Bharti Hexacom Ltd (NSE: BHARTIHEXA) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Soumen Ray — Chief Financial Officer – India and South Asia
Vaidehi Sharma — Investor Relations
Gopal Vittal — Vice Chairman and Managing Director
Harjeet Singh Kohli — Joint Managing Director
Analysts:
Unidentified Participant
Manish Adukia — Analyst
Piyush Choudhary — Analyst
Sachin Salgaonkar — Analyst
Sanjesh Jain — Analyst
Vivekanand Subbaraman — Analyst
Aditya Suresh — Analyst
Kunal Vora — Analyst
Presentation:
Vaidehi Sharma — Investor Relations
Hexacom Ltd. I must remind you that the overview and discussions today may include certain forward looking statements that must be viewed in conjunction with the risks that we face. Post the Management Opening Remarks we will open up for an interactive Q and A session. Interested participants may click on Raise Hand option on Zoom application to join the Q and A queue. The participants may click this option during the Management Opening Remarks itself to ensure that they find a place in the queue. Upon announcement of name participants to kindly click on Unmute myself in the pop up screen and start asking the question post Introduction with this Now I would like to hand over to Mr. Gopal Vital for his opening remarks.
Gopal Vittal — Vice Chairman and Managing Director
Thank you. A very warm welcome to everyone to for our earnings call for the first quarter ended FY26 with me. I also have Shashwat, Shaman, Arjit, Naval and Akhil. Today’s call will focus on our first quarter performance along with an update on some of our key strategic priorities. We’re making good progress on our ESG commitments by embedding technology and digital innovation at the heart of our operations through very targeted initiatives. 64% of our sites are now green and nearly half the electricity consumed at our data centers comes from renewable sources. Our diversity agenda continues to advance.
Women represent just under 19% of our total workforce, up from 11% two years ago. Our remote work program has also enabled qualified women in smaller towns to take on tech roles. The Airtel foundation has amplified its impact through the introduction of the Airtel Scholarship. This is a fully funded nationwide initiative designed to empower talented students from diverse backgrounds to pursue undergraduate technology courses. Women make up 51% of the Airtel Scholars supported thus far, reflecting generally our commitment to to foster gender equality in education and providing equal opportunities for all. A quick word on our financial performance.
We delivered another quarter of consistent performance. Consolidated revenue came in at 49,463 crores, just under 500 crores 49,500 crores. This was impacted by a decline in the B2B segment as I had mentioned earlier. This is in line with our guidance which I gave earlier to peel off our low margin revenue in B2B India. Revenues excluding Indus came in at about 33,820 crores and EBITDA EBITDAL, which is, you know, stripped off the lease obligations, margins came in at 51.4%, improving by 65 basis points sequentially. The operating free cash flow, which is EBITDAL minus CAPEX was at 11,928 crores.
We continue to deleverage our balance sheet. During the quarter we redeemed senior notes worth a billion dollars. Disciplined capex spending and operational excellence underpins our solid balance sheet. India Net debt to EBITDAL now stands at 1.3. Our approach to financial prudence and the consequent strong balance sheet is recognized by leading agencies, the most recent being the credit rating upgrade that came in from crisl. Our clear and simple strategy of portfolio premiumization and razor sharp execution is driving strong performance across our businesses. Mobile saw yet another quarter of industry leading revenue growth. Broadband is seeing strong growth momentum with FWA expanding the addressable market for us.
Our IPTV ramp up is progressing as planned with encouraging response. Our customers network expansion is happening as planned with about 1830 network sites and over 8300 km of fiber deployed during the quarter. We are future proofing our network with accelerated fiber deployment reflected in over 130,000 km fiber rollout in the last three years. We continue to expand fiber home passes for our broadband businesses along with FWA rollout across two and a half thousand cities. Let me share a quick update on each of our segments. In mobile, we added 1.2 million customers to our overall base and 3.9 million smartphone data customers.
Postpaid net ads remained steady at 0.7 million, accounting for 57% of total net additions. You will recall that the base of Postpaid is only 7% of our customer base. ARPU at Rupees 250 had the benefit of one day extra in the quarter and continued underlying mix improvement. We further strengthened our entertainment experience for our prepaid customers by launching an industry first all in one OTT entertainment pack with access to over 25 OTT platforms. I do want to reiterate that feature. Phone to smartphone upgrades, prepaid to postpaid upgrades, data monetization and international roaming continue to be central to our RADPU growth in the absence of any tariff repair.
Our 5G expansion continues as planned. We ended the quarter with 152 million 5G customers. We continue to believe that 5G handset adoption at the bottom end of the market will accelerate with the launch of more affordable options. 5G shipments continue to grow and now account for 86% of total smartphone shipments. Our share in the 5G shipment is constantly growing. 5G sites already cater to 36% of the total network traffic, enabling some traffic offload from the existing 4G sites as well. In the broadband business, we delivered a solid quarter with the highest ever quarterly net adds of 939,000.
We’re seeing strong momentum in FWA net adds of 5.4 lakh. I believe this momentum on the overall broadband business should continue to see acceleration. In digital TV we lost around 2 lakh customers during the quarter while the decline was somewhat compensated by the step up in IPTV Net ads, DTH Net adds were impacted by structural changes that we initiated to eliminate subsidies on the set top box. We believe this move will pay off well with very strong cash generation. Our competition has also followed us and reduced the box subsidies. Our IPTV is seeing strong acceptance from customers as it delivers a better experience and convenience combined with a very very solid expensive and expensive content slate.
In the Airtel business segment we reported revenues of about 5060 crores. Discontinuation of the commoditized low margin business is now fully reflected on the base and what you’ll see going forward is really underlying growth. But if you look at the underlying revenue growth stripped off the discontinued commoditized business, we grew at 2% sequentially and the business outlook continues to be strong. With a strong visibility on funnel and the order book, we’re seeing some early signs of green shoots in our global business. During the quarter we won multiple deals in our IoT and security business. On the digital businesses, we are strengthening our digital portfolio across cloud, Cybersecurity, Financial Services, IoT and CPaaS.
With continued strategic investments. Airtel Finance is shaping up well with acceleration in loan disbursements and credit card issue. Our partnership with several NBFCs is going as planned with increased supply, all of it now integrated into Airtel. Thanks. We are seeing continued improvement in offtake. Our payments bank monthly transacting users stood at 98 million. Annualized revenue run rate is now over 3100 crores growing over 27% year on year. Deposits remain strong at about 3750. Gross growing 29% year on year. A quick update on Africa Constant currency revenue growth continues to remain strong at 6.7% sequentially and this was also helped by a favorable currency movement which led to a solid reported revenue growth of 6.2% sequentially.
EBITDAL was 4,456 crores with a margin just under 37%. The balance sheet remains solid with net debt to ebitda of under 1. Let me now briefly comment on each of our areas of focus. The first area is really the continued focus on building a diverse and resilient portfolio. The underlying performance now across the portfolio was strong. Africa accounts for 24% of revenues, India mobile at 55 and India non mobile at 13% Indus now at 8%. Our investments are channelized towards building future ready digital networks and digital services to accelerate growth across our portfolio. Second area of focus is to win quality customers.
Let me start with broadband. As I mentioned earlier, we see a large opportunity, a penetration opportunity in homes. Our investments are now prioritized to capitalize on this growth. We continue to focus on three areas deepening our network and market footprint and therefore we’re accelerating rollout of fiber home passes. I want to get to a quarterly run rate of 2.5 million homepaths up from 1.6 million. FW will drive the addressable market further by expanding our footprint where we are unable to get fiber. Second, we are focused on providing exceptional value to our customers through bundling content and driving convergence.
