Bharti Airtel wireless ARPU growth and margin strength underpin earnings outlook

Investment View and Valuation

In its August 6, 2026 result update, ICICI Direct Research retained its BUY rating on Bharti Airtel, citing the company’s relative strength in a consolidated telecom market. The broker views Airtel’s industry-leading India wireless ARPU, wireless margins and cash-flow generation as evidence of its premiumisation strategy, digital ecosystem and efforts to increase customer wallet share.

ICICI Direct’s sum-of-the-parts target price is Rs 2,350 per share, against a CMP of Rs 1,948, with a 12-month target period.

Q1 FY27 Financial Performance

Bharti Airtel reported healthy Q1 FY27 operating performance across its consolidated operations.

India Wireless: ARPU and Margin Strength

India wireless revenue rose 3.8 per cent quarter-on-quarter and 9.2 per cent year-on-year to Rs 29,929 crore. The subscriber base increased by 3.3 million during the quarter to 376.5 million, while ARPU increased 2.7 per cent quarter-on-quarter and about 5.4 per cent year-on-year to Rs 264.

Bharti Airtel added 5 million 4G and 5G subscribers, taking its 4G and 5G data subscriber base to 301.8 million. Data usage per subscriber increased 9.3 per cent quarter-on-quarter to 34.4 GB per month. Postpaid additions were about 1 million, the highest ever in a quarter, taking the postpaid base to 30 million. India wireless EBITDA margin improved by 14 basis points quarter-on-quarter to 60.8 per cent.

Tariff and Earnings Outlook

Management reiterated that long-term ARPU expansion requires a structural change in pricing, including charging for tiered data consumption rather than unlimited data bundles. ICICI Direct estimates around 10 per cent ARPU CAGR over FY26 to FY28E, reaching Rs 311, based on a roughly 10 per cent tariff increase in H2 FY27 and favourable mix.

The broker expects a tariff increase to lift India margins to 61 per cent in FY28E from about 59 per cent currently. Its projections are as follows:

Non-Wireless Business Developments

Broadband

Broadband additions slowed to 473,000 from 1.12 million in Q4, taking the base to 14.7 million. Broadband ARPU declined to Rs 523 per month from Rs 527.

Management attributed weaker customer continuity to low entry-level Fixed Wireless Access pricing and said it had tightened acquisition quality. Airtel is refocusing on fibre-to-the-home and limiting FWA to non-fiberisable locations and customers with viable unit economics.

Enterprise

Enterprise revenue grew 3.2 per cent quarter-on-quarter and 12 per cent year-on-year to Rs 5,665 crore, led by cloud, IoT, cybersecurity, CPaaS and international connectivity wins. Enterprise margin improved 105 basis points quarter-on-quarter to 44 per cent. Airtel added 11 cloud enterprise customers, taking the total to 33.

Africa Operations and Strategic Developments

Africa revenue was Rs 17,566 crore, up 9.6 per cent quarter-on-quarter, or 5.7 per cent in constant currency. Africa EBITDA margin was 50.2 per cent, down 15 basis points quarter-on-quarter.

Management described Africa as a multi-year structural growth engine, supported by low telecom penetration, demographics and financial services. Bharti Airtel increased its Airtel Africa stake to over 79 per cent through a share swap, while Airtel Money was preparing for a London listing in H2 2026.

Key Risks

• Wireless market-share losses.
• A delay in tariff hikes.