New Delhi Credit rating agency ICRA changed its outlook for the Indian telecom tower business from “Negative” to “Stable” on Monday due to strong customer collections and the recovery of past-due payments.

Long-term receivables, which resulted from certain telecom service providers’ payment delays, were previously causing difficulties for the sector.

But thanks to regular, on-time payments to the tower businesses, the situation has much improved. As a consequence, the days of receivable have decreased to around 45–60 days, which is less than the 80-day ICRA negative outlook level.

Together with the recovery of past due payments, this has improved the telecom tower industry’s liquidity profile and reduced its need on external debt, both of which are expected to boost the industry’s return metrics.

ICRA projects that the tower sector would post 4-6 percent rise in operating income and 70-75 percent operating margins (after accounting for energy sales) in FY2026.

With the industry’s cash balances rising to around Rs. 5,500–6,000 crore from Rs. 2,200–3,000 crore levels before, these factors, together with the relaxation of working capital restrictions, are expected to improve the liquidity situation.

The working capital cycle of tower firms has been made easier by improvements in the credit profiles of several important telecom service providers that serve as their clients, according to Ankit Jain, Vice President and Sector Head, Corporate Ratings, ICRA.

Additionally, a significant number of past-due amounts have been cleared, leading to the reversal of prior FY2023 provisions.

As a result, the industry’s overall cash flows and liquidity situation have improved. Going ahead, it is anticipated that the collections would continue to be made on schedule, keeping the industry debtor levels below 60 days.

With ICRA estimating net external debt/OPBDITA at around 3.4x for FY2026, this would also lead to a decrease in external debt, according to Jain.

Some clients are anticipated to resume their capital expenditure plans after their credit quality improved and some of them completed a fund-raising activity.

According to the survey, telcos are constantly expanding and upgrading their networks in response to India’s rapidly growing demand for telecom services, particularly data.