Airtel Shows Stronger Operating Leverage Than Jio in Q2; ARPU Growth Driven by Premium Users

Bharti Airtel demonstrated superior operating leverage in Q2 compared to Reliance Jio, meaning its revenue growth translated more efficiently into profit. Analysts attribute this to Airtel's focus on premium users and strong operational discipline, leading to a 94% incremental EBITDA margin for its mobile business, significantly higher than Jio's 60%. Airtel's Average Revenue Per User (ARPU) rose to ₹256, driven by premiumization and a better subscriber mix, including postpaid and 4G/5G upgrades. While Jio added more subscribers (8.3 million vs. Airtel's 1.4 million), Airtel's India EBITDA margin expanded to 60%, outperforming Jio's 56.1%. Jio is increasingly shifting its focus towards home broadband and Fixed Wireless Access (FWA).

Impact: This performance divergence is critical for investors, highlighting strategic strengths and competitive positioning. Airtel's profitability focus and ARPU growth suggest potential for sustained shareholder value, whereas Jio's subscriber acquisition pace indicates its market expansion strategy. Investors will monitor how these strategies impact market share and profitability going forward. Impact Rating: 8/10

Difficult terms: Operating Leverage: How changes in sales affect profit due to fixed costs. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of operational profit. ARPU: Average Revenue Per User; the average income generated per subscriber. Premiumization: Strategy to move customers towards higher-value, more profitable services. Opex: Operating Expenses; ongoing costs of running a business. FWA: Fixed Wireless Access; wireless broadband internet service for fixed locations.