Suyog Telematics Ltd Q1 FY2025 Concall Summary

Key Takeaways

• Breakout growth guided, funded by promoter warrants: Revenue is guided to nearly double from ~₹195 cr in FY25 to ₹320+ cr in FY26, backed by a 4,500-tower rollout this year and a similar number next year, with promoter warrants injecting ₹40 cr.
• BSNL is the engine, not a side bet: A 10-year locked agreement and BSNL's government-backed, professionally-run 4G/5G rollout make it the single biggest near-term catalyst, with management expecting a "lion share" of the national rollout.
• The model's edge is in hard-to-replicate site access: Exclusive government rights (MMRDA, NHAI, BEST), a proprietary CCTV-pole strategy that locks in police dependency, and a focus on high-revenue slum areas create a moat that even larger rivals cannot easily copy.
• Margins normalize downward from an exceptional FY24: FY24's ~70% EBITDA margin was inflated by zero new towers and a one-off bad-debt recovery; the sustainable run-rate is ~65%, and new tenancy additions will lift EBITDA and PAT even if the margin percentage stays flat.
• What to watch next quarter: Whether the 4,500-tower FY25 rollout stays on pace through Q3, any revision to guidance if funding visibility improves, and the NSE listing timeline once management is ready to disclose it.

The BSNL Catalyst

• A transformed customer: Management states BSNL is now run like a professional private company with unprecedented government support, a sharp departure from its historical reputation. Suyog is one of the few IP companies BSNL is backing for its massive network rollout.
• 10-year locked revenue stream: The agreement with BSNL carries a 10-year lock-in starting FY25, providing long-duration visibility. The merger of Mumbai and Delhi circles into BSNL's scope means the current 0.4% revenue contribution from BSNL will change drastically.
• 4G now, 5G later: BSNL's 4G rollout is underway after resolving a six-month stability issue with Tejas Network's microwave connectivity. Aggressive rollout began in August and scales from September, with a 5G rollout expected after roughly 18 months.
• Rural focus where others fear to tread: BSNL's strategy is rural-heavy, areas where no other IP company wants to enter. Suyog is following aggressively alongside Airtel, positioning itself as the partner of choice in underserved geographies.

Tushar Shah: "I have never seen government supporting BSNL like they are doing right now. BSNL is run like a professional private company."

The Moat: Site Access & Innovation

• Government-site exclusivity: Suyog holds agreements with BMC, MMRDA (exclusive rights on foot over bridges and Skywalks across Mumbai), NHAI (pan-India agreement), BEST, MSRDC, and Monorail. These are "hot sites" for mobile operators because of their locations, and the company is replicating the model in West Bengal, Gujarat, and Madhya Pradesh.
• CCTV-pole lock-in: Suyog installs a 12-meter pole with a 6-meter CCTV camera at its own cost and hands it to the police, then mounts a 12-meter small cell for the mobile operator on the same pole. The police dependency eliminates termination risk, and the hard-to-get locations drive high tenancy ratios. The model was so successful that Airtel's Gopal Vittal visited a site and asked for pan-India replication.
• Slum-area specialization: Suyog deliberately enters slums like Dharavi and Malvani where no other IP company goes. These sites generate very high revenue because mobile is the only source of entertainment and study, with no Wi-Fi or landline alternatives. All such sites carry higher tenancy due to their locations.
• Small-cell first-mover advantage: Suyog was the first IP company to deliver small cells on a hybrid model for Bharti Airtel, ahead of Indus. For roughly one year, it was almost the only IP company delivering small cells, which expanded its footprint from Mumbai and Maharashtra to pan-India.
• Operator selection criteria favor Suyog: Operators choose IP companies based on uptime, tower maintenance, ability to provide desired locations, and speed of delivery. Management claims Suyog is the best-performing IP company on all three parameters.

Tushar Shah: "This model was so hit that Gopal Vittal himself came on one of my sites in South Bombay, and he asked me to replicate this model across India."

