why they end up choosing us versus them?

So every operator has a different strategy. Like if it's Airtel, Airtel will always go to Indus first because they have almost 49%, 50% of shares. But Airtel company is so huge that first Indus will not be able to deliver alone. Second, there are very critical areas where Indus don't go and build sites or because of whatsoever reason, which I can't quote. So they will also look outside Indus and outside Indus, Suyog is one of the best performing IP company. For them, there are 2 critical criteria whenever they select any IP company for delivering work what is their uptime and how they're maintaining the tower. Second, whether they're able to provide the location which they want and at what speed. So if you take these 3 parameters, we are one of the best performing company in terms of uptime SLA, in terms of speed of delivery and in terms of location, we are the best performing IP company. Hence whenever Airtel wants to see outside Indus, it has to be Suyog first because of my existing performance. If you say we take the Reliance Jio, Reliance Jio will have their own -- they will try with their own site as first priority. And where they're not able to build site, they will pass it on to IP company, for them all IP companies same. They don't have any tie up with Indus or Suyog, anyone. So again based on the performance, they will select the IP company. We are open to everyone. VL don't build their own tower, they hardly have any stake in Indus now, so they are open for anyone..

Sure, sure. Sir, so in that case, given that a company like Indus or a Data Infra Trust, which are present in a lot more places than we are, right? How is it that like location, they may not be able to come up with the right location where we may be able to? I'm just trying to understand because we wouldn't have the bandwidth that they would have, right, given their presence everywhere?

In terms of bandwidth, yes, if you see money power, bandwidth, I may not have same as Indus. But my bandwidth will be very similar or better than other peers in terms of execution and correcting the right side with a different type of innovations. So that's the advantage which I get on field because we are the one who work on field. We don't have very big corporate office where we just give orders. If you see most of the time, I'm traveling on field, I'm going on site. So the team which we have is -- and I can confidently say it is far superior in executing work on ground. More than that I can't reveal because then it will be about revealing business secrets, which I can't do, protocol.

Certainly. Sir, the last question, if you can -- on typical CapEx for macro ground-based versus a small cell? And then revenue -- how do we think about the payback period of these assets?

See, as a thumb rule, what we have is we will try to maintain EBITDA of 60%, 65%, so that we have a payback of say around, if it is a single tenancy site, we not only have a payback of 3 years, and if tenancy comes into, then it goes down to 18 months or 2 years. That's the model on which we work whenever we create an any site.

So why does a telecom -- I mean, this looks very attractive, given the telecom companies are also on these towers themselves or have known, why do they agree to such economics? Like they could easily say, okay, why should you make payback in 2 years. I want you to make a payback in 5 years?

As a business, I'm not getting any premium rate. If you see my IP fees, same to my competitor, whether it's Indus Tower, whether it's Cloud Exotel, whether it's XYZ company, I don't have any premium charges compared to them. My charges would be very similar, a little bit less than them. So if I am able to build efficiency into my own system, they're not worried. They will be worried only when I charge them more than the other competitor, which is not the case.

Yes. So is it possible that our CapEx is much lower for the same product than other people?

So not much lower, but yes, lower than the other peers.

And what would be a typical CapEx for a ground-based tower.

Ground-based tower would vary around, say, INR 12 lakhs to INR 15 lakhs.

INR 12 lakh to INR 15 lakh. And a small cell would be what, INR 4 lakhs, INR 5 lakhs?

INR 4 lakhs to INR 6 lakhs.

We'll take the next question from Darshil.

I guess one question was on this last call, we discussed the company was into the ASM and the listing was some issue. But as of now, the company is removed, so any news on that?

So very soon, we'll get a good news on NSE listing. Now we are not into ASM, as you see ASM has been removed and we're obviously working very aggressively on NSE listing.

Any timeline that we can expect?

We will not comment on that for now, Darshil.

Vinay, you were saying something.

Yes, I'm saying we'll not comment on that for now. It's a process, we can't.

Okay. And sir, the other part was what would be the borrowing that we will do for this year as we are going into INR 300 crore CapEx?

As of upto Q3, I have enough provisions of funds through internal accruals and the warrant where a promoter has himself invested INR 50 crores, out of which, I think, INR 40 crores will come in this year, plus internal accruals, so I have provisions upto December. And post December, we will see how we want to raise funds or we want to go for debt or something. So as of now, nothing has been finalized in terms of raising funds. Up to Q3, we have enough cash to roll out our sites. So maybe by the time we do Q3 call, we'll be able to give you more clarity on it.

