Bharti Airtel Ltd Partly Paidup Q2 FY2025 Concall Summary

Key Takeaways

• Tariff repair flows through, customer loss milder than feared: ARPU rose to ₹233 (vs ₹211 in Q1) while SIM consolidation and down-trading both came in better than management’s action standards, and the customer base has already begun recovering through October.
• ROCE at 11.2% keeps further tariff repair firmly on the table: Management called current economics “still quite poor” and said the only way to improve returns is another round of price increases, though it wants the present round to fully settle first.
• Homes broadband stepped up, but competitiveness is a work-in-progress: Net adds jumped to nearly 6 lakh, FWA economics are now comparable to fiber, and the company plans to activate mass retail and DTH channels over the next two quarters to close the gap.
• Enterprise margins are being traded for absolute profit growth: A mix shift toward faster-growing, lower-margin adjacencies (CPaaS, Cloud, Security) is compressing margins; management is explicit that it prioritizes stepping up growth and absolute profit over the margin rate.
• What to watch next quarter: Whether the full tariff-repair benefit lands in ARPU, the pace of homes broadband competitiveness improvement, and any sign that global business discussions convert into firm orders.

Tariff Repair: Impact, Customer Behavior & The Next Round

• ARPU lift on track: ARPU reached ₹233, up from ₹211 sequentially, with the flow-through matching expectations. The full benefit will accrue over the next two quarters.
• Customer loss milder than modelled: The 0.29 crore mobility customer decline from SIM consolidation was less severe than in earlier repair rounds. Down-trading also undershot action standards, and normalization was already visible through October with a trend reversal and customer adds.
• Bharti Hexacom felt it slightly more: Revenue-earning customer reduction ran 40–50 bps higher than the parent, reflecting Rajasthan and Northeast’s greater price sensitivity; Rajasthan is otherwise behaving like the rest of the country.
• The economics still demand more: India ROCE sits at just 11.2%. Management’s stated first priority is getting ARPU to ₹300, and it frames the long-term need as taking ARPU up constantly so return on capital becomes respectable in a business where people spend 5–6 hours a day on their phones.

Gopal Vittal: “At the same time the ROCE of the India business is still very low at 11.2%. The only way to improve this is further tariff repair.”

Homes Broadband: Acceleration, FWA Economics & The Fiber Endgame

• Net adds stepped up materially: Nearly 6 lakh broadband customers were added in the quarter, a jump from prior quarters, driven by rapid FWA coverage expansion and Wi-Fi services.
• FWA unit economics now match fiber: CPE costs have been dramatically reduced through work with OEMs and chipset manufacturers, bringing the cost per connected home pass in line with FTTH. Management is determined to drive CPE costs lower still.
• Fiber remains the destination: Management reiterated that fiber delivers superior concurrency, uplink and downlink, and that FWA customers will be moved to fiber as rollout reaches their locations. Fiberization continues at 0.15 crore home passes per quarter, prioritized into areas where FWA capacity may face constraints in 1–1.5 years.
• Competitiveness gap acknowledged: The company is not yet as competitive as it needs to be in homes and will work over the next two quarters to activate mass retail and DTH channels alongside existing broadband channels. About 50% of broadband acquisitions already come through Airtel Black plans, with significant headroom.
• Standalone 5G on FWA by December: Trials are underway to test better uplink performance with SA for fixed wireless access; the current plan targets a December move.

Gopal Vittal: “I do want to reiterate that fiber will always offer a superior experience and our expansion plan is predicated upon eventually converting our fixed wireless access to fiber once fiber reaches the location.”

Enterprise & B2B: Growth Over Margins

• Revenue grew 3.3% sequentially, but mix is shifting: Incremental growth is coming from new and adjacent businesses (CPaaS, Cloud, Security, IoT) that are low-capex but also lower-margin than traditional connectivity. Global business, the more profitable half at ~50% of the segment, faces headwinds and has yet to see customer discussions convert into firm orders.
• Management is explicit on the trade: The objective is to step up growth and focus on absolute profit growth rather than worry singularly about margin, because that is where the market is going. 90% of incremental B2B growth already comes from adjacencies.
• Cloud investment signed off: An own-cloud investment is underway and will be taken to market in the next few months, targeting workloads that do not need elastic public-cloud requirements at a more economical price point.
• Security business doubling: Customer base in both Zscaler-tied and other managed security services has doubled over the last year with strong revenue growth; momentum is expected to sustain.