Rollout Plan & Revenue Build

• FY25: 4,500 towers, ₹195+ cr revenue: The plan splits into roughly 3,500 macro and lean towers plus 1,000 small cells. Of the macro towers, 3,000-plus are planned for Vodafone and BSNL under confirmed agreements, with an additional 500-plus sites already listed for MTNL in Mumbai, potentially scaling to 1,000.
• FY26: another ~4,500 towers, ₹320+ cr revenue: Management calls this guidance conservative because significant rollout in Q1, Q2, and Q3 of FY26 will also contribute to that year's top line. The ₹150 cr full-year revenue add from 4,000-5,000 additional tenants underpins the build.
• Tenancy doubling drives the math: Suyog currently has 5,000-plus tenants and plans to double that number. An additional tenancy on a macro site yields over 90% revenue growth on that tower because the discount is only ₹2,000, or less than 10% of the IP fee. EBITDA and PAT improve because incremental capex is low while revenue generation is very high.
• Revenue geography diversifying: Revenue will spread across roughly 15 states. Mumbai and Maharashtra will still dominate but less heavily than before; roughly 30-40% of incremental revenue is expected from states other than Maharashtra.
• Capex funding visible through Q3: Internal accruals, promoter funds, and some debt provide enough cash through Q3. The ₹40 cr from promoter warrants is expected this financial year. Post-December, management will assess whether additional funds need to be raised; no borrowing plans are finalized yet.

Tushar Shah: "FY '26 top line is relatively very conservative, because we will have some significant rollout also happen in Q1, Q2, Q3 of FY '26, which should also contribute to the top line."

Revenue Model & Unit Economics

• Four revenue categories, three in the top line: IP-1 fees, site rental, and loading charges are part of the top line; utility charges for electricity and diesel are passed through on an actual basis and excluded. All charges are predefined in the MSA, so ROI is known before investing even ₹1 on a tower.
• IP fee benchmarks: Ground-based tower IP fees average ₹20,000 to ₹30,000; rooftop poles range from ₹19,000 to ₹21,000. Suyog's fees are the same as competitors like Indus Tower and Cloud XL, with no premium charged. The company builds efficiency into its own system, and its capex is lower than peers but not dramatically so.
• Tenancy discount is minimal: The ₹2,000 discount for an additional tenant on a macro site is less than 10% of the IP fee; on a small site, the discount is only ₹500. This means incremental tenancy is highly accretive.
• Revenue timing lag: Capex done in FY25 gives a full-year benefit only in FY26; capex done in FY26 gives actual benefit in FY27. This lag is structural and shapes the revenue build.
• New towers maintain current revenue per tower: Management confirmed that new towers will sustain the same revenue per tower as the existing portfolio, with no major benefit being given to any operator.

Tushar Shah: "The best part of this model is from the day one before even I invest even ₹1 on my tower, I know what is my ROI, because all charges are predefined in MSA."

Margins: Normalization, Not Deterioration

• FY24 was exceptional, not the baseline: The ~70% EBITDA margin in FY24 was inflated because no new towers were added, revenue growth came from technology upgradation loading charges, and a provision for Vodafone bad debts was reimbursed. The normal historical margin is ~65-66%, in line with the tower industry norm.
• Tenancy addition improves absolute profitability: While the margin percentage may stay around 65%, additional tenancy drives EBITDA and PAT higher because the incremental capex is low while revenue generation is very high. If the tenancy ratio improves further, EBITDA margin can improve, though management has given no timeline for that.
• Industry margin ceiling: Management stated plainly that the tower industry EBITDA margin is typically ~65% and not more than that, setting a realistic ceiling for expectations.

New Verticals & Long-Term Optionality

• FTTH: a "just born baby" with a 2-3 year fuse: Suyog has started rolling out FTTH sites in Mumbai, Maharashtra, and West Bengal, and has signed term sheets with a few telecom operators. Management expects FTTH to be a big boom after two to three years, contributing a good percentage of revenue down the line.
• Revenue mix shift underway: Management assumes 10-15% of revenue will come from FTTH, 5G, and fiber three years down the line. The company is taking the FTTH vertical seriously and will go very aggressively on both FTTH and fiber.
• 15-20 year vision toward 2040: Management articulated a long-duration vision looking out to 2040, signaling ambition well beyond the current rollout cycle.

Guidance & Commitments

Key Metrics