Engro Sees Strong Growth in Tower Business After $563m Deal

Engro Holdings highlights telecom tower expansion, fertilizer surplus, and Thar coal growth as key drivers of future earnings.

Engro Holdings has identified strong growth potential in its newly acquired telecom tower business following a $563 million deal with VEON Group Pakistan, positioning the company among the world’s top 20 independent telecom operators. The management shared the outlook in a meeting with analysts on September 15, emphasizing that Deodar, its tower infrastructure subsidiary, is expected to deliver robust returns.

CFO Farooq Barkat Ali and GM Group Portfolio Performance Management Usman Hassan said Engro Corporation’s consolidated revenues had grown at a compound annual rate of 21 percent between 2018 and 2024, reaching Rs540 billion ($1.9 billion), while net profits rose at a 19 percent CAGR to Rs67 billion ($200 million). The executives noted that the tower business is expected to become a major contributor in the years ahead, driven by increased tenancy growth and capital investments in solarization and infrastructure.Engro Earnings and Dividend Revised Down; Buy Stance Maintained

Deodar currently operates a portfolio of around 10,500 telecom towers, but only about 3,000 have been placed on a sharing basis so far. Management said this leaves significant upside for future tenancy growth, especially since initial progress was achieved with minimal marketing. Over the next three to four years, Deodar’s EBITDA margins are projected to surpass those of Engro Enfrashare, the group’s earlier tower venture. Executives also stressed that satellite-based connectivity is unlikely to pose a major threat to the tower model, given its cost disadvantage in areas already served by terrestrial infrastructure.

The management further outlined that near-term cash flows from the tower business will be focused on Deodar’s capital expenditure, including tower solarization, and debt servicing. Engro Connect, the digital connectivity platform, is expected to provide strong medium- to long-term earnings support.

In its fertilizer segment, Engro said demand had been resilient despite ongoing flood conditions, which are not expected to be worse than the devastation of 2022. Current estimates suggest fertilizer demand may decline by no more than 4–5 percent. Inventory levels have already reached 1.2 million tons, well above safety thresholds. Management expects the government will allow fertilizer exports after the fourth quarter of 2025 to help clear excess stock.

For Engro Powergen Thar, management reported strong receivables collection, with 93 percent of billed amounts recovered since inception and a current recovery rate of 98–99 percent. Outstanding receivables currently stand at Rs40–45 billion, but management expressed confidence in cash flow visibility for the next two to three years. On the broader issue of circular debt, executives said the government had not yet approached Engro, though any eventual settlement could involve concessions such as waiving late payment surcharges.

Regarding Engro’s LNG business, management stated that renegotiations between Qatar and Pakistan would not materially affect its terminal operations, as it runs on a fixed “take-or-pay” capacity model. However, the existing arrangement with Vopak terminal is set to expire next year, with discussions ongoing about the future framework.

On the coal mining front, Sindh Engro Coal Mining Company (SECMC) is advancing with its Phase 3 expansion, which will increase mine capacity from 7.6 million tons to 11.6 million tons by 2026. Management also indicated plans to scale up to 20 million tons in subsequent phases, reinforcing Engro’s long-term energy sector footprint.

The diversified conglomerate, trading at 2025 and 2026 forward price-to-earnings ratios of 5.2 times and 6.7 times respectively, continues to balance its portfolio between growth opportunities in digital infrastructure and traditional businesses in fertilizers, power, LNG, and coal mining. Management underscored that the combination of stable cash-generating assets and high-growth ventures such as the tower business positions Engro Holdings for sustainable long-term expansion.

Analysts note that Engro’s entry into the global tower market aligns with its strategy of diversifying into high-growth infrastructure sectors while leveraging its strong balance sheet. With its Deodar unit poised for tenancy-driven growth and robust margins, alongside expansion in coal mining and stable fertilizer demand, Engro Holdings appears set to remain a dominant force in Pakistan’s industrial and infrastructure landscape.