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Strong quarter – beating estimates

Quick Pointers:

* India Mobile ARPU grew 2.3% QoQ to Rs256; net subs. add at 1.4mn in Q2FY26.

* Consol capex in Q2’FY26 stood at Rs 113.6bn, while India capex was Rs96.4bn.

Airtel delivered a strong growth, beating key parameters. Consol. EBITDA grew +35.3%/+6.2% YoY/QoQ to Rs295bn (PLe: Rs268.9bn, BBGe: Rs286.9bn), while Adj PAT came in at Rs67.9bn (Ple Rs53.8bn, BBGe Rs67.3bn, +52.7% YoY, +14.2% QoQ) led by growth in India and Africa operations. India revenue rose by +10.6% YoY & +2.9% QoQ led by sustained momentum in Mobile and Home Services, partly offset by softness in Digital and Enterprise segments. India Mobile revenue stood at Rs281.1bn, +13.2% YoY and +2.6%QoQ with EBITDA margin of 60.3% due to higher realizations and expanding customer base. ARPU improved to Rs256 (+9.8% YoY / +2.3% QoQ) with 1.4mn net adds. Home services revenue grew 30.2% YoY and 8.5% QoQ. Digital services revenue declined -0.7% YoY and -1.3% QoQ, while Enterprise services rev. declined - 6.7% YoY, but improved +4.3% QoQ. We remain optimistic on India business due to expected increase in ARPU and net subscriber base. We continue to maintain ‘Accumulate’ rating with a TP of Rs2,259 (earlier Rs2,090) based on 14x FY27/FY28E EV/EBITDA for India business and adding the value of its investments in Airtel Africa, Indus Towers and Bharti Hexacom.

Improved ARPU growth: India mobile revenue/EBITDA was Rs281.1bn (+13.2% YoY and +2.6% QoQ) and Rs169.5bn (+19.6% YoY, +.2% QoQ), led by ARPU improvement and an expanding customer base. ARPU grew to Rs256 in Q2FY26, vs Rs250/Rs233 in Q1FY26/Q2FY25 on the back of earlier tariff hike undertaken by the company. Net subscriber addition stood at 1.4mn, up from 1.2mn QoQ. Tariffs in India continue to remain amongst the lowest globally and we expect growth in ARPU on the back of tariff hikes undertaken by the company. We estimate FY26/27/28E subscribers at 374/390/406mn each along with ARPU of Rs260/272/275 respectively.

Steady Homes, Soft B2B/DTH performance: Home services revenue continued its steady growth of 30.2%/8.5% YoY/QoQ to Rs18.6bn with an EBITDA of Rs9.3bn (+29.6%/+8.7% - YoY/QoQ) and margin of 50.1% driven by increased customer base. However, ARPU declined from Rs537 in the previous quarter to Rs534. B2B revenue declined -6.7% QoQ to Rs52.7bn on account of focusing on quality revenues and discontinued low margin business, while it improved 4.3% QoQ driven by broad-based improvement across segments. EBITDA improved 8.6%/1.9% YoY/QoQ to Rs21.9bn in Q2FY26. However, EBITDA margins declined by ~100bps QoQ from 42.6% in Q1FY26 to 41.6% in Q2FY26. DTH revenue/EBITDA declined -0.7%/-13.7% YoY and -1.3%/-5.6% QoQ to Rs7.5bn/Rs3.6bn in Q2FY26. ARPU improved from Rs161 in the previous quarter to Rs163 with net decline of 341k subscribers.

Improvement in Africa performance: Africa revenues grew 34.6% YoY and 13.2% QoQ to Rs136.8bn, while EBITDA stood at Rs67.0bn (+42.1% YoY, +15.5% QoQ). Subscriber addition improved to 4.4mn vs 3.3mn in Q1FY26 and 1.2mn in Q2FY25, while ARPU improved marginally from USD2.4 in Q1FY26 to USD2.5 during the quarter.

Concall highlights: 1) AGR – Co. plans to seek a reassessment of its AGR dues following the supreme court’s recent order for Vi and will soon approach the govt, 2) Indus – Increased stake by 5% as management views it as an undervalued, highdividend paying asset providing critical infrastructure support to the company; any further stake increase remains speculative. 3) Mobile segment: current base of 5.1 mn smartphone data users; net adds of 1.4 mn (Postpaid – 1mn, 68% of total adds), ARPU improved due to mix improvement and one extra day to Rs256, simplified roaming plans boosted international out-roamers by 30%. 5G – customer base of 167 mn users. 4) Broadband: Net adds of 0.95 mln with strong FWA (Fixed Wireless Access) traction, benefiting from rising smart TV adoption and evolving content habits. Industry expected to grow to 100 mln homes in medium -term; Airtel investing aggressively to capture this growth. 5) Digital - lost 340,000 customers due to impact of seasonality and structural changes on the set-top-box subsidy at the start of the year. 6) Data Center (Nxtra)- partnering with Google to build a data center in Vishakhapatnam; targeting >1 GW capacity with Rs15bn annual investment.

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