For years, telecom investors in India worried about only one thing: survival. Could telecom companies survive brutal tariff wars? Could they survive endless spectrum payments? Could they survive Reliance Jio’s disruption? Could they survive mounting debt?
Today, Bharti Airtel’s problem looks very different. The company is growing, generating cash, improving margins and steadily reducing debt. Investors clearly liked what they saw. The stock reacted positively after the results as the market cheered strong free cash flow generation, falling debt and continued momentum across businesses.
Bharti Airtel 1-Year Share Price Chart
At the same time, another conversation has quietly started emerging around Airtel. In Q4FY26, Airtel’s India mobile Average Revenue Per User (ARPU) stood at Rs 257 compared to Rs 259 in the previous quarter.
At first glance, a Rs 2 decline may not seem meaningful. But in today’s telecom market, ARPU matters far more than subscriber additions.
Investors are no longer valuing Airtel merely as a company adding users. They are valuing it as a business capable of steadily extracting higher revenue from every user through premiumisation, 5G upgrades, postpaid conversions and tariff hikes.
Which is why even small changes in ARPU expectations suddenly matter a lot. Particularly because entry-level smartphone prices are rising, which could slow upgrades from feature phones to smartphones and eventually affect data consumption growth. Market expectations for FY28 ARPU have already started to moderate from around Rs 318 to nearly Rs 308 now.
The irony here is fascinating. Just when Airtel may have become the strongest telecom business India has seen in years, the conversation around the company is beginning to change. Investors are no longer debating whether Airtel can grow. They are debating how much of that future growth is already reflected in the stock price.
Telecom Has Finally Become A Good Business
There was a time when Indian telecom was one of the toughest sectors to make money in.
Companies borrowed aggressively to buy spectrum, slashed tariffs to gain market share and then watched profits disappear. Investors learned the hard way that telecom was one of those sectors where customers became richer while shareholders became poorer.
Then the industry structure changed completely. Several operators disappeared. Competition weakened. Pricing became more disciplined. Telecom companies stopped chasing subscribers at any cost.
Reliance Communications collapsed. Vodafone Idea weakened dramatically. Several regional operators vanished. What remained was effectively a three-player industry with far more pricing discipline than before.
Indian telecom did not suddenly become profitable because companies became smarter. It became profitable because the industry stopped behaving irrationally.
Bharti Airtel has emerged as one of the biggest beneficiaries of this transformation.
The company’s Q4FY26 consolidated revenue grew 15.7% year on year to Rs 55,383 crore. Meanwhile, Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) rose 16.6% to Rs 31,492 crore. Margins stood at 56.9%.
For the full year FY26, revenue grew 22% to Rs 2.11 lakh crore while EBITDA increased 28.5% to nearly Rs 1.2 lakh crore. These are not ordinary telecom numbers.
The balance sheet has improved meaningfully as well. Free cash flow generation remained strong during FY26, supported further by the recent rights issue of around Rs 15,700 crore. As a result, consolidated net debt excluding leases declined by nearly Rs 47,500 crore year on year to roughly Rs 91,000 crore, with leverage falling to 0.84 times from nearly 1.5 times a year ago.
For years, telecom companies spent most of their time worrying about spectrum payments, debt repayments and survival. Airtel today is operating from a very different position, where strong cash generation is beginning to strengthen the balance sheet instead of merely funding the next round of investments.
But Airtel Is Quietly Changing Into Something Else
The interesting thing about Airtel today is that the company itself may no longer be thinking like a traditional telecom operator. The market still tracks the stock mainly through mobile tariffs and ARPU growth.
But management appears to be looking at a much bigger opportunity. Airtel is slowly trying to position itself as part of the digital infrastructure layer powering India’s next technology cycle.
That becomes clearer once one looks beyond the core mobile business. The home broadband segment continues to grow rapidly. Revenue from home services rose 37.3% year on year in Q4FY26 while the subscriber base increased to 14.2 million users.