Okay. Got it. And sir, if I'm not wrong, we have a guidance of 35% to 40% for FY '24, FY '25? Am I right? In one of the presentations you did mention.

Sorry, what?

What was the guidance for FY '25 that you have given?

In terms of revenue you are saying?

Yes, yes.

So see, basically, currently my sites are 4,000 - I have 5,000 plus tenancy, I am going to double it. So you can take a proportionate of say 3 or 4 months average and add to revenue because obviously the entire year benefit I'll get in FY '26. But if I roll out this 4,500, 5,000 sites in the next 3 quarters, you can take an average revenue add to my existing revenue, you will get the revenue numbers.

Okay, and FY '25?

[indiscernible]

Sir, but we are almost spending around INR 600 crores in the -- over the next 2 years. So don't you think the asset turn for us is very low in this as compared to what we really have right now?

No, whatever CapEx I do it in FY '26, I will get full year benefit only in FY '27. Whatever roll out I do in FY '25 in the next 3 quarters, full year benefit will only come in FY '26. Same way, same thing will happen with the CapEx of FY '26 when I invest huge say around INR 300 crores in FY '26, I'll get actual benefit in FY '27.

We'll take the next question from Guneet Singh.

I'm new to the company. So in my understanding, we would be erecting about 4,500 towers in FY '25, right?

Right.

So I mean, what kind of CapEx is required for these 4,500 towers itself?

So as of now, it's around INR 10 lakhs per tower on an average basis. So it should be around INR 450 crores to INR 475 crores CapEx.

So sir, how much of that would be -- would we be borrowing?

See, as of now, we have not finalized anything on borrowing. As of now, we have enough internal accrual provision plus we have some bank debts approved and our warrant has been issued to promoter from where I'm getting around INR 40 crores odd. So we have funds to do all the CapEx roll out up to end of Q3. By Q3 end we will give you clarity whether we want to go for borrowing, we don't want to go based on the funds availability. But as of now borrowing plans have been finalized till now.

All right. And sir, with this CapEx, I mean, what kind of depreciation would we be looking out for FY '26? And how would we depreciate these assets?

[indiscernible] 5.28% depreciation straight line method.

12% depreciation?

5.28%.

Sorry?

5.28%.

5.28% depreciation. So on INR 450 crores, we would be seeing about INR 23 crores depreciation for FY '26?

Right.

Alright, sir, this is a very interesting business, and I wish you all the best.

We'll take the next question from Mani Kumar.

Sir, you were saying in the presentation, just a few queries, 1 or 2. In the operator wise, you were saying around 3,000 towers will be done for the BSNL and Vodafone. Can you please throw some light what would be the revenue breakup in terms of BSNL for FY '24 and this upcoming FY '25?

The revenue in terms of per site, IP fees almost same for all the mobile operators. So it's not that BSNL is going to give me some premium or they are asking for any discount. Revenue from BSNL, VL, Airtel, Jio, all are very similar basis. There will be hardly any difference -- there would be some difference, obviously, but not very much, not a notable difference. All mobile operators are almost same.

Okay. Revenue from all mobile operators are same. Okay. Sir, and next is in the presentation it is said that the locations will be identified, whether it is urban or slums locations. And after building tower, you will get the rental from all the operators. But recently it has also said that you will identify the location and you will build towers. So means I did not get whether you will take the site identification by telecom operators or you will identify, you will build and you will get the rental income from the operators?

I will give clarity. These locations are finalized by mobile operator because they are the one who are planning network. We don't do network planning as a process. They are the one who do network. So as a process, every month-on-month basis, every circle of mobile operator share their list with me that these are the locations in which they want the mobile tower. I will go there and identify a suitable option within 100 meter where owner is ready to give their ground or flat, which we again send back to operator that these are the 2 or 3 places within 100-meter periphery where we can construct mobile tower for you. Then their technical team will go do a proper survey and confirm me back as this location is suitable at X height and X type of tower. Based on that I will construct a tower and sublease it to mobile operator, where I will get IP fee, loading charges, rentals and everything.

Okay. Okay. Yes. Sir, and the last question is, sir, regarding depreciation means you are saying you will be upgrading the battery packs to give this 99.7% kind of operator efficiency. So means how do you consider this depreciation in terms of revenue percentage?

We follow a 5.28% depreciation as a straight line method. So whatever [indiscernible] 5.28% depreciation is applicable on all the equipments whether it is battery bank, whether it is tower, everything.

Okay. So maybe approximately, we can say, maybe 12 years and more, we can use this product efficiently by considering the depreciation benefits?

Right, right.

We'll take the next question from H.C. Daga.