We partnered with Google to bring a compelling Google One cloud storage subscription service to our customers. This will help them address the mounting challenges of limited device storage. All our postpaid and Wi fi customers will get access to 6 months of 100GB Google One Cloud Storage at no extra cost. The third area of focus is expanding our channel footprint which I spoke to you about a few quarters ago. This is now in place and is allowing us to drive cross selling at an accelerated pace. We now intend to leverage our data driven precision targeting, enhance our persuasion and strengthen analytics to scale the impact of our expanded channel strategy.
A quick word on the Mobile Business Our focus to drive ARPU improvement continues to be underpinned by sustained postpaid upgrades, smartphone upgrades and penetration of international roaming. We further simplified our IR plans to deliver greater value and convenience to our customers. Our rural expansion over 43,500 sites deployed in the last three years are delivering on all action standards. We’ve now intensified our efforts to sweat our deployment in areas that are not fully utilized to drive sustained share gains. Let me now spend some time on B2B. We believe our network investments need to be geared to building gold standard flow, flapless and reliable fiber networks.
Our infrastructure comprising of low latency fiber, submarine cables, OPGW fiber and advanced data centers is the backbone of our superior service, quality and assurance. As a result, we’re now stepping up our investments to drive growth in core connectivity. We’ve made substantial investments in OPGW capacities connecting all metros and major cities. In addition, we triggered a significant investment nine months ago to connect data centers and cable landing stations in Mumbai and Chennai on the submarine cables and capacities. We’ve invested over 2000 crores over the last five years and we expect a further light up from 45tbps capacity to 180 terabits per second in capacity.
All of this is now playing out in the data segment growth that we see. At the same time, as I mentioned earlier, the bulk of the incremental growth for the industry in B2B is happening in adjacencies, cybersecurity, IoT and cloud. In each of these areas, we’re continuing to invest and seeing traction. The digital segment is now growing at 23%. Today I want to spend some time on the largest growth area within digital, which is cloud. You would have seen our recent announcements made on the 4th of August. Let me give you a little bit of texture on this.
Over the last five years, Airtel has changed significantly. Our digital capabilities, based on our comprehensive benchmarking with large telcos around the world, are truly world class. Our capabilities can be essentially summed up in the way we think about our business, that it’s a platform above all else. So let me explain to you how it works. It really works across three layers. At the foundational layer, which is our first layer, is the data layer. This is truly the secret sauce. Besides a massive data infrastructure, we built a homegrown data engine. We call it a data engine, which allows us to ingest data, monitor data, measure the data, catalog the data and leverage over 3,000 attributes relating to every single customer, all of it automatically done with no human intervention.
This data engine also has a next best action algorithm that provides the intelligence to all our channels on what action we need to take for that individual customer, whether to offer a service or solve a problem that they may have. The whole of the data engine is linked to our second layer, which we call our workflow platform, which really helps customers to do the four things that they want to do with us in any business. Buy something, we bill them for it, they pay for it, and we serve them. Finally, all of this is exposed in the third layer on our channels platform to our customers across every single touch point.
So whether it’s the call center, it’s the web, it’s the app, it’s the storefront, or it’s at the home, through our engineer, we have one unified presentation layer which we call the channel layer. This entire stack has been built by our engineering group and is homegrown using open source software. It operates at a massive scale of 1.4 billion transactions per minute. All of this sits on our own cloud platform, which is managed and hosted in India. Our Cloud handles over 250 petabytes of data, managing over 10,000 servers across our 14 large and 120 edge data centers.
As you can see, all of this is at a mega scale. It’s telco grade and it’s hosted in the country. I can also tell you that as a cloud for an individual company in this country, this is clearly the largest cloud instance. We’ve now extended all of these capabilities to our customers. We’ve launched Airtel Cloud and we believe this will allow our customers to get access to a world class cloud which is telco grade, hosted and held in India and it additionally saved them costs. Over and above this. We’ve also now extended our software platforms globally to telcos to start with.
By the way, we do believe that our platforms can go beyond the telco since they are built on a totally modular basis. This is why we’ve been able to extend our platforms in a totally fungible way both across geographies and sectors. For example, we extended it to Airtel Africa which is our subsidiary. We extended to Air Indus Towers which is a totally different type of business. We’ve also extended it to Airtel Payments bank which is again a very different type of business. I’m also pleased that we won deals with Singtel and Globe Telecom in the Philippines.
These are not part of the group and so this is a measure of the credibility that we’ve been able to bid. More conversations with several telcos are in the pipeline. I believe the launch of the cloud and software platform business can truly change the composition of Airtel B2B and broadly even Airtel in the years to come. The third pillar of our strategy is the obsession to deliver a brilliant customer experience. All our digital capabilities are now coming to bear on serving customers. So whether it is go to market lifecycle management, customer experience, driving personalization or improving productivity for our fleet, this impacts all of it.
As I mentioned before, this allows us to track the experience of our customers at a device level as well as provide tools to our frontline on the experience delivered within a very, very small micro market of 100 meter or by 100 meters across the country. India has now well over a million micro markets and we measure the performance within each micro market. We also believe one of the drivers of our market share outperformance is really this. We’ve now extended these tools into Airtel Africa and you can see that the results are already visible. Our anti spam solution continues to provide significant relief to our customers.
Our tool, as you know, detects scam and spam and alerts our customers in real time in their own language. So whether these calls or Messages originate on SMS or on any OTT platforms, whether they originate in India or abroad. Our tool works. We continue to add features to our tool. We’ve added cutting edge solution that detects and blocks malicious websites across all communication OTT apps and platforms, including emails, browsers in real time, giving total peace of mind for our customers while browsing the Internet. Since its launch, the solution has identified over 42 billion spam calls.
The fourth pillar of our strategy is to build and leverage our digital capabilities. While I’ve already spent considerable time today on this, I do want to make two points here today. The first is AI. On AI, we’ve done numerous experiments, much as most large companies have in various parts of the world. The change we are now bringing about is to put AI at the very heart of our business. So what we’re doing is to now place AI at the very center of all the digital platforms that we’ve already built and are running at scale. We feel this will take our capabilities to the next level.
More about this in the coming quarters as we see it coming to fruition. The second area I want to talk about is our belief. While we will continue to build tools and solutions that we need for our business, as you’ve seen, we will also leverage the capabilities of partners to help scale our business and provide our customers a distinct advantage. There are three that I will illustrate today. On content, we have a slate of the most compelling content covering 25 OTT apps in India. Within the Extreme platform, we have a partnership with Amazon, we have a partnership with Disney, we have a partnership with Netflix, we have a partnership with Z and we are exclusively available on Apple.
A second example is our partnership with Google that allows us to offer complementary cloud storage to our broadband customers. And the last example is our breakthrough partnership with Perplexity that empowers our customers with innovative technology and cutting edge AI capabilities. We’re seeing strong customer engagement within a few days of the launch and have already climbed over 5 million and growing every day. The fifth and last pillar of our strategy is War on Waste. As I mentioned earlier, this is fully wired into our operation. We started the year on a strong note with a funnel and we are on track to achieve our planned savings.
To sum up overall, we delivered another quarter of strong performance. We continue to see meaningful growth opportunities in postpaid, in Broadband, in Convergence and B2B. Our investments are now directed towards capitalizing these growth opportunities. All of this is really done by keeping digital at the core. Lastly, we take great pride in in our flawless governance track record. Spirit of ownership and entrepreneurial spirit that is ingrained in our culture and the quality and transparency of our disclosures. With this let me hand back to Vaide.
Questions and Answers:
Vaidehi Sharma
Thank you very much Gopal. We will now begin the Bharti Airtel Q and A interactive session for all the participants. Please note that the Q and A session will be restricted to analysts and investor community only due to time constraints. We would request if you could limit the number of questions to two per participants to enable more participation. Interested participants may click on Raise hand option on your Zoom application to join the Q and A queue upon announcement of name participants to kindly click on Unmute myself in the pop up screen and start asking the question post Introduction Participants are requested to limit their questions to Bharti Airtel till 3.30pm as the management will start the Q and A discussion on Bharti Hexacom from 3:30 onwards.
