Bharti Airtel Ltd Partly Paidup Q4 FY2025 Concall Summary

Key Takeaways

• Tariff architecture is the central thesis: Management declared the current one-size-fits-all pricing model "broken" and laid out a vision to restructure it by dramatically reducing data allowances on mid-tier plans, forcing upgrades. The call was a manifesto for this change, not a near-term tariff hike signal.
• Capex has peaked, cash flow inflection begins: FY2026 capex will be lower than FY2025 as the heavy rural rollout is complete and radio spend moderates. Combined with the first large DoT installment payments falling due after the moratorium, the focus shifts to balancing deleveraging, dividend step-up, and growth investments.
• Data center ambition is a declared gap, not yet a plan: Management is "not pleased" with a sub-12% market share and sees an opportunity to "step up the game," with substantial capacity coming online over the next 18 months. But no separate capex was disclosed, and the path to closing the gap remains a work in progress.
• B2B is deliberately shrinking to get healthier: Revenue declined sequentially as the company shed commoditized, low-margin wholesale business, a strategy that will continue for one more quarter. The underlying core connectivity and digital order book is strong, and performance is expected to improve this year.
• What to watch next quarter: Whether the B2B revenue reset completes without further drag, the pace of home broadband net adds stepping up beyond 812,000, and any regulatory or competitive movement on the tariff architecture thesis.

Tariff Architecture: The "Broken Model" Thesis

• The diagnosis: Management called the current one-size-fits-all pricing model broken, arguing it is not appropriate for customer upgradation and is out of line with any other market globally. The structure needs repair for sustained financial health, continued investments, and respectable ROCE.
• The proposed fix, not a simple hike: Entry-level pricing should not go up, or only very modestly. Mid-tier plans with "oodles of data allowance" should see that allowance dramatically reduced, creating a reason for customers to upgrade to higher plans. The architecture should move from small, medium, large to extra large, mirroring markets like Indonesia where the pricing spread is 100 to 500 versus India's 100 to 250.
• ARPU drivers intact despite flat quarter: Q4 ARPU was flat sequentially at ₹245, impacted by two fewer days (₹248 on an equal-day basis). The underlying upgrade engines (feature phone to smartphone, prepaid to postpaid, data monetization, international roaming penetration) remain intact.
• Postpaid momentum building: Net adds have been trending at ~600,000 per quarter for two quarters, held back by the industry-wide tariff repair that also hit postpaid. Management expects this to step up in coming quarters, with family plan aggregation as an important driver.

Vittal: "We have also said that the current telecom tariff structure in India is broken, with a one-size-fits-all pricing model, which is not appropriate for upgradation, nor is it in line with any other market."

Capex & Capital Allocation: The Inflection

• Capex has peaked: FY2026 capex will be lower than FY2025, with the heavy lifting of the last two years behind. Rural rollout will substantially slow down as the footprint is now complete. Radio capex, a large component, will come down, while transport capex stays consistent and other businesses get a fair share.
• The DoT installment wall is here: This financial year brings the first large DoT installment payments after the four-year moratorium. Management is confident it can match all objectives through a combination of deleveraging, dividend step-up, and prudent cash deployment.
• Capital allocation philosophy: Complete flexibility, no specific net-debt-to-EBITDA threshold disclosed. The company will balance debt reduction, dividends (stepped up to ₹16 this quarter), buybacks (possible in Indus or Africa), and growth investments. Management asked investors to "trust us on this."
• Partly paid shares: No requirement to call them at this point.
• Bharti Hexacom specifics: Capex will also come down from FY2025 levels; the transport job in its two circles is not significant. Absolute capex will reduce without compromising growth capex. The tower sale proposal to Indus Towers has been put in abeyance at TCIL's request for a fresh PSU-compliant process.

Vittal: "We do not believe that the rollout in coming year will be accelerated. This rollout will substantially lower as we have completed our footprint today."

