BHARTIARTL - Bharti Airtel Ltd. Share Price

In the earnings call dated May 14, 2025, the management of Bharti Airtel provided an optimistic outlook emphasizing strong performance and growth opportunities. For FY2025, consolidated revenues reached Rs.173,000 Crores, despite currency devaluation challenges in Africa. EBITDA after FLO and lease obligations grew by 21.2%, with India revenue growth at 15.3% and EBITDAaL increasing by 20.2%, achieving a margin of 48%. The company reported a solid operating free cash flow of Rs.31,400 Crores.

Key forward-looking statements included an expected decrease in FY2026 capex, which would be lower than FY2025, supporting the ongoing focus on operational efficiency. The management highlighted that the rural rollout will slow down, and they will prioritize investments in existing infrastructure. They confirmed that India's tariff structure requires further repair to ensure long-term sustainability and profitability, with bad debts standing at Rs.42,000 Crores prepaid over the past two years.

The management also noted 5G expansion, with 25,000 new sites added in FY2025, resulting in a total of 135 million 5G customers. They aim to capitalize on digital services, forecasting growth opportunities in B2B with a strong focus on Cloud and IoT. Moreover, the payment bank segment reported 96 million monthly users, with an annualized revenue run rate of Rs.2,900 Crores, reflecting a 35% year-on-year growth.

Management reiterated their commitment to ESG initiatives and technological advancements, underlining their strategic focus on premiumization of customers and integrating digital capabilities into core operations, with continued investments in AI and machine learning technologies. Overall, the management's outlook remains positive with a clear roadmap for enhancing growth and shareholder value.

Questions and Answers from the Q&A Section of Bharti Airtel's Earnings Call (May 14, 2025)

Question 1: Piyush Choudhary - HSBC
"In terms of capital allocation, would you intend to further increase stake in Airtel Africa or Indus Towers? Any minimum net debt to EBITDA threshold you'd like to maintain, and how lower can FY2026 capex be?"

Answer:
I clarified that the hike in Airtel Business capex was due to investments in Cloud and data centers. While I can't specify exactly how much lower FY2026 capex will be, it will trend down as rural rollout slows. On Africa, we see significant growth potential, so we'll consider increasing our stake if it makes sense. Indus Towers buyback plans are not currently on the table, but I assured we'll use cash flexibly to balance debt, dividends, and growth investments.

Question 2: Gaurav Malhotra - Axis Capital
"Could there be a formalization of a dividend policy? What's the traction you're seeing in fixed wireless access (FWA), and where are we with transitioning to 5G SA?"

Answer:
While we have stepped up dividends, there's no specific policy being announced; we prefer flexibility. Currently, around 40-45% of our net adds come from FWA, especially where fiber can't reach. As for 5G SA, we'll transition at the right time, focusing first on offloading 4G traffic to ensure a seamless experience. Experience is more critical than tech specs.

Question 3: Ankur Rudra - JP Morgan
"Is the mobile capex increase in Q4 due to seasonality, and how do you see the free cash flow planning, especially for AGR conversion?"

Answer:
The Q4 spike in capex wasn't worrying; it's normal for annual trends. Moving forward, capex will indeed decline, while free cash flow looks promising. Regarding AGR conversion, it's about ensuring a level playing field with the government, and we're committed to prudent financial management.

Question 4: Sanjesh Jain - ICICI Securities
"Are there more opportunities beyond smart home security for FTTH and FWA? What's your strategy to utilize AI more economically on the enterprise side?"

Answer:
We've previously ventured into home surveillance, but the focus is on broadband growth right now. As for AI, while we see its potential, we are cautious about investing heavily in GPU services at this stage; we prefer to be fast followers rather than early movers.

Question 5: Vivekanand Subbaraman - Ambit Capital
"What do you foresee as the right benchmark for capex-to-revenue in India? And can you share insights on your B2B revenue growth?"

Answer:
Analyzing capex as a percentage of revenue isn't effective at this time. We previously saw high percentages in a stressed market. Our goal is to lift revenue while managing capex carefully. Our B2B segment, primarily driven by cloud and data services, has good order growth, with certain elements experiencing declines due to market dynamics.

Question 6: Kunal Vora - BNP Paribas
"Is the entry of competitors impacting your mobile growth, especially in postpaid segments? How will DTH play a role as IPTV gains traction?"

Answer:
We added 600,000 postpaid customers this quarter and see sustained opportunities, particularly through family plans. Regarding DTH, while it faces challenges, as broadband access grows, it will remain relevant in areas without broadband access, but we are focusing on stripping subsidies to ensure profitability.

These responses encapsulate the critical discussions from the earnings call, revealing strategic insights and outlooks for Bharti Airtel.