With this, the first question comes from Mr. Manish Adukiya. Mr. Adukia, you may please unmute your side, introduce yourself and ask your question now.
Manish Adukia
Thank you. Hi, good afternoon. Thank you so much for taking my questions. And Gopal as always, thank you so much for that comprehensive overview about the business in your opening remarks. First question is on capex. Now last year the India wireless business in particular did about 2.5 billion of capex and well, while there could be some seasonality in the June quarter, looks like for the full year the capex may be trending down again in fiscal 26. Now if you were to take a slightly longer term view, the next technology refresh cycle maybe like a few years away still.
So the wireless business in particular, are there any particular reasons why in the foreseeable future at least the capex will or has to move higher? Or should we expect that for the next 3, 4, 5 years the CAPEX will probably remain range boundaries and then on the non wireless side you talked about a few things FTTH and FWA focus and also Cloud more recently. What does that translate into CapEx for some of these businesses? Directionally, do the CapEx in these businesses go up before they start coming down? That’s my first question. Thank you.
Gopal Vittal
Well, I think firstly this quarter’s capex has been low, but the way that I would urge you to look at it Manish, is look at it over quarter four and quarter one. You have sort of ups and downs in a particular quarter so you average that out. That’s the sort of run rate that we’re currently operating at. You’re right in the assumption that radio capex Generally is trending down but at the same time when you look at transport capex, the investments that are going in on fiber on our code networks, they continue because that is linked to our quest to connect more and more sites to fiber.
Upgrading our transport infrastructure as also running on our core networks based on the capacities and the bandwidth that get consumed. The non wireless capex if you look at it there are, you know the B2B business gets its fair share of capex, that’s normal. The data centers gets its fair share of CapEx. OHMS continues to be, you know, get its fair share. I think the one thing that I would say on cloud is that it’s a modular capex. You know we have already invested in the cloud. We’ve got now two regions running and they’re alive. One in Delhi and the other in Chennai.
We will open up a third region at some point in time but as of now there are two regions running and this has enough headroom for us to continue to fill out those capacities. And if they do fill out those capacities then you know it’s really effectively a three to six month time frame for us to install more capacities. Because remember we also have a data center business which is Nextra, which is in the middle of building our data centers and so space will always be available.
Manish Adukia
Thank you. My second and maybe related question is just on the free cash flow generation of the India business excluding towers again continues to trend like really strongly. Maybe more than a billion dollars of CapEx every quarter now just two subcomponents of that question is 1, 1 AGR payments start for you in March of this year. What are your expectations around it at this point in time? And the second bit is just on shareholder payouts. How are you thinking about that given just maybe the moderation in radio capex in the wireless business and the strong free cash flow generation in the overall India business?
Gopal Vittal
Well on the AGR payments we have written to the government as you know, to be extended the same relief as any other telco and that is a decision that the government has to take. We will abide by whatever decision they take. To that extent I would say that we have the room to make whatever payments are required on the overall strength of the balance sheet because the debt position is getting better and there is a lot of free cash that will get generated over time. We’ve always maintained that our dividends will increase, our leverage goes down and we’ll continue to look for opportunities to grow our business in market around the adjacencies that we’re operating in.
So whether it’s in cloud, it’s security, these are areas that we certainly continue to look at data centers. We’ll keep looking at it. There’s nothing to report as of now. But those are active conversations that, not conversation, active sort of work that is going on behind the scenes to identify opportunities.
Manish Adukia
Thank you. I’ll jump back in the queue.
Vaidehi Sharma
The next question comes from Mr. Piyush Chaudhary. Mr. Chaudhary, you may please unmute your side, introduce yourself and ask your question now.
Piyush Choudhary
Yeah, good afternoon. Thanks for the opportunity and the remarks initially. This is Piyush from hsbc. Two questions. Gopal, you talked about the value proposition of Airtel Cloud in software solutions. How should we think about potential of these services in India and abroad? And if you can share some color on the size of the contracts which you’ve signed with Singtel Globe, Aettel Africa, what’s the kind of margin profile and capex required in these businesses as you scale it up? Second question is on home broadband, one of your peers is providing services using ubr. What is your view on this technology and would Bharti be looking to offer such service?
Gopal Vittal
Yeah. Thank you, Piyush. I think, you know, both on. So let me start with the cloud. I think this is a very large market. It’s also growing rapidly in the market that we are playing in and the services that we’re offering. We estimate that this market could well be in the ballpark of 60,000 crores. So as I’ve mentioned before, this is an ocean that we’re playing in. It’s also growing very rapidly. So for us to pick up any market share, there will be a substantial contribution to the B2B business. So I think that’s the first point.
The second point on software is that that is an even bigger ocean because you’ve got so many telcos around the world. And then of course there are other sectors. But to start with, even in telcos, this huge opportunity. And this, as you recall, this, as you know, is a, is a, is a product that we built for ourselves. It’s called a roadmap that is, that is ongoing for the next several years that will keep getting better and better. For example, I mentioned that we’re going to put AI at the heart of it. That is going to come in the releases in coming quarters.
And therefore I do believe that the development effort that is going in on the software business is a business, a development effort that’s going in for Airtel India and the subsidiary that we have set up which is extellified where all our people are housed is anyway supporting Airtel. So when you take this to market, which typically, you know, you have multimillion dollar deals over five years, this is typically software business. So it’s just like a SaaS business where you’re licensing software. The margins are very, very good and there’s barely any capex. It’s largely some managed services that you need to deploy to integrate the software.
So we’re very excited that we’re playing in a very large market. This is now up to how we look at our own capabilities which is where the gap is in terms of go to market and so on in order to strengthen our whole business. And that’s really where our focus is. So we’re currently working on how do we ratchet up our go to market capabilities because remember, we’ve not done this kind of selling motion. We have done mostly connectivity and messaging type of sales. So this is an area where we are now focused on to ratchet up our capabilities on ubr.
Just to give you a little bit of color on this ubr. It’s really using the WI fi band to provide connectivity. You know, this is used in the B2B space through the Ivan, you know, sort of links that get provided. One of the challenges particularly, particularly in dense urban areas is there’s a very high degree of interference. So even if you. And that’s, that happens in the WI FI band. So even if you have, you know, interference mitigating solutions, you end up with high churn and you end up with poor experience where the density of the customer base is very low.
On fixed broadband UVR could definitely work. So we have done a lot of trials with this UBR piece and we will see where to deploy it if, if we have to, but it will certainly not be intense server. The second point I would make is that we’ve already got a 5G investment that’s played out in mobile and fixed wireless access is just a topping on the cake. So it doesn’t require any incremental capex on the radio side and you can use that to monetize the investment. So that’s an area of focus. But I would continue to underscore that actually the best way to connect to home is through fiber.
So our focus is to actually step up more and more fiber home passes which I mentioned. And we are actually glad that in the last three months of this first quarter of this year, our fiber. Homes. That we are connecting through fiber has actually ratcheted up growth. So if you take the total WI fi number of 930,000, fiber is actually pushing ahead with very, very fast growth and SWA compliments. So that’s really how we think of UVR and the delivery mediums.
Piyush Choudhary
Very clear. Gopal, thank you very much.
Vaidehi Sharma
The next question comes From Sachin Salgaokar. Mr. Salgaokar, you may please unmute your side, introduce yourself and ask your question now.
