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Slightly weaker 2Q (vs. Airtel) as wireless subscriber base declines and network opex remains elevated

* Overall 2Q reported revenue of INR23.2b (+11% YoY, vs. our est. INR23b) grew 2.4% QoQ. Excluding ICR revenue from inroamers, customer revenue grew 2% QoQ to ~INR22b.

* Overall 2Q EBITDA grew ~4% QoQ to INR12.1b (+21% YoY) but was 2% below our estimate due to higher network opex (+11% YoY, 9% ahead).

* Reported EBITDA margin expanded ~85bp QoQ to 52.1% (+435bp YoY, 140bp below our estimate), and remained significantly below 58.5% (up 40bp QoQ) for Bharti’s India operations (ex-Indus).

* Depreciation and amortization rose 5% QoQ to INR5.5b (3% higher), while net finance cost fell ~16% QoQ (-29% YoY) to INR0.9b (11% lower).

* Reported PAT came in at INR4.2b (up 8% QoQ, 66% YoY), 5% below our estimate due to lower EBITDA and higher D&A.

Capex picks up, FCF moderates QoQ; net debt broadly stable QoQ

* After low capex in 1Q, capex surged 62% QoQ to INR3.7b (still -18% YoY).

* Hexacom’s overall net debt (ex-leases) was broadly stable QoQ at INR28.2b (vs. INR28.1b QoQ). Including the impact of leases, Hexacom’s consolidated net debt stood at INR63b (vs. INR63.1b QoQ).

* Net debt (ex-leases)-to-EBITDAaL declined to 0.64x (vs. 0.65x QoQ, 1.32x for Bharti’s India SA business).

* Hexacom’s consolidated free cash flow (after leases and interest payments) moderated QoQ to INR4.4b (vs. INR8.9b QoQ), due to higher capex and actual interest outgo.

Wireless: Subscriber base declines; elevated network opex leads to weaker performance vs. Airtel

* Wireless ARPU grew 1.8% QoQ (vs. 2.3% QoQ for Airtel) to INR251 (10% YoY, vs. our est. of INR250), driven by subscriber mix improvements and one extra day QoQ.

* Paying subscriber base declined by 110k (vs. 17k net adds QoQ and our est. 140k net adds). As a result, its share of Airtel’s paying subs fell ~10bp QoQ to ~7.6%.

* However, the subscriber mix continued to improve as Hexacom added 193k smartphones net adds QoQ. Hexacom’s share of Bharti’s 4G/5G net adds moderated to ~3.2% (vs. 7.2% QoQ and ~7.7% share of Airtel’s 4G subscriber base). The share of data subs in Hexacom’s mix improved ~95bp QoQ to 78.6%, but remained below Airtel’s at 79.3% (+80bp QoQ).

* Reported wireless revenue grew 2.1% QoQ (vs. ~3% QoQ for RJio, including FTTH and Airtel’s India wireless) to INR22.4b (+10% YoY, vs. our est. INR22.3b) due to weaker net adds.

* Customer revenue grew ~1.7% QoQ (vs. ~3% QoQ for RJio, including FTTH and Airtel’s India wireless) to INR21.1b (+13% YoY, in line).

* Wireless EBITDA at INR12.3b (+20% YoY, 2% below our estimate) was up ~3% QoQ (vs. 3.5%/4.2% QoQ RJio, including FTTH/Airtel) due to high network opex.

* Wireless EBITDA margins improved ~40bp QoQ to 54.8% (+450bp YoY, vs. +20bp QoQ to 54.2% for RJio), vs. 90bp QoQ improvement for Airtel’s India wireless business to 60.3%.

* Incremental margins were robust at ~73% (vs. 60%/94% for RJio/Bharti).

* Similar to Bharti’s India wireless segment, Hexacom’s wireless capex also surged ~94% QoQ to INR2.4b (though down 37% YoY).

Homes and Offices: Net subscriber additions remain elevated; margins contract (vs. expansion for Bharti)

* Homes BB subs base reached ~0.56m (+60% YoY) as net adds accelerated to 60k (vs. 54k QoQ, in line). Hexacom accounted for ~6.1% of Airtel’s Homes BB net adds (vs. ~4.7% share in Airtel’s Homes BB subscriber base).

* Reported Homes ARPU was stable QoQ at INR484/month (-5% YoY, vs. ~1% QoQ dip for Airtel to INR534/month).

* Homes and Offices revenue was up ~12% QoQ at INR0.88b (+47% YoY, 2% above) and was better than ~9% QoQ growth for Airtel.

* Homes and Offices EBITDA at INR0.3b (8% below) was up ~19% QoQ (+58% YoY, vs. 9% QoQ growth for Airtel), as margins expanded ~200bp QoQ to 33.7% (+235bp YoY). Comparatively, Airtel’s Home BB margins were largely stable QoQ at 50.1%.

* Capex in Homes Business rose ~23% QoQ to INR1.25b (up ~2x YoY).

Other highlights: Data engagement remains ahead of Airtel’s India wireless business

* Data volume for Hexacom rose 6% QoQ (vs. 8% QoQ in 1QFY26, +7% QoQ RJio including FTTH and Airtel India).

* Data usage per sub improved to 30.7GB/month (vs. 29.4GB QoQ, 38.8GB reported by RJio including FTTH and higher than 28.3GB for Airtel on pan-India basis).

* Voice usage on network remained flat QoQ (-2% QoQ in 1QFY26, +1% QoQ for RJio and Airtel), with minute of usage (MoU) per subscriber broadly stable at 1,111mins/month (vs. 1,107mins QoQ, ~996mins for RJio, and slightly lower vs. 1,145mins for Airtel on pan-India basis).

* Hexacom’s tower count increased by 39 QoQ (vs. reduction by 7 in 1QFY26) to 26.5k towers. Revenue per site grew ~2% QoQ to INR281k/month (+8% YoY, vs. +2% QoQ to INR273k for Airtel).

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