On capex, last year India wireless was about $2.5 billion; with the next technology refresh cycle a few years away, will wireless capex remain range-bound for the next 3-5 years? On non-wireless (FTTH, FWA, Cloud), do these capex lines need to step up before they come down?
Q1 capex was low; averaging Q4-Q1 reflects the run rate. Radio capex is trending down but transport/fiber capex continues to support site connectivity and core network upgrades. B2B, data centers and homes continue to receive their fair share of capex. Cloud is modular - two regions (Delhi and Chennai) are live with sufficient headroom and ability to bring up capacity in 3-6 months when needed.
On site additions, Q1 site adds are at a five-year low and we had a rural distribution-led market share win in recent years. Will the distribution-led benefit taper as expansion slows?
There is still significant opportunity because many of the 45,000 sites rolled out have low utilization; there is sweating to be done as well as redeployment of mistakes on the ground. ARPU drivers also remain intact, with international roaming and postpaid penetration low (postpaid only 7-7.5% of base; 90 million credit-approved users; 70-75 million feature phones to upgrade).
On the Perplexity partnership, how do the economics work? On the Bajaj Finance partnership, any milestones or goal posts you can share?
Bharti is the first port of call for any company seeking distribution given platform scale and quality customer base; Perplexity economics cannot be disclosed but cost is marginal while value to customers is high. Finance partnerships are scaling well with EMI cards lit up across digital and store channels; July growth was 15% over June with continued traction.
B2B segment seems to have far more emphasis this call - is there a strategic pivot toward B2B versus B2C? Are there any milestones for B2B EBITDA share over a 3-5 year view?
It is not a pivot but more action to retool the B2B portfolio to capture the very large unaddressed Cloud and security spaces beyond connectivity, CPaaS and IoT. Disclosed B2B contribution is understated as postpaid B2B is in B2C. No revenue number is being put out, but immediate-term goals are a credible roster of Cloud customers and software wins beyond Singtel and Globe (with 30-40 telco conversations underway).
Hexacom has Rs. 2,800 Crores debt and Rs. 800 Crores quarterly cash flow generation - effectively under four quarters of debt. With limited adjacency opportunity unlike Airtel, should Hexacom move to a full payout?
Dividend has already been increased this year and there will be a directional increase. External debt is very small; the bulk is deferred payment liabilities to the department which are not exciting to repay early. Future investments may include site additions and 5G deployment, so it is not entirely out of the woods, but the Board will direct payout increases based on future liability assessment.
Any numbers you can share in terms of Airtel Black penetration?
Specific numbers are not shared because they can fluctuate based on various factors and need explanation. Hexacom prefers to communicate generic strategic direction rather than point-numbers, with clarification provided only on items that warrant it (such as the opex commentary).
On free cash flow generation of India business excluding towers, with AGR payments starting March, what are expectations on AGR relief? On shareholder payouts, how are you thinking given moderation in radio capex and strong free cash flow?
On AGR, Bharti has written to the government seeking the same relief as other telcos and will abide by the decision; Bharti has the room to make whatever payments are required. On shareholder payouts, dividends will continue to increase as leverage comes down, while opportunities will be evaluated in adjacencies including Cloud, security and data centers.
On Airtel Cloud and software solutions, how should we think about potential in India and abroad, size of contracts with Singtel/Globe/Airtel Africa, and margin profile and capex required as the business scales? Second question on home broadband - one peer is using UBR; what is Bharti's view and would Bharti offer such service?
Cloud market is large at ~Rs. 60,000 Crores and growing rapidly; software is an even bigger ocean given global telco opportunity, with multi-million dollar five-year licensing deals, very good margins and barely any capex. The challenge is ratcheting up go-to-market capabilities. On UBR (Wi-Fi band), it suffers from interference in dense urban areas and is only suitable for low-density fixed broadband; FWA already monetizes the existing 5G investment with no incremental radio capex, but fiber remains the best home connectivity medium and Bharti is accelerating fiber home passes.
On Airtel Business, what are the key drivers of underlying growth and what steady-state growth and margin should we expect medium-term? Second, on capex - global telcos run 13-16% capex/sales but Airtel is moving from 30% toward 20%; what is the steady-state capex/sales for wireless versus non-wireless?
Airtel Business has five segments: connectivity (good margins, 4-5% market growth), IoT (~60% market share, ~50 million customer base, very fast-growing, good margins), wholesale/messaging (margins under pressure due to OTT shift), security (low capex via partnerships), and Cloud (good margins, modular capex). On capex, peak years of Rs. 30,000+ Crores happened when revenues were lower; capex/revenue is the right lens and revenue growth from ARPU, volume and tariff repair will help; major new radio capex cycles are not expected, with capex going into new growth areas.
Followup on enterprise business - on a broad-based basis, are we seeing competitive intensity stable, increasing, or decreasing across the board?
It is a mixed bag - connectivity has 4-5 big players plus newer entrants; messaging rides on telco networks but has many aggregators; Cloud has public cloud players plus a few Indian domestic players; IoT is largely just telcos; security is crowded but requires capability, credibility and trust.
On FWA, market share is 18%. How do you see this changing in Bharti's favor over the next few years and what is being done if we look at FTTH including FWA as one segment?
Bharti looks at FTTH and FWA as one Wi-Fi segment and prioritizes fiber where available. Momentum is strong with 939,000 net adds and July tracking better than June. Focus is to reduce churn through better transport hygiene and infrastructure, and Bharti measures market share via OTT-platform light-up data in addition to TRAI-reported numbers, with Bharti happy with progress.
Capex intensity in the home segment was around 85% this quarter - what does the capex constitute, the modem/CPE at the customer site?