Please excuse me, I have joined late. So if you can kindly give your revenue and then the operating margins plan for the '24, '25, '26, if that is possible?

[Foreign Language]

'24, '25, we are targeting around INR 195-plus crores as a revenue. '26 is more than INR 320 crores plus. Right now, we are targeting for the next 2 years only.

Yes, yes, yes. And then the operating margins, please?

Operating margin is more or less 65% EBITDA.

We'll take the next question from Raj Makwan.

Hello, am I audible?

Yes, Raj, you are audible.

Sir, for FY '26, you have given a guidance of INR 320-plus crores of sales. So it includes BSNL, right?

Yes, yes, it includes everything.

It includes overall sale, consolidated?

Yes.

We'll take the next question from Rohan Patel. Rohan? We'll move on to the next participant, Siddharth Agarwal.

Am I audible?

Yes, Siddharth.

Okay. So my question is, so we have planned for 4,500 towers -- new towers in this year and roughly another 4,500 towers for the next year. So I'm assuming that we have this visibility, the INR 320 crore turnover, the guidance that we have got for FY '26 is just based on exact tower tenancies as on FY '25, right? So potentially, it could be higher depending on how FY '26 tower rollout actually happens throughout the year?

Right, right.

Okay. That is question number one. And the second thing is we keep on getting these aggressive rollout plans from both BSNL and Vodafone, who have lagged behind in tower rollout for both 4G and 5G. And the numbers that we are hearing is in multiple lacks of towers are needed for both the companies in the next few years. So for us, how do we see the opportunity for the next few years? And what prevents us from capturing a bigger pie of this potential opportunity out there?

So as of now opportunity is very high. It seems like you can easily say sky is the limit, if you want to do a major network rollout for both the companies. Now while we are saying this number, this number is based on our financial capability, what visibility we have with these funds. So if we're able to improve our funds visibility, say, next quarter or after 2 quarter, after 3 quarter, we will again revise the plan. But current plan is based on the current funds visibility. So you are right, we can get a bigger pie also, but that will require a lot of planning because it will require a huge CapEx investment. So as and when we are able to free the funds plan, we'll keep revising our targets also.

Okay. So basically, the guidance that we have now seems to be the best case and depending on how quick the rollout happens and how we -- better visibility we have on the funds these guidance can keep on getting upgraded. And also, FY '26 top line is relatively very conservative because we'll have some significant rollout also happen in Q1, Q2, Q3 of FY '26, which should also contribute to the top line?

So I'm keeping my finger crossed actually.

Yes. And one more question on that is we say that our EBITDA margin would continue to be around 60%, 65%. But I'm expecting that we -- our tenancy ratio would keep on increasing from where it is now, especially when -- for the same towers, we would have multiple tenants. So wouldn't our EBITDA margin overall at the firm level keep on increasing?

Right now we're not seeing a major -- yes, there would be surely an improvement of sharing, there is a sharing ratio or tenancy ratio but since BSNL is going ahead with a very different strategy of rural network, we don't see a massive jump in tenancy. Yes, there would be a jump in tenancy, but not massive. Hence, we have as of now maintained it at the same level but as and when we get more clarity from operator, yes, it can further improve.

And finally, the last question is, currently, we still continue to be majorly Mumbai- and Maharashtra-based company in terms of our revenue. So after, say, FY '26, when we have almost 15,000 tenancies across India, how would that regional spread of revenue look like?

So it would be spread in more or less in 15 states of India, which still Mumbai and Maharashtra will dominate, but not majorly like what is right now or what was it 2 years back. So that the decent share of revenue, which will come from 15 states of India, which are my targeted states.

Okay. So it would be a lot more evenly spread, Mahrashtra will continue to be a dominant share, but can we expect 30%, 40% of incremental revenue coming from states other than Mahrashtra?

Right, absolutely.

We'll invite Rohan Patel to ask his questions now.

Am I audible?

Your voice is coming in a bit low.

Now am I audible?

If you could speak up a bit louder, that will help.

Okay, I hope now am I audible.

Yes, go ahead, Rohan.

I just wanted to ask a question. We are seeing that there is definitely more density required for towers. And like can I know that like we are planning to add 4,500 towers in the next 3 quarters. But like as an industry, how many towers are required for, say, next 3 years? And what type -- what kind of market we want to capture?