Gopal Vittal: “The challenge for the business or the objective for the business is to really step up the growth in the business and not worry singularly about margin but really worry a lot more about absolute profit growth because that is where the market is going.”

Digital & New Businesses: Planting Pearls

• Airtel Finance scaling: Served over 0.1 crore customers, trending at an annualized loan disbursal rate of ₹3,000 Crores with AUM at ₹2,500 Crores. The company is partnering with leading NBFCs and will launch embedded insurance. Management is building it as a strategic group asset.
• Payments Bank momentum: Monthly transacting users reached just under 8.6 crore, up 20% sequentially. Annualized revenue run rate crossed ₹2,600 Crores (58% YoY) and deposits exceeded ₹2,950 Crores (43% YoY).
• Spam detection as an AI showcase: The network-based AI solution analyzes 1 trillion records daily in real time, has identified over 10 crore potential spam calls and 0.3 crore unique spammers, with initial data indicating significantly reduced spam volumes.
• No digital revenue target given: When pressed for a proportion-of-revenue target for digital, management declined, saying only that it must be “meaningful” given the large revenue pool. On whether any new initiative could reach 40–50% of the cash flow size of mobile and broadband, the answer was that the opportunity is massive but “time will tell.”

Gopal Vittal: “The assets that we have in terms of our digital infrastructure, the strength of our balance sheet as well as the data that we have of our users both B2C and B2B along with the relationships that we enjoy with our customers … really gives us a lot of confidence that using the strengths of our business we can actually look at having interesting businesses around it, which are pearls on the side.”

Capex, Spectrum & Network Strategy

• Capex moderating from last year’s peak: Q2 saw seasonal moderation; full-year capex is expected to be lower than the prior year’s elevated level. The reduction will come from wireless, where the big 4G and 5G spectrum-band rollout is largely done. 4G capacities are no longer being invested in; 5G rollout will be modest and spread over the next three to five years.
• Transport and fiber capex continue: Transport capex will keep going for the next 5–10 years. Core network is a small component. B2B cables, data centers and broadband continue to receive investment.
• NSA-to-SA transition is a slow burn: Management sees no need to hurry into standalone 5G on mobile, which would cost ₹30,000–40,000 Crores for a sub-gigahertz band that Airtel does not need because it already holds sub-gigahertz spectrum and a powerful mid-band combined with 3.5 GHz. The roadmap will play out over three to four years or more as 4G traffic drops and spectrum bands are released.
• Rural site rollout nearing completion: Over 39,000 sites have been rolled out in the last two years, contributing to revenue market share gains. The bulk of the 25,000-site project will be completed this year, with some bits left in 3–4 circles; the focus now shifts to sweating the deployment.
• Free cash flow and deleveraging: Operating free cash flow should be consistently delivered barring seasonal capex swings. Deleveraging will combine reduction and paying down high-cost spectrum; management did not confirm a specific ₹40,000–45,000 Crore deleveraging figure put to it by an analyst.

Gopal Vittal: “If you hurry into it you end up paying almost 30 - 40,000 Crores to buy a sub gigahertz band you do not need it because we already have sub gigahertz so we have a mid-band which is very powerful.”

Succession & Organization

• Shashwat Sharma named CEO designate: He will take over as MD & CEO on January 1, 2026. Gopal Vittal moves to Vice-Chairman & MD for 2025 and then to Executive Vice Chairman, with a remit spanning mentoring, group-wide synergy (digital, procurement, talent, network strategy), incubating new growth areas, and overseas oversight.
• Vittal staying deeply involved: A structured 14-month transition plan is in place, and Vittal stated he will remain deeply involved well beyond that period. He also confirmed he is fully committed to the Bharti group with no intention of taking on anything outside it.

Gopal Vittal: “Our objective through this change is to bring in a fresh crop of younger leaders into key positions to run the India operations. This move symbolizes world class succession in best-in-class companies.”

Guidance & Commitments

Key Metrics