BHARTIHEXA - Bharti Hexacom Limited Share Price

Management provided a positive outlook for Bharti Hexacom Limited during the earnings call dated February 6, 2026. They reported a consolidated revenue of approximately Rs. 54,000 crores, representing a sequential growth of 3.5%. Specifically for Bharti Hexacom, revenue was about Rs. 2,360 crores, growing 1.8% sequentially, with an EBITDAaL margin of 47.6% and EBITDAaL totaling over Rs. 1,120 crores.

Key forward-looking points mentioned include:

1. Customer Growth: The mobile customer base increased to 28.4 million with net additions of 370,000 in the quarter. Notably, smartphone customers grew by 283,000, indicating a focus on quality customer acquisitions.

2. Average Revenue Per User (ARPU): ARPU for the quarter was reported at Rs. 253, driven by a premiumization strategy aimed at enhancing customer value.

3. Broadband Expansion: Bharti Hexacom's broadband segment showed robust momentum, achieving record-high net additions of 73,000 customers, contributing to a revenue growth of over 10% sequentially.

4. Future Infrastructure Investments: Management emphasized the importance of expanding their Fixed Wireless Access (FWA) footprint and enhancing fiber infrastructure. They noted plans for significant investments to improve broadband services, aiming towards a total home penetration goal that aligns with the anticipated market growth.

5. Strategic Launches: The launch of IPTV services in Rajasthan and Northeast was mentioned as part of their convergence strategy to enhance offerings.

6. Strong Free Cash Flow Generation: Operating free cash generation was strong at Rs. 784 crores, indicative of efficient cash management relative to capital expenditures.

Overall, management expressed confidence in Bharti Hexacom's growth trajectory and re-emphasized their focus on prudent capital allocation, operational excellence, and strategic investments in growth areas.

1. Question: "In light of recent growth dynamics, what extent would you tolerate revenue growth deceleration before considering a tariff increase?"

   Answer: I acknowledge that the wireless market has indeed slowed down, averaging around 6% growth. Our strategy is to explore creative avenues for ARPU enhancement without relying solely on tariff repairs. Essential drivers remain intact"”premiumization strategies continue to yield results despite market challenges.

2. Question: "Can you provide an update on your Data Center ambitions and capex plans?"

   Answer: We anticipate increasing our Data Center capacity to about 1 gigawatt in the next three to four years, targeting a 25% market share. Investment in Data Centers is paramount, but we cannot yet provide specific capex guidance. Our focus remains firmly on long-term value creation through these investments.

3. Question: "How do you view your repayment obligations relating to AGR and spectrum, especially with Vodafone Idea's recent AGR relief?"

   Answer: We've sought clarity from the DoT regarding our AGR dues and await their response. We're exploring every option for parity as mandated by the Supreme Court, which could impact our future cash flow scenarios.

4. Question: "With improving cash flows, could a special dividend be on the table?"

   Answer: We maintain a progressive dividend policy. Our focus will be on investing in growth areas like Data Centers and Cloud services first, with any decisions on dividends evaluated accordingly. Special dividends would be discussed only once we are confident in our sustained growth trajectory.

5. Question: "What's your view on differentiated pricing strategies for 4G and 5G services?"

   Answer: While we need to revisit our pricing strategies, introducing distinct pricing between 4G and 5G might create confusion. Our emphasis will instead be on customers paying more for enhanced services, leveraging 5G's advanced capabilities while gradually reconsidering the pricing architecture.

6. Question: "What's the expected trajectory for your customer base, especially regarding 5G adoption?"

   Answer: Our 5G growth strategy is on track with over 90% of smartphone shipments being 5G-ready. While we are actively working on pricing, customer education, and enhancing our 5G network, uplink performance may also become pertinent due to increasing data demands from AI.

7. Question: "Can you clarify your approach to potential mergers or acquisitions, particularly in the Data Center space?"

   Answer: We're open to exploring inorganic growth opportunities within the Data Center domain, targeting consolidation within this fragmented market, ensuring they align with our strategic objectives, and valuing strong partnerships.

8. Question: "How are you planning to manage your growing capital needs, particularly with strong free cash flow projections?"

   Answer: Our balance sheet allows us to step up investments in Data Centers and Cloud services, which are critical growth areas. We will target prudent use of capital, seeking opportunities in adjacent markets while remaining focused on our core operations.

9. Question: "What's the estimated opportunity size for Fixed Wireless Access (FWA) within your operational areas?"

   Answer: We estimate a FWA penetration opportunity of around 30-35% of households in our states. This is based on statistical models, addressing the longstanding need for better connectivity and aligning with our broader growth strategy.

10. Question: "How do you view your capital allocation strategy moving forward, specifically regarding Hexacom?"

Answer: With Hexacom's strong balance sheet, we will not shy away from investments that drive growth, focusing on FWA and enhancing our digital service offerings. We will continuously assess market dynamics and areas requiring capital investment.