So I will quote a report of DIPA, which is Digital Infrastructure Provider Association. So there was a reported study, which was published by T.R. Dua, who is the Head of DIPA, to provide a seamless 5G network across India we need around 12 lakhs tower across India. Out of 12 lakhs tower, 6 lakhs existing tower, which will get converted to 5G towers. So there is a scope of another 6 lakhs tower to come up in India down the line 2 years, 3 years whatever operator plans. So in terms of opportunity, there's a 6 lakhs tower, which are there to be rolled out in coming years in India, out of which we are planning, as of now we have planned is based on our current financial capability, which is right now, as and when my financial capability improve, I'll go for a bigger share of pie. It will be keep revising every quarter, every year, we'll have to keep revising our targets.

And as I'm new to this industry as well as to this company, I was going through some updates regarding 5G. There's also -- as much as there is a need for tower network, there's also a need for DAS system and in-building solution system. So are we any time planning to get into that? Because that is also a very important thing for 5G rollout.

If you have seen my presentation, we are going aggressively for FTTH roll out. So DAS system would be more or less outdated down the line 1 or 2 years, every building will run fiber rather than 2XL cable DAS, they'll run fiber DAS. So we are working on FTTH. We have already started rolling out FTTH sites in Mumbai, Mahrashtra, West Bengal. But India is still not matured. We are seeing our FTTH goal will come down the line 2 or 3 years. Then we will be ready to take all the benefits of FTTH as we already started working on FTTH roll out. And we are taking that vertical very seriously, and we are seeing a good percentage of revenue coming from fiber and FTTH down the line 2 years.

Okay. So I can assume that FTTH is a more advanced technology over DAS and IBS and you are pursuing to get into FTTH?

Right, right. We've already stated FTTH.

We'll take the next question from Yash Ginoria.

Am I audible?

Yes.

My first question was, what is the maximal number of tenancies we can have on our tower, on a macro tower as well as small cell towers?

Since we have 4 operator, maximum tenancy go to 4.

Okay. And sir, my second question was, do you require some environmental permissions for erecting the tower? Who is responsible for those permissions?

For any environmental clearance, if we install DG that too static DG, then we may need. But all my sites are green sites which are powered, and we don't work on DG. Yes, we have a mobile DG project, which goes as and when required, if there's a longer power outage. Otherwise, all my sites are green sites with power by electricity.

Rishi, you can just go ahead with your question, please.

Congratulation on good set of numbers. My specific question was on the margin front. As you said that 2, 3 down the line, we are targeting a margin of around 60%, 65% EBITDA level. Right now, if I see -- right now looking at the statement, we had around -- for FY '24, we had 70% margin. So any specific reason we are seeing a decline in margin eventually because as the company grows the -- some or the other way, the operating leverage must kick in, in a way so or was it the FY '24 been very exceptional year in terms of the any specific expense in terms of revenue?

[Foreign Language]

Mr. Gaurav, you can please go ahead and ask your question. Mr. Gaurav? Your voice is a bit on a lower side. Can you speak up louder?

Can you hear me?

Yes, yes, we can hear you.

Okay. So yes, my question was around the master service agreement. Are these master service agreements signed with all the operators at a similar time or they are signed at different intervals?

I did not get your question. Can you repeat? Your voice was not clear.

I'm talking about the master service agreements that you have signed with the 4 operators, Airtel, Jio, Vodafone and BSNL. I assume these are signed at different intervals with these operators. So these MSAs, when they -- do they come up for review? Is it after a period of 10 years or maybe earlier than that?

As of now, it's around 15 years period with all the operators. It will come around after 15 years. So as of now, still we have now 8 to 10 years period left in all the MSAs. BSNL has just been renewed, so it has 15 years pending period and all others will have 8 to 10 years minimum pending period..

Okay. And then these MSAs that are signed with the operators, they are similar for you and all your other competitors, the terms won't be very different?

Right.

Okay. And when they are -- like -- so just a benchmark, what you've signed with BSNL, which is the latest one, are the numbers slightly in your favor? Or have they gone down from the last MSAs that you have signed?

It's almost similar. There's no major change in the numbers.

Okay. If there is no change in the terms, then how do we account for the inflation and other expenditures that may go up over time for the providers?

We are including escalation of 2.5% on IP fee which I've mentioned by MSA side. So by default IP fe of every site increases by 2.5% every year, which takes care of salary increment and other inflation.

We will take the last question from Mr. Guneet Singh.

Sir, you mentioned that until Q2, we have funds in place for the CapEx. So I mean, how much CapEx are we planning to do until Q2? And can you just like help me understand the amount of cash that we have currently? You mentioned that you raised INR 40 crores from warrants. So I just would like to understand the source of CapEx since you mentioned the borrowing?

