Bharti Airtel has kicked off FY26 with a steady quarter, underscoring its ability to deliver robust financial performance even as competition in India’s telecom sector intensifies. The company posted healthy Q1 results with positive revenue growth, strong ARPU improvement, steady subscriber additions and also a sharp moderation in capex that has propelled free cash flow (FCF) bolstering its balance sheet, stated a report by Nuvama.
The question now is whether this combination can translate into superior shareholder returns over the medium term.
A look at Bharti Airtel’s steady growth in a competitive market
Bharti Airtel reported another quarter of consistently improving financials with Q1FY26 revenue at Rs 499.7 billion, driven by ARPU of Rs 250 which climbed 2.1 per cent QoQ and 1.2 million QoQ subscriber addition. Bharti Airtel’s ARPU outpaced Jio’s Rs 208.8 and Bharti Hexacom’s ARPU which grew by 1.7 per cent QoQ to Rs 246 in Q1FY26. The telecom company’s net subscriber additions lagged Jio as it slowed to 1.2 million, with 4G/5G net adds of 3.9 million versus 6.6 million in Q4FY25
Bharti Airtel’s homes business EBITDA increased to Rs 8.6 billion in Q1FY26 with additions of 939k subscribers during the quarter, aided by fixed wireless access (FWA) rollouts, although it continued to trail Jio in absolute broadband additions. Its home-pass network also expanded at a faster pace of 1.6 million home passes in Q1FY26. Separately, enterprise business revenue was down 4.9 per cent QoQ to Rs 50.6 billion as the company completed its exit from low-margin contracts. However, Bharti Airtel maintained that the underlying revenue growth was steady at 2.0 per cent QoQ growth with continued improvement in funnel and order book.
Capex moderation boosts cash flows
Bharti Airtel’s Q1FY26 capex reduced significantly to Rs 83 billion vs Rs 144 billion in Q4FY25 driven by moderation in radio capex cycle intensity. Excluding Indus, it dropped to Rs 54.5 billion in Q1. Consolidated capex (ex-Indus) dropped 47 per cent QoQ to Rs 64.9 billion.
As a result, FCF improved sharply to Rs 199 billion, up from Rs 130 billion in Q4FY25. Nuvama said, “Bharti is in an enviable position today generating over Rs 100 billion of quarterly FCF, which should further improve with peak 5G capex behind, leading to better shareholder returns.”
Meanwhile, net debt (ex-lease liabilities) fell by a steep Rs 130 billion QoQ to Rs 1.26 trillion, with net debt/EBITDA improving to 1.69x.
The company management has reiterated that capex will follow a non-linear but declining trajectory, with no major new radio investment cycle expected until 6G which is likely post-2030. Instead, capital deployment will focus on fiber expansion, home broadband, enterprise digital services, and data centre growth. The telecom major will remain focused on strengthening the balance sheet through ongoing deleveraging initiatives while also evaluating steps to unlock value and enhance shareholder returns.
Bharti Airtel’s strategic positioning
Nuvama and JM Financial are betting on Bharti Airtel’s positioning and see the telecom giant as best placed to benefit from the industry’s wireless ARPU growth potential at 12-13 per cent CAGR in the next 3-5 years. The projection is supported by a consolidated “3+1” player market structure and Jio’s own need for higher monetisation to justify its 5G capex and potential listing.
With over 153 million 5G subscribers and 36 per cent of network traffic already on 5G, Airtel’s investments in high-capacity infrastructure are starting to yield efficiency gains.
“Further, the potential 5G monetisation and FWA rollout provides significant upside risk over the long term. Moreover, there is huge FCF generation potential over the next 4-5 years with the next big jump in capex, mostly related to 6G, which is the most likely 2030-onwards story,” JM Financial said.