Bharti Airtel finds its frequency: High Arpu, low capital expenditure

Margins ring loud as controlled spending and per-user revenue amplify financial signals for investors

The stock of Bharti Airtel, India’s largest listed telecommunications (telecom) services provider, recently hit an all-time high on expectations of higher average revenue per user (Arpu), a stable market setup, and fresh revenue lines. 

The stock has outperformed the market over the past year, gaining 21 per cent against the Nifty’s 5.7 per cent. With a bullish outlook and upgrades from brokerages, analysts see more upside — especially if Airtel tops Street estimates for the July–September quarter (Q2) of 2025–26 (FY26). 

The next trigger is the company’s Q2 results, scheduled for release on November 3. BofA Securities expects Airtel to deliver a strong set of numbers, supported by steady growth across segments. Analysts led by Sachin Salgaonkar project that Airtel will close the quarter with 365.7 million mobile users and a 2 per cent quarter-on-quarter (Q-o-Q) rise in implied Arpu. 

Home business revenue is expected to grow 5 per cent sequentially as the company continues to expand its fixed wireless access (FWA) footprint. Enterprise revenue should also rise Q-o-Q, with the impact of exiting the low-margin wholesale voice business now behind it. 

Airtel’s consolidated operating profit margin is likely to remain steady at 56.4 per cent, while capital expenditure (capex) may ease sequentially, except in broadband. 

 

Rival Reliance Jio saw a 1.3 per cent sequential increase in Arpu in Q2, helped by a longer quarter. Jefferies said subscriber additions and Arpu came in slightly below expectations, though the sustained growth in FWA users should support revenue and earnings in the coming quarters.

 

Tariff hikes and Arpu growth remain key drivers for Airtel’s stock. HDFC Securities notes that Airtel’s Arpu, at ₹250 in the first quarter of FY26, continues to lead the industry. Expected tariff increases in the second half of FY26 could lift Arpu further, expanding operating margins and free cash flow (FCF) to fund future investments. Airtel aims to raise Arpu to ₹300 in the near to medium term. The brokerage has a ‘buy’ rating with a one-year target of ₹2,244.

 

Airtel’s growing presence in Cloud services and its expanding enterprise business are also positives. Jefferies analysts Akshat Agarwal and Ayush Bansal say the company’s strong enterprise network, in-house infrastructure, DeepCloud expertise, and solid FCF position it well in India’s Cloud market.

 

The Cloud market is projected to reach $38 billion by 2029–30 (FY30), potentially adding 1–3 per cent annual revenue growth for Airtel from 2024–25 (FY25) through FY30. Jefferies expects steady mobile growth and expanding adjacencies to reinforce Airtel’s position. It maintains a ‘buy’ rating with a target price of ₹2,500.

 

ICICI Securities has also upgraded its view on the telecom sector, covering both Airtel and Jio Platforms. Analysts led by Sanjesh Jain expect Airtel’s mobile operating profit to benefit from stable subscriber growth (2 per cent), gradual tariff repair, and operating leverage.

 

Capex is likely to remain lower as the 4G rollout is complete and 5G expansion proceeds at a measured pace. The brokerage projects Airtel’s FCF (operating profit minus capex) to climb from ₹20,800 crore in FY25 to ₹58,600 crore in 2027–28. Strong FCF and generous dividends should help reduce invested capital and sharply improve the return on capital employed, potentially making Airtel one of the most efficient telecom players globally. The brokerage’s target price: ₹2,400.