I will not be able to answer your question with exact numbers. But yes, we have planned around 4,500 sites for next 9 months, which we'll do evenly on quarterly basis, more or less. So -- and we have enough provision for Q2 and Q3 both. In terms of INR 40 crores which I said if you have seen the [indiscernible] we had done warrant through promoter last year, out of which INR 40 crores is expected in this financial year. More or less, it has come..

All right, sir, we generate about -- I mean, how much EBITDA do we generate per quarter? So we generated about [indiscernible].

Some from internal accruals, which takes care of my CapEx up to Q3. Between internal accruals, promoters fund and some debt, we have enough funds for Q3, up to Q3, not up to Q2, up to Q3 and we have funds.

All right, sir, so up to Q3, how much of CapEx would we have concluded as per internal?

Tough to give you breakup quarter-wise of CapEx. It would be revealing my exact plans of every quarter, which really, I don't want to reveal at this point of time.

All right, Sir. Sir, what are the average number of tenants per tower that we have currently?

So for macro, we have around 1.8, and small cell 1.2.

All right. And sir, what is the expected revenue per tower per tenant from the 4,500 towers coming in?

See, like what I said, my revenue would be doubling, so u can do the calculation. It would be exactly at the same, current revenue would be maintained per tower because we're not giving any major benefit to any operator.

So which is around -- what is the average revenue currently per tower?

You can see now my topline is around INR 166 crores, and I have around 5,100 tenancies.

INR 25,000 per tower. All right. So I mean, we are factoring that we would be having about on average 1.5 to 1.8 tenants per tower, I mean?

Right, 1.8 and 1.2 for small cell.

We will take one last question from Mr. Rohan Patel.

Just a question regarding towers. I just wanted to understand like when we build one tower, like what would be 4 to 5 most important components or I can say, like main component that has 60% to 70% of tower cost, if it's possible to say like there are microwave antenna, base station antenna?

All what you are saying antennas are part of active equipment, which will be brought by operator only. My major 3 components in terms of CapEx are tower structure, SMPS and battery bank. These 3 constitutes the major cost of my tower.

So -- and rest all, it's bought by...

[indiscernible] meter, some cables would be there. There are multiple small, small elements which come into tower, but major cost will go to battery bank, SMPS and tower structure. But there will be civil work, there will be -- it's a big view for any tower.

I think that was the last question for the day. Tushar and the management team, would you like to give any closing comments?

I think we are here to give shareholders the returns which they are expecting. And we are sure of delivering what we are committing to them on this call or even in all my future commitment, we'll ensure we deliver all our other commitments. Sir will have to [Foreign Language].

My point is only that looking towards the industry of telecom, we are the upsides are only coming because of the 3 players, basically, the market has been captured by Airtel and Jio. But later on, the development of the BSNL is now see that 25 lakh customer has gone. Ultimately, we are the active passive part we are only doing. Active part, already orders has been given by all the operators. For Vodafone, Jio and Airtel, Ericsson equipment is available. And BSNL is knowing to be the Indian company, it is given to Tejas. So make in India, they are making. So all the orders are in place of the operators. So we have to deliver the goods and we are seeing the every operator now last 1 month before, operator has increased their tariff also. So looking at the CapEx is not from our perspective, we should look at our customers who are giving payment to us, they are also in a safer zone now. And that gray zone, I think my CFO and Tushar has given an excellent presentation regarding all these things. But the customer view is also clear that market and looking to this sector, there is no threat or no any type of AGR has came looking forward, there is no -- any negativity is seen. So only Suyog to deliver the goods, properly placed the thing and government is also stable and digital utilization of all the data are there, all fiberization work is there. So we are searching for better and better opportunity to make the India more digitalization, all the banking sectors are there. And mobile use, you know without mobile, we can't live now. So range is also required. Voice has reduced but data has increased. So fiberization of all tower. Also one of the new aspects will come to our Suyog feature. And we are also agreement with all the government NHAI, MSRDC, MMRDA, monorail, and we are looking forward new areas where the new expansions of cities are happening, smart cities are coming, under construction are there and one stable market for looking the goal of 15 to 20 years. These agreements are in place. Now we are in 2024. And if you consider this is 2040, the vision is very clear. So I request all the -- who are participated here, asked the question, and we are happy to see your views, and we'll take consideration of your notes and we will more clear, and we will shortly list in NSE also. But both the listing will complete, then I think the picture will be more clear. So thanks from my Suyog team who participated in this investor meet and thanks to organizer and we wish all the best to all the other people who are joining and looking forward toward you. Thank you very much.

Thank you so much, Lature ji and thank you for the entire management team of Suyog for coming on the call. Thank you to all the participants for joining on the call. We now come to the end of this call. Thank you so much.

Thank you.