Sachin Salgaonkar
This is Sachin Salgaokar from Bank of America. I have two questions. First question is on the enterprise business or Airtel business. Gopal just wanted to understand the key drivers out here which would drive the underlying growth for the business and what kind of a steady state growth and margin should we expect in the medium term? I’m not talking about at a time when the business is, let’s say scaling up, but just wanted to understand the opportunity out here. And second question is a follow up question on the CapEx. Now typically we look at global telcos capex to sales hovers anywhere between 13 to 16% depending upon whether it’s an emerging market or a developed market.
For Airtel we are seeing and of course this quarter could be a bit of anomaly but close to around 11% but on an annual basis the numbers are coming down from a 30% to a 20% as we go ahead where most of the radio capex is done and we don’t need any technology led investments that is more towards the 6G or any other technology. What is the steady state capex to sales number we need to keep in mind in commensurate and this is more specifically for a wireless versus let’s say on the non wireless part. Thanks.
Gopal Vittal
Well on Airtel business you know if you look at the drivers of growth we think of the business as having five sort of broad segments. One is connectivity which has historically been our bread and butter. Margins here are very good, in fact better than what we report as the overall margin for the business because this is what we manufacture ourselves. The underlying market growth here has now slowed down to maybe 4 to 5% and while we are getting faster growth in the market, that’s the reality that we are confronted with. The second segment that we look at is IoT here we have a market share of almost 60% and we are clearly winning the segment.
This is a very fast growing segment. We’ve seen massive fit out of meters into smart meters and electricity in homes as the discoms have or the distribution companies have upgraded their infrastructure. There are opportunities around auto, there are opportunities around fleet tracking so this is a business that will only grow and if you look at the total IoT customer base that we would typically have now, it would be in the ballpark of about 50 million and growing rapidly. The third area is, and again here the margins are very good because again this is our core, core business.
The third area is really the wholesale business, which is what I would call largely messaging, both domestic, international, incoming, voice. Here the margins are under pressure and the margins are low. It’s a trading business and we have exited the very low margin business in this area. But the rest of the business has a better margin profile. But it’s really riding on your existing networks and the headwinds that you face here are the shift away from SMS to OTT platforms or in app notifications or even just rate pressures. The fourth area is security. This is largely through partnerships.
Requires very little capex. Just to let you know, we invested about 100 crores a few years ago on the SoC. We’ve not put in major investments since then. Business is growing nicely, but the margins are low because the capex is not required here. It’s more a partnership business where we sort of wrap around products and then offer our SOC solution on top. Then you come to cloud. In the cloud where we are actually, if we were doing, you know, what many telcos do, which is just reselling public clouds, then your margins be very low. We didn’t want to be in that business because that’s a commoditized business and a very crowded space.
So we’ve got our own cloud here. The margins are very good, but it requires CapEx and as I said, this is modular CapEx. So that’s really the way that this business is. Connectivity growing softly as an industry IoT exploding cloud really growing in a big way and massive market security growing rapidly and messaging and wholesale under pressure. Now I come to CapEx. You know, the question on CapEx that I would ask is if you look at the CapEx that we have put in over the last four, five years, we’ve hovered around, we had a couple of highs high years in the 30,000 odd crore region.
But the reason that we were doing that is we were just investing rapidly. But at that point our revenues were low because our ARPUs were even lower. So the percentages were high and it’s come down now as a percentage. But the capex, while it’s peeled off, has not peeled off as much as the percentages have dropped. Which really comes to the question of, you know, it’s CapEx to revenue ultimately and therefore the revenue is as important as the capex. And where will the revenue come from? The revenue will come from incremental arpool, the revenue will come from more volume led growth of customers and finally it’ll come from data for.
So all of those are also factors. We do not expect major cycles of new radio capex that will happen that that’s going to trend down. It’s only CapEx that’s going into some of the new growth areas which, which, which I’ve already talked about.
Sachin Salgaonkar
Thank you. Very clear. Just a small follow up on the enterprise business. Clearly five different businesses. So every business has a different set of competition on a broad based basis. Are we seeing competitive intensity, stable, increasing, decreasing across the board?
Gopal Vittal
I think it’s, it’s difficult to, you know, comment in those terms. I think in connectivity you have the, the big players, you also have some of the newer players coming in but that market is maybe four, five players. In messaging, you know everything rides in the telco network but you’ve got a lot of aggregators sitting there. And then on cloud, you know there are the public cloud players as well as a few other Indian domestic players. IoT is really just, you know, the telco and security is a crowded space but security needs a different kind of capability set and requires you to have credibility and trust with customers. So I guess it’s a mixed, mixed bag..
Sachin Salgaonkar
All right, thank you. All the best.
Vaidehi Sharma
The next question comes from Mr. Sanjay Jain. Mr. Jain, you may please unmute your side, introduce yourself and ask your question now.
Sanjesh Jain
Hi Gopal, Thanks. I got few first on the site addition itself this quarter. Site edition probably is a five year slope. We had a great run last few years thanks to the rural expansion distribution led game which was giving us that market share win. Do you think to that extent the win we were doing because of distribution led benefit will taper off with the expansion now slowing down?
Gopal Vittal
Well, I think that, you know, I can’t comment on a target or forecast of how this will actually play out but we do believe there’s still a lot of opportunities. Sanjesh, because we do believe that there are several sites that we have rolled out. We rolled out about 45,000 sites in the last few years. There are several sites where our utilization is low. So while at an aggregate we’ve met our action standards, there are several sites, several sectors, several areas where our utilization is low. And if you put that together that is like another big year of rollout.
So we really need to sweat that. And there are actions that are currently underway of not just sweating it, but also redeploying in some places where the sites may not be making as much sense and may have made a few mistakes on the ground. So I think that’s really the focus. Second is that I do believe that one of the opportunities that we have within our business is to continue to see gains in ARPU and the drivers of ARPU continue to remain intact. Like I mentioned to you, the penetration of international roaming is still abysmally low.
The penetration of postpaid is still very low. So while we are adding close to 60% of net ads and postpaid fact is that the base is only 7, 7.5%. We’ve got 90 million credit approved users who could be on postpaid and then feature phones. You still have 70, 75 million feature phones in our network that are ready to upgrade to a smartphone. So the headroom for ARPU continues to be there and it’s a function of how well we are able to persuade and execute, you know, users to actually move into some of these areas that, that I talked about.
Sanjesh Jain
No, no, fair enough. We can see the ARPU growth. I was just looking at this distribution.
Gopal Vittal
Both those add up to market share. So that’s why I talked about ARPU also. Sanjish.
Sanjesh Jain
Got it, got it. The second question on the FWA, again, if I look at the market share for FWA, we are at 18%. How do you see this market share changing in our favor in next few year and what, what are we doing to address it? Or we look at FTTH including FW as one segment.
Gopal Vittal
When you look at market share, yes, absolutely. We look at FTTH and fiber as one segment. We call it WI fi. We go to market as WI fi. We don’t care whether the customer is on fiber or FW as long as we get WI fi. We do care at the back that if we’ve got fiber in that particular place, we want the customer to be on fiber because that’s a better quality connectivity. And at the front, therefore we keep it very simple. If you walk into the store and say I want WI fi, say where do you want it? Do a check.
If there’s fiber, you will get fiber first. If there’s fixed wireless access, you get fixed wireless access. If there’s neither, you get nothing. But the fact is that when the frontline person is talking to the user, to the customer, they’re having one conversation on WI fi, they’re not having conversation on technology. I think the. So therefore we are not fussed about not winning on fw. We are fussed about winning on WI Fi. I think that’s our singular metric that we want to chase. Whichever way it comes, we want to win the WI Fi game. I would say that the momentum on WI Fi has been strong with 930,000 as I mentioned and we are continuing to grow the momentum.