Capex in homes is primarily towards CPEs (both wired and wireless FWA) plus FTTH fiber rollout, with both home FWA CPEs and the wireline/FTTH being bolstered together. There are two parts of fiber - common fiber backbone and dedicated homes fiber - the homes fiber sits in the home capex bucket.
On capital allocation, India at 1.3x net debt/EBITDA and Africa under 1x - how should we look at allocation across M&A, distribution to shareholders, and anything else?
Dividend will be stepped up over the years (already playing out). M&A focus is on adjacencies (B2B areas, data centers) where market opportunity is large. Multiple options have been considered but none have fructified to date; Bharti remains clear that opportunities around adjacencies are the priority.
Extending the capital allocation question to portfolio - with three listed subsidiaries (Africa, Hexacom, Indus), upcoming IPOs (Payments Bank, Money), private investors in Nxtra, and Xtelify, how should investors think about value unlocking by 2028-2030? Second, on tariffs - how much more repair is needed and how is Bharti addressing low tariff dispersion?
On tariffs, India is at the bottom of ARPU and rate-per-GB globally including versus lower per-capita-income markets, and the architecture is skewed - entry-level packs already give substantial data/calling so users have no reason to upgrade; an Indonesia-style architecture would lift ARPU substantially. Xtelify was set up for focus and credibility, not value unlock; the anchor customer is Airtel India and increasingly Airtel Africa.
Followup from Harjeet Kohli on the three-to-four-year view for subsidiaries - infrastructure, financial services, and minority stakes in Axiata.
Data centers can grow 3x in topline and EBITDA over 2-3 years with possible listing later; Towers (Indus) is already listed and could become a trust/equity hybrid in future. Fiber InvIT is possible but not necessary. Airtel Money in Africa generates teen-multiple EV/EBITDA and has ~$0.5 billion EBITDA growing 30%+; IPO could be 3-9 quarters away; Payments Bank must list within 2-3 years per RBI. Axiata stakes (28% Bangladesh, 11% Sri Lanka via Dialog) will be monetized over time.
On Bharti Hexacom, why did roaming charges drop - is this seasonality (more tourists in Rajasthan in H2) or something else?
Roaming is seasonal and there were unfortunate incidents in Q1 that brought travel down before it picked up later (a travel aggregator CFO confirmed this). Roaming is largely a pass-through so EBITDA was not impacted; intrinsic ARPU excluding roaming is Rs. 246. The Q1 movement was larger than expected but offset through access charges.
On Hexacom cost lines - employee costs dropped sharply and SG&A jumped sharply; what explains these two line items?
Employee cost reflected reversal of year-end provisions made in the prior quarter. SG&A growth includes USOF tower subsidy provisions which were stuck on stage gates; with department clarification, a lot of reversal flowed through. Reported opex growth was 7-8% but underlying growth was much lower at 2.5-3%.
Surprised by the lack of ARPU questions on the Bharti call - assuming no industry tariff increase, how much more can Hexacom expand ARPU through mix levers (postpaid, data, international, etc.)?
There has been no SIM consolidation or customer drop in absence of headline tariff hikes, indicating affordability is present for marginal increases. ARPU growth happens via contextual upsell - example, offering a Rs. 19 daily 1GB top-up at the moment a customer hits 90% of their daily limit. As affordability rises, contextual ancillary revenue per connection will grow even without headline tariff change.
On FTTH versus FWA mix in Hexacom's more rural circles, does it make sense to remain on FWA longer than Airtel? How big can FWA scale? Second, why is Hexacom's mobile data usage so much higher than industry?
Hexacom's higher data consumption (~29 GB/customer/month) reflects lower Wi-Fi penetration outside urban areas, since people don't have access to Wi-Fi at work. On FWA-FTTH mix, FWA will likely have a higher share than the rest of the country in 5 years, but fiber will continue to be rolled out wherever possible (NESA is culturally evolved with strong fiber extraction prospects, e.g., Shillong).
Lease/infrastructure costs (gap between EBITDA and EBITDAaL) have grown at 15% CAGR / Rs. 600 Crores over the last three years. With more rural rollout planned, how should we think about these costs and incremental cash EBITDAaL margin?
The bulk of the rollout-related cost increase between EBITDA and EBITDAaL has happened. Going forward, the only additions will be agreed yearly tower-company increases plus loading payments for additional 5G radios. The gap will be more gradual with no major step-up expected ahead.
Outlook for Hexacom capex intensity for FY26 and beyond? Second, how is Airtel Black adoption tracking in these circles?
Capex will marginally unwind on a yearly basis (looking at full year given monsoon impacts) since the rural acceleration site rollout has largely happened. Airtel Black with IPTV is seeing strong traction - the dish is no longer needed, weather disruption is eliminated, and OTT/linear content is converged on broadband; Rajasthan adoption has caught up with national levels in recent weeks.
On digital services like Perplexity and Google 100GB storage - is the value retention, customer insights, or eventual monetization through segmentation to higher ARPU customers?
Hexacom's mantra is to deal with quality customers and offer them best experiences; Perplexity and Google Cloud were brought in so customers feel Bharti delivers more than mobility. Hexacom does not make money on these third-party IPs (only commission if charged), and does not segment to give them only to certain customers - it is about exposing customers to new-age experiences for one year, after which they decide whether to commercially continue.
On tower additions, there seems to be a disconnect between Airtel's commentary (largely done with expansion) and Indus Towers (still expecting strong additions). How to reconcile?
Indus serves four-five customers and Hexacom is one of the smaller ones; other operators are also rolling out per media reports. Hexacom will continue some rollouts but not zero; the Q1 drop seen by some was relocation/timing mismatch. Airtel India rolls out concentrated and prioritized towers based on economic, customer-acquisition and experience reasons rather than uniform sprinkling, and Hexacom evaluates independently.