Concall — clean across the call.

On capital allocation - dividend payout is still less than 40% of free cash flow generation. How are you thinking about progressive payouts in steady state and what other assets outside India might you explore?

Free cash flow generation has increased and that is why we have stepped up with a progressive dividend policy. As far as capital allocation is concerned, the first and primary port of call is to really invest in the core business - core in India, Africa and Indus Towers. The climb in stake in Africa was predicated on picking up a greater stake in a very valuable asset. The second port of call is to continue to deleverage. The third port of call is to invest in adjacencies - data centers (we are only at about 10% to 12% share, ambition is to get to a gigawatt), financial services (NBFC announced after experiments, we believe we have a genuine moat) and cloud (25 deals so far, this could be a large opportunity especially in a new geopolitical context where workloads need sovereign requirement). All of these will require capital. As of now, there is nothing to talk about in terms of additional capital being needed in any other area.

Given that whatever you listed is all India assets and the large Africa transaction is announced, is it safe to assume that for the foreseeable future there are no plans for further capital deployment in non-India assets?

For now, yes, absolutely. We will continue to look at bolt-on acquisitions in spaces we have already talked about - towers, cloud, cybersecurity, in B2B specifically. But if there is anything going outside, at this point in time, there is nothing to talk about.

On ARPU - while growth has been weak, you are now generating decent returns on capital. Is it even realistic to assume meaningful tariff hikes in the foreseeable future? And without tariff hikes, shouldn't growth only decelerate?

Fundamentally, my belief is that the price architecture in this country is broken. At about Rs.340 to Rs.350, you are capped out because you are running unlimited data plans. Nowhere in the world do you see this capping out at unlimited data at these levels. In the US these kind of plans begin at $60 to $70; in Europe at about euro 35 or pound 30 to 35. So the architecture of pricing fundamentally is broken and needs to be repaired. At lower entry levels, the price is at Rs.199 - taking up prices on those packs is something we will need to do with caution, but if the allowances and the architecture were to change - moving from small, medium, large and extra large with different amounts of allowance - that allows a natural pathway to upgradation. Given the stratification in this country, ARPU will only go up.

You mentioned ARPU coming a bit lighter than expected. As you think about FY2027, with international roaming headwinds and smartphone shipment drops, do you think there will be additional headwind leading to lower organic ARPU expansion absent tariff increases?

We have seen some bit of softening of shipments of handsets and prices going up, so we have not yet seen any impact but we cannot rule it out. Having said that, the organic ARPU levers - led by a much bigger play in postpaid as well as getting customers to their best fit plans, upgrading within tiers driven by consumption - still give us good headroom for continuing ARPU growth for many quarters to come. So it is a combination of both. As Gopal said, the pricing architecture eventually is the biggest unlock, but the feature phone to smartphone space needs to be watched because handset prices have gone up very sharply in the last few weeks.

On capex - several demands on capital across new initiatives, financial services and perhaps 5G densification. Could you talk about capex plans for the coming year and how this changes versus prior years?

The first and primary port of call for any capital allocation will be our core business. We have no right to play in any adjacencies unless our core is vibrant. Within the core, radio capex is moderating - in Africa it is growing but in India moderating. The core capex, which is a smaller component, is moderated. Transport capex - we are going to double down and do more. We are focused on building in the next 18 to 24 months - 56 world class edge data centers. Data centers, home business, cloud (modular business in terms of servers and compute, goes into existing data centers - three cloud regions) will all be focus areas. Financial services will require some investment. While we do not give guidance typically, our sense is that we will be in the ballpark of this year, give or take a little bit.

On return on capital employed - today on a consolidated basis you are at about 19%, can you articulate any targets on a two to three year basis? And on Nxtra, could you articulate the business model - tenancy or GPUs? And touch on the partnership with Google.

On return on capital, I will dodge the bullet of what our targets are, I do not think we give those targets out. On the core business given the scale that we have and obsession to strip out waste, we hope to continue to see operating leverage as we get growth. On the Nxtra side, the model is really around tenancy - this is a colocation model. Specifically with Google, they are building a very large AI data center in Visakhapatnam and we are building it for them - a colocation-led project. We are currently not doing GPU as a service. The GPUs that we bought for ourselves a few hundred GPUs - the efficiency is 10x of what GPUs were two-and-a-half years ago and they are also cheaper. Our data centers are being built with latest technologies in terms of cooling capabilities, power efficiency and standard toolkit on the build out, so it is fungible across different customers.