So my sense is that even July, which we finished, has been better than June so we should see continued momentum. The second is that we want to see a drop in churn and we’re not happy with some of the issues that we’re facing on experience relating to our transport hygiene and infrastructure. So a lot of work going on there to fix that so that our churn goes down. It’s still, it’s still very good. I mean it’s still, you know, it’s still, I would say industry beating, but we still need to do a better job. And thirdly, we have various ways to measure our market share and our relative performance, which is not just based on the reported numbers to trai but also based on what we see light up on digital platforms which are run by very large OTT companies. And suffice it to say we are happy with the progress that we made in terms of market share as well.
Sanjesh Jain
Got it. Got one. One related question this quarter the the CapEx intensity in the home was around 85% can you help us understand what really the CapEx means in the home segment? It is the modem which we put in the or the CPE which we put in the customer site. Is that the one constitute that?
Gopal Vittal
Yeah, I, I, I’ll allow SH to answer this question.
Soumen Ray
Sanjesh this is the cpes, the FWA CPS and also the wireline and the FTTH as we as Gopal mentioned we are also bolstering with a lot of FTTH rollout happening and we have actually increased our net adds on FTTH in this quarter. So this is primarily towards CP’s both wired as well as wireless FWS and the fiber rollout.
Sanjesh Jain
But I thought fiber SH was in the wireless business, right? The transport network we use two parts of fiber.
Soumen Ray
There is a common fiber backbone and there is dedicated homes fiber. So that’s the difference.
Sanjesh Jain
Clear?
Gopal Vittal
Clear.
Sanjesh Jain
Gopal, one last question probably philosophically on the capital allocation India at 1.3 net debt to EBITA Africa less than 1 times I think balance sheet looks pretty strong and solid. How should we look at capital allocation? 1 into the M&A number 2 distribution to the shareholder and number 3 anything else you are looking beyond this.
Gopal Vittal
Well, I already mentioned that, you know, we will certainly look to step up dividend over the years. You’ve already seen that, that playing out right now. We’ll continue to look at that. We are certainly going to see opportunities for, you know, in market growth in adjacencies. So in some of the B2B areas that I’ve already talked about in data centers, you know, certainly those are, those are areas that we will look at. So, and then over and above that, I would say it’s too premature because at this point in time, our focus is to make sure that we identify opportunities around adjacencies so that we can really get some acceleration.
And the market there is very large and it’s a real ocean, as you know. So this is an area that we need to step up our game on. And we’ve had multiple sort of options, but none of them have, have sort of fructified for various reasons. But this, we are clear that, you know, we, we could see opportunities in, in making, in market acquisitions around adjacencies.
Sanjesh Jain
That’s, that’s pretty clear. Thanks Gopal for answering all those questions and best of luck for the coming quarters.
Gopal Vittal
Thank you.
Vaidehi Sharma
The next question comes from Mr. Vivekanand Subaraman. Mr. Subaraman, you may please unmute your side, introduce yourself and ask your question now.
Vivekanand Subbaraman
Thank you. Yeah. Am I audible? Okay.
Gopal Vittal
Yes.
Vivekanand Subbaraman
My first question is an extension on what Sanjesh asked. Sorry. I am Vivekanand Subaraman from Ambit Capital. The capital allocation question, extending it to your portfolio. Gopal, if you can help us understand how investors should think about value unlocking. In your portfolio you have three listed subsidiaries, Airtel Africa, Hexacom and Indus. And there are some entities which will see IPOs in the next few years like payments and money. And you also have private investors in extra. And now you are doing so much in Xtelify. So from a portfolio perspective, how should one think about the Airtel in say 2028 or 2030 from a listed entities value unlocking perspective? That is question one.
The second one is on tariffs. You have spoken about tariff repair at length in the past and in this discussion also my question is how much more repair is needed. And secondly, you have spoken in the past about tariff dispersion and India having very low tariff dispersion and Airtel doing something about it. So can you please elaborate on these two aspects of tariff. Thank you.
Gopal Vittal
Yeah, I think the second one first and you know, and I will, I will comment briefly on, on the xlify piece and, and so on. And then maybe I’ll invite Harjit to just take the, the other part on tariff. I mean our view is that like I’ve mentioned before, think you know, whether you look at average revenue per user, you look at rate per gb. India is at the bottom on both the axis when compared to other markets all around the world, including markets that have a lower per capita income. So the opportunity is, is clearly there.
The second is that as I’ve again mentioned in the past, the architecture of pricing in, in India is quite, quite skewed. Where you know, if we for a very at the entry level itself or just above the entry level, you get so much of data allowance, you get so much of calling and messaging that you really don’t have any reason to upgrade. If there was a more sensible architecture like you’ve got for example in Indonesia, then we would already be sitting at an ARPU that is substantially higher than where India is today without any pain to customers at the low end or without any pain to customers who can’t afford to pay more.
So it’s just that unfortunate situation where people who can afford to pay the rich are paying less and the poor are, you know, we don’t need to charge the poor anymore. So I think that’s the real issue. On the tariff side you are, you know, you’re already aware of the three listed entities, Africa, Hexacom and Indus. Yes, there are obligations to list the bank at some stage. Nextra as an independent company. Xtelify has been set up as a separate subsidiary not with an intention to unlock value, but really with an intention to provide focus and provide credibility in the marketplace.
Because the anchor customer for xtelify is Airtel India. And now increasingly all of those tools and assets are being transferred to Airtel Africa. So it really becomes two large companies operating across geographies. And if we can take the same cloud now without spending a ton of money on development, but really putting modular Capex, if we can take the same software without spending our money on development but really then making margin on top of it in a business that is sticky, in a business that has licensing revenues, then I think this is a very powerful proposition which comes at very marginal cost.
So that’s our thought process on XLify. Who knows in the future where it will go but as of now, because it’s so locked in into Airtel, it will remain really within the Airtel fold. Harjit, do you want to comment on anything on the value and long.
Harjeet Singh Kohli
Yeah, sure. Thanks. Gopal, I think you covered the thematic pretty well. So maybe Vivekanand, I can give you the perspective around you mentioned what is 3, 4 out years out view on some of the subsidiaries that the company has. There are multiple pockets of some or the other nature of intervention. But I’ll just focus on three pockets. Pocket number one is infrastructure domain pocket number two is really financial services, whether it is Airtel Money as you mentioned or Airtel Payments bank as Gopal was mentioning. And pocket number three is our standalone but minority stakes, whether it’s Axiata in Bangladesh or Axiata’s Dialogue operations in Sri Lanka.
So in the infraspace data centers you commented right there is a minority shareholder we’re not mandated to necessarily list but that’s the natural path to take forward. Our belief is that while the business has probably more than doubled in the last three years, it’s really still early. It can scale up faster. Data center globally, you know better than us commands over 20 times CV EBITDA multiples. It is a significant value, capability and expertise well in place. So we can continue to grow 2, 3x growth on the top line and if it does in the next two, three years and have possibly a listing of the data center entity over the coming years.
No hurry, no mandate, no anxiety. Very very strong value growing well put is in place. Possible monetization Towers is already listed. The question to ask is should it remain listed? There’s no anxiety. Over time it can be a trust or an equity or a combination. That is an intervention that should be done sometimes when markets have stabilized, maybe few more years down the line. There’s no necessity to either delist or continue to list. But it’s independent. We have flexibility to own more or own less depending upon how you want to manage the asset profile. Third is a fiber again, some other players have done an invid structure.
It is possible multiples of 100,000 crude kilometers are available. We don’t need to deconsolidate any debt. We don’t need to do any, you know, deleveraging. But this could be a disciplined way of running a large infra core infra vehicle. Is it necessary? Again, no. Is it possible?
Gopal Vittal
Yes.
