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Monetization engine kicks in

Bharti Airtel’s (BHARTI IN) disciplined investment in network quality – from dense fiber and submarine cable capacity to robust backhaul infrastructure – has preserved its average revenue per user (ARPU)-premium through periods of hyper competition, and it is now the primary driver of stronger cash generation. The company is executing the same playbook in its African business operations, where scale, improved network quality, and monetization levers are starting to translate into superior revenue and margin expansion. BHARTI’s extensive fiber and submarine cable network create a structural moat that is hard for competitors to replicate, with emerging optionality from data center capex and enterprise services provides additional upside for monetization. We expect India business top-line CAGR of 9% and an EBITDA CAGR of 14% during FY26-29E with an Africa business top-line CAGR of 19% and a 22% EBITDA CAGR during the same period. We initiate on BHARTI with a Buy rating and a TP of INR 2,427 based on 10x FY28E EV/EBITDA

Structural monetization opportunity:

We expect an ARPU CAGR of ~7% during FY26–29E, driven by tariff hikes and premiumization. Postpaid upgrade, 2G-to-4G & 5G migration, and bundled offerings will continue to support monetization. Rapid 5G adoption and continued secular increase in data use coupled the lowest telecom tariff globally leaves a strong room for tariff normalization, which would strengthen pricing power and support long-term ARPU growth. A quasi-duopoly market and Airtel’s premium circle exposure will likely sustain industry-leading ARPU and profitability.

Orbit shift towards cashflow compounding:

BHARTI has come out of its 15-year phase of heavy investments and hyper-competition (17 firms). It has transformed into a strong and higher free cashflow-generating company in a market that has turned quasi-duopoly. 5G rollout is largely complete and capex intensity has been moderating, driving deleveraging. ARPU improvement of 7% and other growth drivers would drive margin expansion by 276bp and superior ROCE of 33% by FY29E.

Airtel Africa to benefit from growth levers:

The Africa’s young demographics and low digital penetration is driving multi-year subscriber growth as well as internet use across mobile, home broadband, and enterprise. With moderating capex, improving margin, and rising free cashflow of USD 3.7bn by FY29E, we believe Airtel Africa is transitioning into a stronger cash-generating business. Planned IPO of fintech platform, Airtel Money, would unlock sizeable hidden value by separating the fintech business from the core telecom valuation multiple

Initiate with a Buy rating and a TP of INR 2,427:

We expect India business subscriber CAGR of 1% and an ARPU CAGR of 7% during FY26-29E. The Africa business subscriber base is set to clock in a CAGR of 9% while ARPU at~4% during FY26-29E . Progressive dividend policy and structural return ratio expansion coupled with earnings compounding makes BHARTI a potential candidate for valuation re-rating. We initiate coverage with a Buy rating and a TP of INR 2,427 based on 10x FY28E EV/EBITDA.

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