BHARTIARTL

Q2 FY26: ARPU Gains, Strategic Investments, and Market Re-Rating Potential

delivered a strong Q2 FY26 performance, marked by a 2.4% sequential rise in average revenue per user (ARPU) to ₹256—outpacing Reliance Jio’s 1.2% growth to ₹211.4. The ARPU uplift was driven by a shrinking 2G base and rising post-paid subscriber share, reinforcing Airtel’s premium positioning. While subscriber volume growth remained modest, improved operating leverage lifted wireless EBITDA margins to 60.3%. Beyond operating metrics 🔹 ARPU Drivers & Wireless Performance - 2G Migration: Airtel’s 2G base fell 4.5% QoQ to 78.37 million, now 21% of total mobile users. Migration to higher-priced 4G/5G plans continues to support ARPU growth. - Post-paid Expansion: Post-paid base grew 3.6% QoQ to 27.52 million; up 12% YoY. Post-paid users contribute higher ARPU and margin stability. - Wireless Revenue & Margin: India wireless revenue rose 2.6% QoQ, driven by ARPU gains. EBITDA margin improved 90 bps QoQ to 60.3%. 🔹 Strategic Capital Allocation - Indus Towers Stake Increase: Airtel board approved up to 5% additional stake purchase (~₹5,000 crore). - Airtel Africa Stake Interest: Airtel may raise its stake in Airtel Africa Plc, leveraging strong wireless cash flows to fund the move. - This aligns with Airtel’s broader strategy to deepen its footprint in high-growth emerging markets. 🔹 Regulatory Watch: AGR Dues - Airtel plans to approach the government for a re-evaluation of its ₹40,000 crore AGR dues, following the Supreme Court’s Vodafone Idea ruling. - However, any relief remains speculative, especially given the government’s dual role as creditor and majority shareholder in Vi. 🔹 Market Outlook & Valuation - Valuation remains reasonable at 10x FY27 EV/EBITDA (Motilal Oswal estimates). - Jio’s upcoming IPO could shift investor focus and influence sector-wide re-rating dynamics.