On wireless ARPU - 5% organic growth year-on-year, focus on accelerating ARPU. In absence of tariff hikes, should we expect further acceleration? And on wireless capex - at a decade low at around 16% of sales. Are we close to the bottom?

On the ARPU, we touched upon this briefly - we see substantial head rooms. Two parts to it: one is correcting the pricing architecture going forward, which as and when it happens will happen. Within the current construct, levers of postpaid penetration within our base which needs a much larger unlock, international roaming, and upgrades within the consumption baskets of customers and data they are consuming. We continue to be very optimistic and this will be our largest growth lever as well.

On wireless capex - we have hit a decade low at around 16% of sales. Are we close to the bottom or should we expect further moderation before 6G capex kicks in?

Coming to the capex on wireless - 16% is a derived number. As Gopal said, the core would be funded completely. It has moderated significantly - it is one of the lowest as percentage of sales, also in absolute terms it is very low. But if tomorrow we need to do higher 5G densification, we will not shy away. We are not chasing a target but we will be optimal and prudent in deploying whatever is required because that is the biggest of the core businesses.

On homes ARPU - while impressive adds, ARPU has been decelerating, should we expect this trend to continue given we are in land grab phase?

On homes, the new additions in the industry have happened at a slightly lower ARPU compared to the traditional ARPU but this is plateauing out. Some of our quarter-on-quarter ARPUs are kind of bottoming out, which trend we are beginning to see in the last two quarters. Gopal added: there are two ways to look at ARPU - new customers and existing customers. The acquisition ARPU is not declining at all over many quarters. The real challenge here in homes is to step up penetration and grab as much share. This is a business that is very profitable over a period of time because the churn and customer lifetime value of a home tends to be very low, and the moment you drive convergence (content plus mobility), the lifetime value increases even more. Our metric is to expand the base.

Mr. Mittal - now that the Africa stake sale is executed and promoter stake has gone up, with the stated objective of equal stake with Singtel, do you continue to view that only Bharti Telecom will own Bharti Airtel or could ICIL also own along with Bharti Telecom?

The belief remains that we must have everything through one Company - Bharti Telecom, which historically has been the founding promoter and had almost always a controlling shareholding of 51%. My own wish is that in the next decade, as I come to a point where I hand over the reins to the next generation, Bharti Telecom should get back to controlling shareholding - 51% or just over 50%. That is 10% more to go. Singtel had about 7% direct stake and about 6% to equalize. With this transaction, the gap comes down to 3.6%. Over the next three to four years, less than 1% a year, gets Singtel onto the equalization path. Then during this period of effort, depending on how well the management team delivers cash flows, more dividends and more buybacks, the idea would be to keep using that twin lever to get BTL above the 50% stake. If I could do it today, honestly, I will do my transfer to BTL now but BTL needs that little bit more room and cash.

On enterprise business - order book has grown 17%, how should we see growth rate for FY2027 and will new business come with better ROCE? And on adjacencies - widening market share gap between us and Jio in homes, we are using fiber while they use FWA. How should we see our strategy of heavily focused on fiber versus FWA?

On B2B - the business comprises a portfolio. Messaging is commoditized, flattish to declining due to OTT platforms. Connectivity grows at low single digits industry-wide but we have been growing faster gaining share. Data centers we have spoken about. Digital businesses - CPaaS, security and cloud. If we have to step up growth, there will be some margin pressures because of mix. Our effort has to be to grow the topline faster and grow absolute EBITDA faster. On home broadband - rising prices of chipsets and memory, particularly on fixed wireless access. A year ago the cost to connect to home was more or less the same as fiber. That has fundamentally changed in the last three to four months. The fixed wireless access has now become very much more expensive. So we have pivoted the whole company back to a dramatic obsession on fiber. Digital tools have been rolled out to minimize leakage of installing FWA where fiber is available, that has almost come to zero now. Triggered in April.

Bookkeeping question - the EPS translation from EBITDA has been weaker. Interest and finance cost has been quite sticky at Rs.4000 Crores while our net debt keeps coming down. What is stopping finance cost from falling in the same pattern as net debt?

There are two parts - consolidated and India. In consolidated, there has been a bit of one-off in Africa which will unwind. In India, a large part of debt reduction actually happened towards the end of the quarter. The money of the rights also came in around end of mid of March, the payment of the AGR dues happened on the last day. So there is reduction and you will see reduction going forth.

Mr. Mittal, you shared aspirations like BTL stake going to 51% and 800 million subscriber target. With the new bet in lending, what are other growth areas that could be growth engines for the group in the next decade?

Airtel and India as a combination offers a once in a lifetime opportunity with a billion and a half people - young, hungry for more services. Going into Africa 15 years back was a very forward looking visionary move - Africa is where India was 10 to 12 years back, another billion plus young people. We have been very disciplined - we have not gone into areas that do not meet with the core of business. We are looking for a very small controlled financial services business at the moment - small ticket lending to our own customer base. The total amount allocated in the next five years - we have stated Rs. 20,000 Crores, of which Rs.14,000 Crores has to come from Airtel. It looks like it will be probably significantly less than that. After one to one-and-a-half years if we do not show demonstrable proof of success we will not throw money. This Africa exchange of shares is akin to acquiring another Company of large size - a $3 billion transaction. UK regulations allow you to go up to 90%. With this move we have gone up to now 78%. Ambition for Airtel should be to go up to 90% one day. We will get to 800 million customers between India and Africa - 500 million here and 300 million in Africa is a dream which is visible.

Extending on pricing architecture - what will it really take for the industry to move to usage based pricing? There is still an unlimited offer going on after 5G rollout. Is there a path to moving to metered data or is it just an aspiration still?

As of now, it is a competitive market. We will not do anything that will hurt our business. I have just mentioned that this architecture does not make sense. Let us see how this plays out over time.

Bharti Hexacom - comparison of mobile growth vs Airtel: Hexacom 8.3% revenue vs Airtel 12%; EBITDA 15% vs 17%. We thought we had levers to grow faster than Airtel given under-penetration. What changed and should this accelerate next year? Second - on cash flow utilization, should we see sharper payout ratio in Hexacom?

Our impression that Hexacom is underpenetrated in the two circles has borne out well. The ARPU gap is much closer, we have been able to close the ARPU gap. The postpaid penetration and IR bit will be a little differential. The smartphone upgrade will see a bit of stress and hence we might lag a little bit. We will be launching some new ways of driving convergence. It is competitive, not lagging the market. On utilization of cash flow - some of the growth engines that the parent has are not available to Hexacom. We have increased the dividend payout significantly and committed to progressively increasing dividend payout. We have moved from 3 to 4 to 10 to 18.

On FWA - considering all issues around chips, do you see home growth decelerate until this chip situation gets resolved for Hexacom?

How do you look at FWA? The way we look at FWA is what is the cost of a connected home. In difficult terrains with fiber, cost of connecting a home is much higher. If you are in Maharashtra it is much easier to lay fiber, or in Tamil Nadu. If you go to NESA, FWA creates an opportunity to go around and connect more homes which would be difficult with fiber. Whilst prices will go up and we will pivot to fiber wherever we can, we are not going to give up on the opportunity of acquiring more homes through FWA or fiber in Bharti Hexacom.

On ARPU - we had a fairly good growth in the base and postpaid addition; however, ARPU growth has not happened. You partly explained international roaming impact - is that the only factor or there is something else playing out?

Yes, there is something else which played out - the whole eat as much as you can on 5G packs, as more adoption happens that will clearly create a headwind. The ARPU we give is the average for the quarter. There is no red flags per se on ARPU. The headwinds are similar to any other player - lower international roaming, handset prices slightly going up putting pressure on 2G to 4G upgrades, and the fact that we now have a pack which destroys the whole price ladder.

There has been good acquisition in homes subscriber addition. Should we expect the pace of addition to continue or could there be some headwind?

I cannot give you forward-looking statements. We do not give guidance but the objective is to continue to grow. There is no reason for me in earnings call to flag off that there is a concern. It is a competitive market. There is no fundamental reason why we are letting up on our effort to grow homes. Whilst chipset prices have gone up we are not relenting on our effort on acquisition. We are pivoting - if fiber is available we would like to go fiber first. As mentioned earlier in difficult terrain the pivoting in these two geographies would be a little less than some other geographies.

What does the regulatory charge this quarter pertain to - is there any new demand from the government which has affected you this quarter?

As a prudent organization, we look at all the basket of charges and we follow a very prudent accounting policy. There is a regular cadence guided by the auditors, Board and audit committee. We have felt that there is something we should in prudence take provision for, which has been disclosed. There is nothing new, exceptional or unearthly which has come. It is just interpretation of issues as time progresses. The interpretation of an existing thing has been changed and accordingly it has been provided for.