Harjeet Singh Kohli
So that’s another three, four, five years out journey. You may think that some of these things will come by in financial services, Airtel Money has four private equity players including Sovereigns QIA and Royal Family of Abu Dhabi. They own 2022% of ATL money in Africa. That is also a business that generates multiples of teams of EV EBITDA It’s a half a billion dollar EBITDA business in, in Edel Africa. We are keen to get it listed. It’s a very strong mature platform but yet growing at over 30% per annum. So that’s Edelmani’s IP is probably more, more visible in the Future.
Whether it’s 3/4 or 6 or 9, I don’t know but it should happen. Adel Payments bank is under licensing guidelines from RBI and at least next two, three years we need to make sure it’s listed the right thing to do and thereby there will be illumination of that which you will certainly see. Then comes our stakes in 28% stake in Bangladesh, 11% stake in Lanka which got merged into dialogue. I think suitable interventions be done over time. We will of course need to monetize and create liquidity out of this. No hurry. It’s not multiples of billions of dollars but still very significant.
And these, these things or these interventions you will see will, will come by generate more episodic liquidity also illuminate value and thirdly create path to exist to whosoever they need to. But our intent continues to be owning all of these businesses but for the stakes in South Asia.
Vivekanand Subbaraman
Many thanks Gopal and Harjit for the elaborate answers. A lot of food for thought. Thank you very much and all the best.
Vaidehi Sharma
The next question comes from Mr. Aditya Suresh. Mr. Suresh, you may please unmute your side, introduce yourself and ask your question now.
Aditya Suresh
Hi, good afternoon, this is Suresh from Macquarie. Gopal, I had a few questions for you. On the partnership side particularly Perplexity, which I think is a really interesting partnership. Could you maybe comment about how the economics would work for this partnership? That’s one. The second is on your Bajaj Finance partnership any kind of goal post milestones which you can kind of speak about in point two.
Gopal Vittal
Well, I think you know on the first question, you know we are a very large platform in the country access to you know, perhaps the best quality customers as reflected in our, in our ARPU and therefore any company that is looking to get distribution, you know we are the first port of call. Suffice it to say that, you know I can’t disclose the economics but you know it’s really at a very, very marginal cost because this is really providing the distribution platform to Perplexity and we’re very delighted with the partnership on the, the value that being delivered to customers is very high but the cost is margin us on the, on the overall finance side, yes, we have partnerships with Bajaj we also have partnerships with other NBFCs.
It’s currently, you know, nice scaling up nicely. So, you know, we’ve lit up the, the, the, the EMI card across multiple channels which include our, our digital interfaces as also our stores and increasingly we will spread into other channels as well. And you know, for us the, the real focus is to make sure that we lend to the right person so that even the, you know, collection cost goes down and the delinquencies are low, which then proves the power of the platform. And I think that’s really what we’re trying to do. But it’s scaling nicely. We’re currently seeing in the month of July substantial growth of almost 15% over June and that’s continuing to sort of grow traction across.
Aditya Suresh
I think for your B2B segment there clearly seems to be far more emphasis on what’s happening in that business compared to your previous earnings calls. Is that a fair call out to make? Is that like a strategic pivot or shift more towards B2B versus your B2C business?
Gopal Vittal
Yeah, I think the, Well, I wouldn’t say there’s greater focus towards the B2B business, but I would say there’s greater action going on in the B2B business to retool the portfolio. You know, the mobile portfolio or the B2C portfolio is fairly solid because you’ve got mobile, you’ve got home broadband, you’ve got convergence. But in B2B, you know, you’re operating in very large unaddressed spaces. And if we as a telcos remain in just connectivity and CPaaS and maybe some sort of IoT, then we are missing the very large ocean that is growing very rapidly around the areas of cloud and security.
And by the way, they have very strong linkage with your existing business and they also leverage very strong relationships that we already have with all of these enterprises. So this is something that is like I’m putting disproportionate amount of my time in that side of the portfolio because there’s a lot of retooling that is, that is happening as we speak. And so there are multiple, you know, not just the, the product work but also the go to market work where this portfolio needs to be retooled, capabilities need to be retooled and that’s really what you’re seeing. And this is the reason we’re talking a lot more about it because the opportunity for growth is very high. There are any milestones which you can maybe point to or articulate the share of EBITDA for this business in the overall India portfolio, still modest. It’s about 10% thereabouts. But if I take a three year. I think that one thing that I would say is that the contribution actually is a little higher than that because you know, we don’t disclose our postpaid B2B in that segment. We disclose it in B2C. Most telcos around the world put that in B2B. But be that as it may, I agree with you that it’s still modest. The opportunity is vast. I’m not going to put a revenue number but I think in the immediate future I would love to see a roster of credible customers on our platform. On cloud. I’d love to see that same roaster coming through on some of the software beyond the two that I spoke about, which is Singtel and Globe.
We’re having multiple conversations with at least 30 to 40 telcos and there’s a lot of interest. So if we can get some of that going that would be a great milestone and then we can sit down and say where do we take this business over the next five years?
Aditya Suresh
Thank you.
Vaidehi Sharma
Thank you everyone. I would now remind the participants to stay connected on the call for the next session on Bharti Hexacom. I would now request Gopal to give his closing remarks for Bharti Airtel.
Gopal Vittal
I just want to thank you very much for a lively Q and A. I look forward to seeing you again next quarter.
Vaidehi Sharma
Thank you Bhopal with this now I’d like to hand over to Mr. Soman Ray for his opening remarks on Bharti Hexacom performance.
Soumen Ray
Thank you Vaidya. Good afternoon to everyone and welcome to the Bharti Exacom Q1FY 2026 earnings call. I have with me Akhil and Naval joining me on the call. We delivered another steady quarter with revenue of about 2,263 crores. Ebital, which is Ebitda, after leases for the quarter came in at about 1079 crore with a margin of 47.7% improving by about 110bps. Sequentially we added 17,000 mobile customers and about 54,000 homes customers. Spark 4 customer addition came in at about 283,000. ARPU for the quarter was 246. Benefiting from the continued mix improvement and one day extra in the quarter.
Home business is seeing strong momentum with net adds holding on which we expect to continue operating free. Cash generation which is Ebitdal minus Capex was a strong 854 crores balance sheet continues to remain robust with a net debt excluding leases at about 2,806 crores. And our net debt to EBITDA is about 0.7 times. Whilst ARPU customers and Ebitdal margins have improved, there is a reduction in reported revenue due to drop in roaming revenue. Finally, would want to call out two key areas where we continue to focus in our effort to deliver convenience and a brilliant experience to our quality customers.
First, the extensive use of digital tools which enable us to deliver safe and reliable connectivity with our industry. First, anti spam solution. This solution has already identified two and a half billion spam calls since its launch. The second area that I would like to mention is the leverage of partnership which was built by Airtel over the years delivering extensive slate of digital and linear content and digital offerings. That in the most recent times is the partnership that Airtel stitched with for publicity which offers free AI capabilities for a year to all our customers at no extra cost.
So we continue to leverage the partnerships that Airtel, the parent company has developed. With that, I’ll hand over to Vaide to open the floor for questions.
Vaidehi Sharma
Thank you Soman. With this, the first question comes from Sanjay’s Jain. Mr. Jain, you may please unmute your side, introduce yourself and ask your question now.
Sanjesh Jain
Yeah, good afternoon. Thanks. Thanks for that opportunity. My first question on this drop in the roaming charges, is it more seasonality because second half sees more tourists in Pakistan and first half has a lower tourist or is there beyond anything to look into this roaming charges drop?
Soumen Ray
Well, see roaming charges as I mentioned, as you mentioned, they’re seasonal. Unfort. There were couple of unfortunate incidents which happened in Q1 and I was discussing with the CFO of a large travel aggregator and he also confided that travel and it did come down and picked up later as is evident from the numbers. Sanjesh, this is like a pass through. Our EBITDA has not got impacted. So I think there would be a bit of fluctuation which is why when we did the IPO we also gave out the intrinsic ARPU. So when I said that the ARPU is 246, that’s the intrinsic ARPU excluding the roaming charges.