B2B: Shrinking to Grow

• The deliberate revenue decline: Q4 B2B revenue fell to ₹5,316 Crores sequentially, driven by a strategy to move away from commoditized, low-margin businesses. A substantial part has been shed, with a little more to shed next quarter.
• What is being shed: The wholesale part (messaging and incoming voice) is broadly declining due to price pressure and the shift from SMS to in-app notifications. The global side (cables) is beginning to look slightly better than last year.
• What is growing: Core connectivity holds a 35% market share, having added six to seven share points over the last few years. Data center is growing at 12-14%, and the digital business at 25-30%, though management is not happy with that growth rate. The order book on both core connectivity and digital is strong.
• The adjacency opportunity: Connectivity is growing at a modest pace, but adjacencies (Cloud, Cybersecurity, Managed Services, CPaaS, IoT) contribute almost 90% of overall industry growth. Customer needs are shifting to a solutions approach.
• Cloud go-to-market: The Telco-Grade Cloud, a fully sovereign and regulated offer built on Airtel's own learnings of running one of India's largest private clouds, launches in June. Q4 capex surge in Airtel Business was largely for this and additional data center investments.

Home Broadband & DTH: Two Bets, One Pivot

• Broadband momentum: 812,000 net adds this quarter, with 40-45% coming from Fixed Wireless Access (FWA). FWA is a complement to fiber, not a replacement, and is particularly strong where no wired broadband exists. Management wants to see home passes step up to well over 0.25 crore per quarter from the current 0.17 crore.
• Fiber rollout constrained by capability, not capital: The company wants to roll out fiber at a much more rapid pace but is constrained by execution capability. This will not materially impact the overall capex profile.
• IPTV launched to drive convergence: The IPTV launch enhances customer experience, drives convergence, and lowers capex on the box. Digital TV added 76,000 customers, largely aided by IPTV, achieving a record high market share despite DTH industry headwinds.
• DTH structural reset: Management has taken a "brave call" and completely eliminated subsidies on DTH boxes, a move expected to dramatically impact cash flows. They are waiting for competition to follow, arguing there is no point subsidizing in a market where the only subsidy rotates your own customer.
• DTH still has a long-tail role: Over the next five years, broadband homes may reach 7.5-8 crore, leaving a large pool of homes for linear broadcast television where DTH will still play a role, with an opportunity to grow from cable.

Vittal: "We have taken a brave call and we have done it. We are waiting for the competition to follow and we hope sense will prevail to strip those subsidies out because there is no point putting in subsidies in a market where the only subsidy is going in to rotate your own customer."

Data Centers & Digital Infrastructure

• A declared gap: Management is "not pleased" with a sub-12% market share in a rapidly growing, fragmented market. Several data centers are in the build stage, with substantial capacity to be created in the next 18 months from investments made over the last 24 months and continuing over the next eight to nine months.
• Conversations with large players underway: The company is talking to multiple very large players to accelerate data center growth, seeing an opportunity to step up the game. More will be heard in coming months.
• Capex not disclosed separately: Data center capex is rolled into overall company capex, described as in the ballpark of what they would have spent, maybe slightly higher, and on track with the programme.
• GPU-as-a-service: waiting for the right moment: Management does not want to be an early mover, arguing chipset quality, capacity, and cost are changing too rapidly. There will be enough time to get in.
• Subsea cables landed: Two cables landed during the quarter (SEA-MEWE 6 and 2Africa Pearls), strengthening the global connectivity offering.

Vittal: "We are a player with potentially less than 12% market share. We are not pleased with that."

Operational Excellence & Customer Experience

• War on waste delivered: Over ₹2,200 Crores of network opex saved in FY2025. India EBITDAaL margin expanded to 48% (around 2% improvement) despite absorbing full 5G cost and continued network expansion. Q4 consolidated EBITDAaL margin improved 1.4% to 50.7%.
• Network grid view driving churn reduction: The country has been divided into a million 1 km x 1 km grids, delivering encouraging results on churn. Visibility has now been honed to 100 meter x 100 meter grids for more precise network issue identification and structural resolution.
• Anti-SPAM tool gaining traction: The industry-first tool has identified over 2,750 crore SPAM calls to date (1,560 every second). Since its September 2024 launch, Airtel customers have seen a 16% reduction in SPAM calls. New features are coming in the coming days.
• 5G expansion on track: 25,000 new sites added in FY2025, closing the quarter with 13.5 crore 5G customers. 5G devices now represent 85% of total smartphone shipments, and Airtel is capturing a fair share of the 5G device market.
• 5G SA transition is "some distance away": Adequate capacity exists on NSA for more FWA rollouts. The first port of call for SA will likely be on fixed wireless access, then mobile, but there is no race to a deadline.

Guidance & Commitments

Key Metrics