Bharti Airtel's June quarter reveals digital pivot as capex normalises, debt burden eases

The company posted robust free cash flow of Rs 14,500 crore and cut net debt by Rs 13,000 crore sequentially to Rs 1.26 lakh crore. India wireless EBITDA grew 3.3% QoQ, driven by ARPU gains and improved margins, while the non-mobile and Airtel Africa segments also contributed meaningfully.

Bharti Airtel’s June quarter performance marks a continued shift in strategy from being a mobility-led operator to a diversified digital platform, with strong execution backed by free cashflow, moderate capital spend and monetisation levers across enterprise and cloud.

The company posted a robust free cashflow of Rs 14,500 crore and managed to trim its net debt by Rs 13,000 crore sequentially to Rs 1.26 lakh crore during for the June quarter. Airtel's India wireless EBITDA grew 3.3 percent QoQ, driven by ARPU gains and improved margins, while non-mobile and Airtel Africa segments also contributed meaningfully.

Cloud and Software Ambitions 

Airtel launched its telco-grade Airtel Cloud platform this quarter, supported by two live cloud regions in Delhi and Chennai, with a third one in the works. The company is also licensing its proprietary software stack - developed for internal operations - to telcos like Singtel and Globe Telecom, with more than 30 discussions in the pipeline.

“Our software platforms are telco-grade, modular, and now proven at scale. This could significantly reshape our B2B composition in the years ahead,” said Gopal Vittal, MD & CEO.

Broadband Gains, Digital Bundling Gather Momentum

Airtel added 9.39 lakh broadband customers - its highest ever in a quarter - driven by strong traction in FTTH and Fixed Wireless Access (FWA). The company is scaling up fiber rollout from 1.6 million to 2.5 million home pass-ups per quarter, treating both FTTH and FWA under its single WiFi strategy.

Airtel's ARPU rose to Rs 250, helped by a better subscriber mix and an extra day in the quarter. Smartphone additions stood at 3.9 million, while postpaid adds were 0.7 million. The postpaid base, however, still accounts for just 7% of total users, indicating significant headroom for ARPU expansion.

Vittal reiterated that tariff architecture remains distorted, with the affluent paying less than they should. “India’s ARPU and rate per GB are among the lowest globally. Tariff repair remains overdue,” he said.

B2B and Adjacencies

Airtel is betting big on high-margin B2B adjacencies - cloud, cybersecurity, IoT, and CPaaS - where it has either built in-house capabilities or formed strategic partnerships. Its IoT base has reached around 50 million devices, led by smart meter and auto deployments. The Airtel Finance business is also scaling up, with lending partnerships seeing 15 percent growth in July alone.

With net debt/EBITDA now at 1.3x in India and below 1x in Africa, Airtel plans to raise shareholder payouts and explore monetisation of adjacent businesses. Potential IPOs or value unlocking are expected in Airtel Payments Bank, Airtel Money Africa, its data center vertical, and eventually even the Xtelify software unit.

While capex may rise again with 6G rollout - likely post-2030 - current investments are modular. “We don’t expect any new radio capex cycles in the near term. Current capacity expansion is geared toward core network, fiber, and cloud,” Vittal said.

Brokerages that were cautious after Q4FY25 now see key concerns easing. “Capex normalised in Q1FY26, and management reiterated that full-year India capex should moderate year on year,” said Motilal Oswal, which has a Buy rating and a revised target price of Rs 2,285. The firm expects Bharti to generate Rs 1 lakh crore in free cash flows over FY26-27.

JM Financial concurred, pointing to the company’s 'huge FCF generation potential' amid declining capex intensity. “We believe wireless ARPU will grow at 12-13% CAGR over the next 3-5 years, while 5G monetisation and FWA rollout offer long-term upside,” it said. JM has a Buy rating with a revised target of Rs 2,240.

ICICI Securities struck a slightly more conservative tone, maintaining a Hold rating with a target of Rs 1,960. It acknowledged Airtel’s execution and expanding total addressable market (TAM) through cloud, software, and digital services. “Bharti is taking proven, AI-powered platforms to global telcos, with multiple value-unlocking opportunities to drive shareholder value,” it noted.

Motilal Oswal and JM Financial appear confident in near-term FCF visibility, and see upside from ARPU gains, spectrum monetisation, and the operating leverage from its broadband and enterprise bets. ICICI Securities, on the other hand, remains more measured, preferring to wait for greater visibility on cloud monetisation and value unlocking before re-rating the stock.

Brokerages see this expansion into adjacencies as a structural positive. “Bharti is expanding its TAM beyond mobile, and has proven scale in group companies. These digital services can support both growth and future value unlocking,” said ICICI Securities.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​