Airtel to keep shareholder interest paramount, take bets only if attractive

Sunil Mittal says Airtel will invest Rs 39,000 crore across India and Africa, expand data centre capacity beyond 1GW, and pursue only attractive opportunities while keeping shareholder value paramount

Bharti Airtel will broadly spend Rs 30,000 crore capex in India and $1 billion (Rs 9,000 crore) in Africa, while raising investments in data centres, going well past 1GW capacity, Sunil Mittal, Bharti Enterprises chairman and promoter of Bharti Airtel, said in a call with investors last week.

 

The top boss of India’s second-largest telecom services provider said that shareholder interest would be kept paramount with the company adopting a progressive increase policy for issuing dividends, which will be stepped up gradually, and the company only taking up opportunities if it made an attractive bet.

 

Mittal also said that Bharti Telecom (BTL), which owns 41 per cent in the listed company, will be the principal vehicle to own Bharti, and around 8 per cent left between Singapore’s Singtel, a key shareholder, and the Bharti group — split between the two as 7 per cent with Singtel and 1 per cent with the Mittal family — will come to market in an orderly manner and be disposed of in the next several years.

 

 

“Singtel will keep selling and perhaps may take 3–4 years to sell down as per Mittal. BTL eventually will be the sole promoter entity owning Bharti,” analysts at BofA said in a note following the investor call.

 

Mittal added that Airtel will expand the core and not yield any space in either rural or urban markets, both in India or Africa. The company will continue to step up dividends and assured that there will be increased dividends where a progressive increase policy will be in place.

 

“Post that, there will be opportunities beyond core like financial services, new territories in Africa and if any certain options come out outside the current footprint. The company will be respectful of shareholder views and will only make bets if they find bets very attractive,” BofA said in the note.

 

On its subsidiary Airtel Money getting an NBFC licence and Airtel committing Rs 20,000 crore, Mittal said that in the first year the company will put 10 per cent capital at work — Rs 1,500–2,000 crore — of which the listed entity will put 70 per cent. The total investment would likely be the maximum capital required before the NBFC becomes self-sustaining.

 

BofA said in its note that the company was inspired by NuBank and the amount of intelligence that Airtel has from its customer base will come into use. Airtel, for instance, has 3,000 attributes of an individual user and there is tremendous intelligence on the data layer across any channel. The company can enable digital collection or send reminders about EMIs being due. “Even the cost of acquisition is much lower and value in the business is about repeat loans and quality of user. One constraint to sort out is that the current context of the Airtel app is from a telco context and that leading eventually to financial services will require marketing investment and word of mouth over a period of time,” analysts said. 

On ARPU, the company reiterated Rs 300 as its goal average revenue per user (ARPU), which was now 15 per cent away. Mittal added that the company’s intention was also to keep the low-end entry point affordable.

 

Airtel is making serious investments in data centres, raising its capacity to beyond 1GW. It is tying up with AI companies to bring services to customers and is in advanced discussion with several companies.

 

The company is also using open-source LLMs and the effort is to own small language models for enterprise use cases. The company currently has 350–400 GPUs being trained and will be at about 2,000 GPUs in some years. Airtel is also using AI for its own internal use, including for contracts, coding efficiency and around customer care where there is no IVR.