Because in India, frankly, you know, you know, the customer doesn’t pay for roaming. So I would say yes, this is seasonal and it will keep going up or down these times I think it’s a little large than what we would have expected but clearly offset through access charges. Which means, yeah, roaming revenue was impacted.
Sanjesh Jain
You mean there was a tension in the border and Hence it was more elevated.
Soumen Ray
This is a BHL earnings call will not go there. But yes, there were concerns where people did not travel as much as they normally would.
Sanjesh Jain
That’s very clear. Shuman, second on the cost line item. Again it appears to be very volatile. I can understand the access charges but employee cost drop have been quite steep and there is a significant sharp jump equally in SGA cost. What explains these two line items?
Soumen Ray
Yeah, so the employee cost was some year end provisions which was made in the last quarter and has got reversed. You know that we participate in one of the two circles that we have under the company under the universal Service Obligation Fund. The USO fund. Correct. When do you set up a USO tower? Under that fund you get certain benefits or certain subsidies for constructing the tower and there are various stage gates which you need to cross before that subsidy gets cleared. Some of those were a little stuck which was provided for. But fortunately with the help of the department we could clarify their. And a lot of reversal crept in into that, into that number. Without getting into gory details if I. I know you see a very large, I think 7, 8% growth in OpEx. The underlying group growth is much lower, I would say in the range of about two and a half, three percent.
Sanjesh Jain
That’s, that’s fair. One last question. As shown before back into the queue on. We have 2800 crores of debt, 800 crores of quarterly cash flow we have been generating. We don’t have debt beyond four quarters. How should we look at the payout ratio considering that we don’t have any much of an opportunity in the urgency unlike Aytel, should we go to a full payout anytime soon?
Soumen Ray
Well you know it would be improper for me to overtake the authority of the board. As you know this year the dividend has been increased and there would be a directional increase in dividend. I must also tell you that the debt that we have, which is primarily because our external debt is very small, it is not even worth mentioning. It is primarily the deferred payment liabilities which is to the department and the coupons that it carry. It is not very exciting to repay that. But yes, Bharti Exacom at the position of cash that it has and it will continue to do, we may evaluate even some amount of prepaying of the debts.
But as far as the distribution or the allocation of capital is concerned I must also call out to you. Whilst this company does not have a lot of investment into digital platforms and all but you know as time progresses we Might like to increase our number of sites. You know, we have leadership positions in both circles. There will be 5G deployment and so on and so forth. So it’s not completely out of the woods. There could be investments which would go in. But yes, directionally I agree with you. The company will have surplus funds and I think the board would take into cognizance future liability and thereby decide the payout at which direction you should increase.
Sanjesh Jain
That’s fair. Shomin, thanks. Thanks for answering all those answers and all those questions and best of luck for the coming quarters.
Soumen Ray
Thank you. Sanjish.
Vaidehi Sharma
The next question comes from Mr. Aditya Suresh. Mr. Suresh, you may please unmute your side, introduce yourself and ask your question now.
Aditya Suresh
Hi, this is Aditya Suresh from Macquarie. I was surprised by the lack of questions on the Bharti call on arpu, so maybe I’ll ask here. Assuming there is no tariff impact, there is no tariff increase from an industry perspective. I appreciate there are levers at play whether it be from a mixed perspective, more postpaid, more data, more international etc. How much more do you think we can kind of expand rrpool in the absence of any headline industry wide tariff increase?
Soumen Ray
Aditya, first of all I would answer this in two parts. The first part is unless a major tariff tariff increase has happened, we have not seen SIM consolidation or drop in customers. So there is no major blockage of a marginal increase in tariff as we speak. We haven’t seen it. The only time that there is some drop in our customer base is when headline tariff increase happens. That tells us that affordability is there. The other thing that I would tell you Aditya is the way we look at ARPU is a derived number. The way the consumer looks at it is the value cost equation.
So if we can keep making it is new people adopting higher price points. We are not trying to get a postpaid customer who gives me 350 rupees to go to 400. The way of doing this is to provide propositions to customers which will appeal to them at a higher cost. I’ll give you a simple example. You have a one and a half GB pack and you are watching something and I tell you that you are at 90% of your daily data limit. Would you like to buy a top on of one GB which is for today.
Now as demographic income changes and affordability increases, the probability of you taking that one gb, maybe you will not need the whole one gb, maybe you will need only half a g. But the probability of you taking goes up at that moment of time. You are not evaluating that I am paying 19 rupees over our 300 rupees. My today’s data is over. I want to watch this movie so I’ll spend 19 bucks. So if you look at it from this perspective, what will happen is more and more people, the more contextual I can make it, the more timing is appropriate for the next best action for that customer.
The ARPU will keep growing up because headline tariff, if it is not changing, what is changing is ancillary revenue attached to a mobile connection which is contextual to a customer. So according to me, I cannot define that A person will not buy more than 3gb thrice, more than 1gb thrice a month. In some month he might buy it six times. He may not upgrade to the 2GB back because he says I don’t use 2GB every day. I’ll remain at one and a half GB. I don’t want to spend that 50 bucks. So technically I would say it will play out.
This is how disposable income, demographic profile and our ability which we have demonstrated over the last so many quarters, our ability to monetize them at the right contextual opportunity. Opportunity.
Piyush Choudhary
Thank you for sharing that perspective, Shamin.
Vaidehi Sharma
The next question comes from Mr. Vivekanand Subaraman. Mr. Subaraman, you may please unmute your side, introduce yourself and ask your question now.
Vivekanand Subbaraman
Hello. Thank you for the opportunity. I’m Vivekanand Subaraman from Ambit Capital. I have two questions. So the first one is on the FTTH versus FWA mix. Your home and office services is growing at a very fast clip. You are. You mentioned that you are increasing your catchment area for FTTH services. But in the markets you operate in, which are more rural than Airtel, does it make more sense for you to remain for a long time on FWA versus say Bharti Airtel which operates in urban areas where FTTH might be more sensible and how much can this FWA market scale up? Is it more important for you? That is question one.
The second question is what is so different about your customer profile that the data traffic or the mobile data usage is so much higher than the other industry players? If you can help us understand some nuances of consumer behavior which perhaps seem to be playing out differently for you than the rest of the industry, that will be great. Thank you.
Soumen Ray
I’ll take the second one first and that’s obvious. One, Vivekanand. The penetration of WI Fi eats into mobile data consumption. So the rest of the country has more WI FI penetration or people go to work in places where they have access to WI fi, where they do not need to use mobile data. That is the the single biggest reason why the data consumption per customer per month, which is about 29 GB, is higher than the blended average of any of the players, whether it is Airtel or others in the market who operate nationally. So that’s the second answer.
The first answer, you, you are directionally right, which is to say that FWA will have a possibly bigger share when the complete rollout happened. Let’s say five years from now, FWA will have a bigger share of total connected homes in these two markets as compared to rest of the country because these are less urbanized. But at the same time we are also seeing because these are less urbanized. A lot of development is happening in these markets, not this. There are a couple of pockets which are a little bit disturbed, but otherwise there’s a lot of development which is happening.
New buildings coming up, new residential settlements, shared services, offices, opportunities to work within the state. A lot of this is coming up. The terrain is difficult to pull fiber both in both the two circles. So to that extent it is challenged. But directionally, I would like to believe that we will continue our fiberization. If you are looking at the ultimate mix, as I said five years from now, yes, most likely wireless broadband through FWA will have a higher share of total broadband in these two circles than rest of the country. But that share will come down compared to today because we will be rolling out five in these two states as much as possible because there are a lot of TLP towns in both.
