Bharti Airtel Posts Strong ARPU Growth in Q2FY26, Boosted by User Upgrades and Strategic Investments

Bharti Airtel has announced impressive financial results for the September quarter (Q2FY26), demonstrating a significant 2.4% sequential rise in its Average Revenue Per User (ARPU) to ₹256. This growth outpaced Reliance Jio's 1.2% increase, which saw its ARPU reach ₹211.4.

Two primary factors are driving Airtel's faster ARPU growth. Firstly, its base of lower-revenue 2G subscribers decreased by 4.5% quarter-on-quarter, as these users transition to higher-priced 4G and 5G plans that typically involve greater data consumption. Secondly, Airtel continues to benefit from a larger post-paid customer base compared to Jio. Its post-paid subscriber numbers grew 3.6% sequentially to 27.52 million, and post-paid users generally contribute more to ARPU.

The company sees potential for continued ARPU growth, as 2G users still constitute 21% of its total mobile base, and its post-paid segment has expanded by 12% in the past year.

Beyond subscriber metrics, Airtel's capital allocation strategy is noteworthy. The board has approved acquiring an additional 5% stake in Indus Towers Ltd, a move that could involve approximately ₹5,000 crore. While this increases Airtel's control, it won't alter consolidated financials significantly as Indus is already a subsidiary. Airtel views Indus as a strong dividend-paying asset, despite Indus's recent announcement to expand into Africa's tower business. Airtel is also considering increasing its stake in Airtel Africa Plc.

Furthermore, Airtel intends to approach the government for a recalculation of its Adjusted Gross Revenue (AGR) related dues, which currently stand at around ₹40,000 crore, following a Supreme Court ruling that favored Vodafone Idea. However, it is noted that Vodafone Idea's situation might not set a precedent for Airtel.

Investors are also anticipating Reliance Jio's upcoming Initial Public Offering (IPO), which could influence Airtel's market valuation. Airtel's stock has already gained 34% in 2025, outperforming the Nifty 50, and is considered reasonably valued at an EV/Ebitda multiple of 10 times.

Impact This news is highly significant for the Indian stock market, particularly the telecom sector. Airtel's strong ARPU growth indicates robust operational performance and strategic execution, which can boost investor confidence. Strategic investments in tower infrastructure and African operations suggest long-term growth ambitions. The AGR dues aspect, while speculative, could offer upside if relief is granted. The competitive dynamics with Reliance Jio and the upcoming Jio IPO add further layers of interest for investors. Rating: 8/10.

Difficult terms ARPU: Average Revenue Per User. This metric shows how much revenue a company earns from each subscriber on average. Ebitda: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance. Basis points: A unit of measure equal to 1/100th of a percent. Used for small changes in percentages. EV/Ebitda: Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization. A valuation ratio used to compare companies. AGR: Adjusted Gross Revenue. It is the revenue figure on which license fees and spectrum usage charges are calculated by the Indian government for telecom operators.