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Mixed Results: Strong Growth Meets ARPU Dip
Bharti Airtel's latest quarterly results show a mixed performance. Strong results in its core India and Africa businesses are partly balanced by declines in traditional areas. The company aims to boost Average Revenue Per User (ARPU) and leverage digital growth, even with intense competition and challenges in older services.
Revenue Growth Driven by India Mobile, Home Services
Bharti Airtel's Q4 FY26 revenue rose 15.7% year-on-year to about ₹55,383 crore. India mobile revenue grew 8.3% with more users and smartphone adoption. Home services revenue and EBITDA jumped 37.3% and 38.2% respectively, showing strong broadband expansion. Airtel Business also saw steady growth. In contrast, Digital TV revenue and EBITDA fell 2.3% and 14.3%, reflecting a shift from traditional TV to streaming. Consolidated EBITDA grew 16.6% to ₹314.9 billion, though EBITDA margins slightly decreased quarter-on-quarter.
ARPU Stalls, Analysts Adjust Target Price
Despite a 5.0% year-on-year ARPU increase to ₹257, ARPU dipped slightly from ₹259 in Q3 FY26. This is the first sequential drop in five years, potentially signaling challenges in increasing user revenue without price hikes or more premium offerings. Management is focusing on bundled services and more postpaid users. Prabhudas Lilladher maintained its 'Buy' rating, lowering the target price to ₹2,216 from ₹2,266. The valuation includes Airtel Africa, Indus Towers, and Bharti Hexacom. Bharti Airtel's P/E ratio is around 31.4x-40.6x TTM, just below the industry average of 39.35x. Forward P/E multiples appear more attractive.
Africa Operations Shine as Key Growth Driver
Bharti Airtel Africa remains a key growth driver, with revenue up 29.5%. The segment achieved record EBITDA margins, reaching 49.3% and 50.3% in Q4. This growth is supported by strong data services (up 40.3%, 39.4% of group revenue) and a 36.3% rise in mobile money revenue. With smartphone penetration under 50% and room for data and mobile money growth, Africa is a key future growth engine, similar to India's past development.
Challenges: Digital TV Decline and ARPU Concerns
The Digital TV segment's ongoing decline weighs on overall profits and requires strategic review, as this business faces strong competition from streaming services. The slight ARPU dip raises questions about growth momentum without tariff increases, which are infrequent in India. Vodafone Idea, despite financial issues, continues network investment, adding competitive pressure. Heavy capital spending of ₹16,066 crore in Q4 FY26 on digital infrastructure and network expansion, while crucial for growth, increases costs. Bharti Airtel's market cap is about ₹11.66 Lakh Cr. Its P/E ratio, near industry averages, requires consistent performance to meet expectations.
Outlook: 5G Rollout and Digital Growth Expected
Management plans to boost ARPU by focusing on premium services and growing its postpaid subscriber base. The company is also speeding up investment in digital infrastructure and 5G network rollout. Analysts, like Prabhudas Lilladher with its 'Buy' rating, generally support Airtel's strategy and market position. The sector outlook is positive due to rising data use, 5G rollout, and government support for digital infrastructure. Bharti Airtel is well-positioned to benefit from these trends in mobile and home broadband, using its African operations for diversification.