These two FLPs are also there so they may not feature in top 30. The other very interesting thing about NESA is that it’s a very culturally evolved place and there is a lot of adoption of newer things, newer technologies. And if we can pull a long haul national long distance fiber to let’s say Shillong, I’m sure which we have, I’m sure we will be able. It makes sense because the extraction of that fiber will be very, very good.
Vivekanand Subbaraman
Great Samin, thanks for the detailed explanation. I have one small additional question bit on numbers. So last three years the lease costs or your infrastructure cost which, which is basically the difference between the Ebital and EBIT, that number has grown at 15% CAGR and almost 600 crore, right? This is the most likely the tower infrastructure cost plus loading charges. Now this number I wanted to understand from a radio point of view, you said that you will Keep rolling out more. And perhaps your aspirations and requirements of this market also entail greater rural rollout. How should one think about these costs and overall your incremental cash ebitdal margin? Because in FY25 it wasn’t that great, but perhaps here on we can expect something better. Thank you.
Soumen Ray
Yeah, yeah. I think you have approached it absolutely correctly. I think we were in a rollout phase. The only now additional cost which will come on a yearly basis between EBITDA and EBITDA because the energy cost is subsumed in ebitda. There are with various power companies a certain yearly increase which is agreed, which will seep in and there would be more 5G radios which are put up compared to what it is today and thereby there would be some loading payment that will go up. But you are absolutely right. The gap, whatever additional had to happen, largely has happened now. It will be more gradual and there will not be any major gap which will come going forward.
Vivekanand Subbaraman
Okay, thank you so much for the elaborate answers to my questions.
Soumen Ray
Thank you.
Vaidehi Sharma
The next question comes from Mr. Pius Chaudhary. Mr. Chaudhary, you may please unmute your side in. Introduce yourself and ask your question now.
Piyush Choudhary
Yeah. Hi. Hi Soman. Thanks for the opportunity. Two questions. Firstly, you talked about possible site expansion and 5G expansion. So can you share the outlook for CapEx intensity for Bharti Hexacom for 2020 fiscal 26 and beyond? Secondly, ATL Black, like how is the adoption of ATL Black in these circles? How has subs grown and what are the tangible benefits you are seeing of the same?
Soumen Ray
Thanks. In line with what we have said earlier, CapEx will marginally unwind wind because our main rural acceleration program site rollout had happened earlier. So CapEx will directionally unwind. But you have to look at a year in full because there are a lot of issues primarily on account of monsoons and otherwise, which hinders growth. So at a yearly level it will marginally unwind coming to black attachment. I think this current proposition with IPTV is seeing a lot of traction in these circles as well. We are looking at a very convenient solution where first of all the dish as it was called is no more required.
There is no disruption because of weather because one of the problems which a DTH service had was disruption due to cloudiness or rains. All of that is not there. The earlier black also MEANT you had two kinds of sources to which content came. The OTTs came through the broadband, whereas the linear content came through satellite. Now that has all been converged. So that helps the cause. We have had very, very promising result. Nothing different from what we have seen in other parts of the country. Rajasthan, it took a little time to take off, but I think now it has taken off and if I look at the last two weeks, three weeks numbers, I think catching up with the national level, so it will trend a similar way. But as I mentioned again, the proposition is, is very good for two, three reasons and which is why the adoption has increased significantly.
Piyush Choudhary
Got it. Any kind of numbers which you can share in terms of what’s the penetration or what’s the subscriber.
Soumen Ray
I. You would have to excuse me on that one because see, it’s not about giving numbers. It’s also about then numbers can change a little bit because of various factors then into explanation. So we generally try to explain to people like you and others on the call about the generic direction in which the organization is going from a strategy and clarification on numbers. If something is a little weary, like we discussed the OPEX part.
Piyush Choudhary
Got it very clear. Thanks a lot.
Soumen Ray
Thank you.
Vaidehi Sharma
The next question comes from Mr. Kunal Vora. Mr. Vora, you may please unmute your side, introduce yourself and ask your question.
Kunal Vora
Yeah, thanks for the opportunity. So a couple of questions I wanted to check on digital services you’re offering perplexity, Google 100GB storage. These are all valuable services especially for premium customers. What is the value which you look to drive? Is it a customer retention tool? Is it to gain customer insights? Or is there a plan to monetize by segmenting and offering these only to hire ARPU customers eventually? Can these partnerships be leveraged to drive arpu?
Soumen Ray
Kunal, do you have a second question or this is the only one.
Kunal Vora
Second question is on Like Towers. But like if you can answer this one like I’ll take it later.
Soumen Ray
Okay, cool. Kunal. See we’ve always said that we want to deal with quality customers and give them the best possible experience that we can. That is how our so called mantra has been as to how we drive value in Hexacom. Now why did we bring Perplexity? This is a tool which was lauded globally and we felt if we bring it to our customers, our customers will feel that we are not just providing them a mobility service, we are also trying to make their life better by giving them an opportunity to experience some of these things.
Whether it is Google Cloud storage or having Perplexity. I am sure till we had launched it, a large part of the customers in Rajasthan and NISA would not have heard of Perplexity. Similarly I mean people of course know about cloud, but I’m not sure even if you have an Android phone, you do not know how do you buy and how much, how do you move your phones other than the youth? So we felt that we should be at the leading edge of offering our customers the opportunity to experience some of these new age things. Now what is in it for me? Well, I don’t make any money for sure.
It’s a third party ip so even if I were to charge, I would just get a commission. But this is not about trying to segment and give somebody anything free. It is about the fact that martyxacom as a company through the Airtel Mobility brand is trying to bring new experiences to its customer for them to try. We have not said we’ll give perplexity free for the whole life. It’s for a year and people get a chance to experience it and then they decide whether they want it or not and they have got a good time of a year.
Similarly, you know, we have some extended tie ups with some of the OTT players which is only exclusive to us. We try to bring them on board and give that experience to people. So the whole idea is that other than pure mobility or home services, can we bring something extra to the customers which they see value, introduce them and then they can evaluate whether they want to commercially continue it or not.
Kunal Vora
Understood. Thank you. And second one is on tower additions. There seems to be a disconnect between Airtel’s commentary and that of Indus Towers. You seem to be largely done with the expansion while Indus is still expecting strong tower additions. So how do I reconcile this?
Soumen Ray
Okay, so see the reconciliation is simple because Indus works with four, five organizations. We are one of them and possibly between us and another one, we are the smallest. So I mean we have heard that Airtel still continues to do some rollouts. We have heard from media reports that there are some other players in the market who are also looking at rolling out. We for as a small, we will also do some. It won’t be zero. I know this quarter some of you would have seen a number of a drop that is nothing but you know, relocation, timing mismatch.
So please ignore that we are not reducing our number of tasks but in the multiple sources we are only one of them. As far as Airtel India is concerned. I think it’s improper to discuss this because the shareholders of Airtel India may or may not be on the call. But since you have raised the point, I’ll tell you Airtel India will look at which place they want to roll out based on economic reasons, customer acquisition reasons, customer experience reasons. So it is not a spring pring of 10,000 towers across 22 circles. It’s concentrated and prioritized. So in that priority in Q1 Bhakti Hexacom has evaluated it independently and realized we can live with this as of now.
Kunal Vora
Understood. Okay, thank you. That’s it for me.
Vaidehi Sharma
Thank you, everyone. Now I would like Salman to give his closing remarks on Bharti Hexagom.
Soumen Ray
Thanks a lot for joining in. It was a good quarter of margin expansion, steady cash generation. Look forward to speaking to all of you next quarter. Thank you.
Vaidehi Sharma
Thank you everyone for joining the call today. Recording of this webinar will be available on the company website. Have a great day ahead.