The enterprise business is also scaling steadily across cloud, connectivity, security and Internet of Things solutions. Order book growth in the segment rose 17% during FY26.
And then comes the part of the story that the market is still trying to fully understand. Data centres.
Management has outlined plans to build nearly one gigawatt of data centre capacity over the next few years. This would imply a 25% market share, according to the company’s management. The company is also building 56 edge data centres over the next 18 to 24 months while continuing investments in fibre backhaul and cloud infrastructure. This is where Airtel starts looking less like a telecom company and more like an infrastructure business for the digital economy. Or maybe even a solid data centre business.
Every major technological shift eventually creates demand for physical infrastructure. The Industrial Revolution needed railways. The automobile boom needed highways and fuel networks. The internet era needed telecom towers and fibre cables.
Artificial intelligence is unlikely to be very different. It needs computing power, cloud infrastructure, low-latency networks, edge computing and massive amounts of data storage. In many ways, Airtel appears to be positioning itself quietly underneath this entire ecosystem.
Airtel is unlikely to become the face of India’s artificial intelligence story. But it may end up building some of the infrastructure that makes that story possible.
The company’s cloud business is also beginning to gain traction. Management highlighted growing demand for sovereign cloud offerings and indicated that nearly 25 cloud deals have already been signed. This is important because it potentially changes how Airtel gets viewed over time.
For years, telecom companies depended heavily on tariff hikes to improve profitability. Airtel now seems to be building businesses that could gradually reduce that dependence.
Africa Is Becoming A Serious Growth Engine
Airtel Africa was once viewed mainly as a volatile overseas business exposed to currency swings and political uncertainty. Today, management increasingly talks about Africa the way investors once spoke about India’s telecom market fifteen years ago. Revenue from Airtel Africa grew 40.9% year on year in Q4FY26, while EBITDA rose 50%.
Africa now contributes nearly 29% of Airtel’s overall revenue. Management believes the region remains significantly underpenetrated, with smartphone penetration still around 52%, relatively low data usage and favourable demographics. That explains why Airtel recently increased its stake in Airtel Africa further.
In some ways, the company appears to be trying to recreate in Africa what it already achieved in India over the last decade.
The Bigger Question Now
The issue for investors is no longer whether Airtel is performing well. It clearly is. The more important question is whether the market has already started valuing Airtel less like a telecom operator and more like a premium digital infrastructure business.
Bharti Airtel’s India business, excluding Airtel Africa and Indus Towers, trades at 12.8x and 11.6x FY27E and FY28E Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortisation, respectively. Those multiples are higher than both global telecom peers and Airtel’s own historical valuations.
Simply put, the market is no longer assigning value only to Airtel’s telecom operations. It is also pricing in the possibility that the company successfully scales cloud infrastructure, enterprise services, broadband, financial services and data centres over the next several years.
That naturally raises expectations. If tariff hikes slow down, ARPU growth may disappoint.
If smartphone prices continue rising, upgrade cycles could weaken. If capital expenditure remains elevated because of investments in fibre, cloud and data centres, free cash flow growth may not rise as sharply as investors expect.
Management has already indicated that FY27 capital expenditure is likely to remain broadly similar to FY26 levels. There is another thing worth remembering. Telecom history globally is filled with companies that generated strong cash flows from their core business and then stretched themselves too far chasing adjacent opportunities.
Airtel may eventually avoid that trap. But investors can no longer look at the company only through the lens of subscriber additions and tariff hikes.
The Final Word
Airtel today looks very different from the telecom company investors once worried about. The industry structure is healthier. Pricing discipline has improved. Cash flows are stronger. Debt is reducing. And the company is steadily positioning itself as infrastructure for India’s digital economy.
But the market has recognised that transformation too. Which means the debate around Airtel is slowly changing.
The question is no longer whether the company is improving. Airtel may already have solved the problem that haunted Indian telecom for years: survival.
The challenge now is very different. Can the company grow fast enough to justify what the market is beginning to expect from it?
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities. As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors.
Disclosure: The writer and her dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary