Suyog Telematics Ltd Q1 FY2026 Concall Summary

Key Takeaways

• BSNL becomes a material customer: BSNL revenue share jumped from ~0.2% to 4.7% in Q1, driven by macro tower rollouts, with a cabinet-cleared plan for 21,000 towers now underway.
• Tenancy ratio and margins both improved: Tenancy ratio rose from 1.10 to 1.22 and EBITDA margin reached 76%, helped by Vodafone and BSNL loading on existing towers plus Airtel upgrade work.
• Revenue per tenancy decline has reversed: After falling for several quarters on small-cell mix and rental renegotiations, revenue per tenancy improved QoQ in Q1 and management targets a return to ~₹25,000 by March.
• A large rollout ambition needs a large funding plan: Management targets 5,000–10,000 new towers and 10,000 total tenancies by FY26-end, requiring ₹500–₹800 crores, but the funding plan is still 10–20 days away from being finalized.
• What to watch next quarter: Whether the funding plan materializes, whether Vodafone Idea provides rollout clarity by October, and whether the EPC tender bid (submission 25th August) translates into a work order.

BSNL Rollout: The Inflection Point

• Cabinet clearance removes uncertainty: BSNL has secured cabinet clearance and funds to roll out 21,000 towers, with the full site list published on their website. Management says the question is no longer whether the rollout happens, only how much Suyog can capture.
• Revenue share jumped in Q1: BSNL contributed only 0.1–0.2% of revenue until last quarter; that share rose to 4.7% in Q1, almost entirely from macro towers, which carry higher revenue per tenancy than small cells.
• 5,000 BSNL tenancies targeted this year: The company plans to add 5,000 BSNL tenancies by March 2026, with major financial impact shifting to FY27 as the bulk of rollout execution moves to Q3–Q4.
• EPC tender is a separate opportunity: The previous EPC contract was cancelled by BSNL but has been re-floated with a 25th August submission deadline. Suyog plans to bid for 4,000–5,000 sites; management declined to disclose per-tower revenue or margin, citing competitive sensitivity around the tender.
• EPC cash flow benefit is for FY27: The EPC contract will improve cash flow and give a big boost to FY27 site rollouts, but will not improve cash flow in the current financial year.

Tushar Shah: "Now BSNL has got cabinet clearance. They have got funds to roll out 21,000 towers. Entire list has been shared on their website with the locations where they want tower. So what action target is no more question. The question now remains is how much we can go out of it."

Revenue Per Tenancy: Decline Arrested, Recovery Promised

• Three forces drove the decline: Revenue per tenancy fell over recent quarters because of (a) aggressive Vodafone small-cell additions, which dilute the average, (b) site rental renegotiations where the company stopped giving 15% escalation every 3–5 years and now gives zero escalation for 10 years, and (c) operator resistance to higher per-site per-tenant rentals.
• Q1 marked the turn: Revenue per tenancy improved in Q1 compared to Q4, driven by BSNL macro tower additions and a rising tenancy ratio. Management says the improvement has already begun.
• March target is ₹25,000 per tenancy per month: By March-end, revenue per tenancy should reach ₹25,000, with revenue per tower at ₹33,000–₹35,000. Management expects roughly two quarters to bring the metric back toward the original ~₹30,000 level.
• Upgrades provide an offset: Airtel 5G tenancy upgrades on existing 4G sites and battery bank upgrades generate additional revenue that flows directly to profit margin, since the original site CapEx is already sunk. This partially offsets the rental renegotiation drag.

Tushar Shah: "It has already gone high in this quarter. If you see compared to Q4 versus Q1 our tenancy, revenue per tenancy has improved."

Vodafone Idea: A Large but Unconfirmed Opportunity

• 15,000-plus sites under discussion: Vodafone Idea is discussing rolling out around 12,000–15,000 sites this year, but approvals are still awaited. Major clarity is expected by early-to-mid October.
• Management expresses confidence: The company is confident Vodafone Idea will sustain, citing ongoing site rollouts and discussions of a significant fund raise by December, led by NBI. Formal guidance will be given once a clear picture emerges.
• Combined tower target is 7,000–10,000: Between Vodafone and BSNL, Suyog is targeting 7,000 to 10,000 new towers, with a clear management mandate to roll out a minimum of 5,000 sites this financial year and go higher.

Tushar Shah: "We're very confident that Vodafone Idea will sustain. They are rolling out good number of sites."

Margins and Cash Flow

• EBITDA margin reached 76%: The improvement was driven by two factors: new tenant rollouts on existing sites, which lifted the tenancy ratio from 1.1 to 1.2, and a large volume of upgrade work for Airtel and Jio.
• Upgrade economics are favorable: Upgrade revenue for Airtel (5G tenancy on existing 4G sites, battery bank upgrades) carries minimal incremental cost because the original site CapEx was already incurred, so the revenue drops through to margin at a high rate.
• Cash flow strengthened: Efforts over the last two quarters to roll out BSNL sites produced very strong cash flow in Q1. The EPC contract, if won, will further improve cash flow but only in FY27.
• Bank sanctions provide headroom: The company has secured close to ₹150 crores in sanctions from Axis Bank and ICICI Bank, adding to its funding capacity ahead of the large rollout plan.

Funding: The Critical Unresolved Piece

• ₹500–₹800 crores needed: Management estimates the 5,000–10,000 tower rollout target will require ₹500–₹800 crores in funding. A detailed plan is being worked on and is expected in 10–20 days.
• Multiple avenues being explored: The company is exploring multiple ways to arrange the required funds and will finalize a plan within roughly a month. The Managing Director, Shivshankar Lature, has assured that whatever funding is required will come through.
• Preferential issue withdrawn: A previously announced preferential issue was withdrawn after the market crashed due to reasons unconnected to Suyog.
• Lotus Tele Infra acquisition closed: The company acquired Lotus Tele Infra on 31st March, giving it a boost in the Delhi Circle, with Lotus already executing nearly 40 sites in Q2.

Tushar Shah: "There's a clear mandate from Managing Director. We need to do minimum 5,000 sites, and we need to go higher than that in this financial year. That's a clear management directive."

Competitive Positioning

• Satellite operators seen as additive, not a threat: Management does not see satellite operators as a threat and expects them to generate additional revenue when they begin rolling out networks in India.
• 30-year track record invoked: The company noted it has completed 30 years in the telecom industry, having navigated all its cycles.
• Tenancy ratio improvement signals operating leverage: The tenancy ratio rose from 1.10 to 1.22, primarily from Vodafone and BSNL loading on towers previously occupied only by Jio and Airtel, demonstrating the operating leverage inherent in the tower model.

Guidance & Commitments

Key Metrics