Bharti Airtel Q2 preview: Higher Arpu, subscriber upgrades to drive earnings
NEW DELHI: Bharti Airtel’s July-September earnings are expected to show early benefits of its move to higher-priced plans, although the tariff changes could also lead some subscribers to switch operators. Premiumization, postpaid additions and growth in its Africa business are also expected to support revenue and profit.
India’s second-largest telecom operator by market share will report its results for the second quarter of fiscal 2027 (Q2FY27) on Thursday. Consolidated revenue from operations is expected to rise 15.6% year-on-year (y-o-y) and 3% sequentially to ₹60,298 crore, while net profit is forecast to grow 45.7% y-o-y and 21.2% quarter-on-quarter (q-o-q) to ₹9,897 crore, according to the average estimates of nine brokerage firms.
The results come days after rival Jio Platforms made its stock-market debut on 28 October. Jio listed at a 21.4% premium to its issue price of ₹1,119 and ended its first day with a market capitalization of ₹13 trillion, behind only its parent Reliance Industries Ltd. The listing pushed Bharti Airtel to third place among India’s most valuable companies.
“Arpu (average revenue per user) trajectory will be influenced by one extra day in 2QFY27 vs 1QFY27, upgrades to 5G/4G from 2G, prepaid-to-postpaid conversion (Bharti being the biggest beneficiary), and higher data usage,” said analysts at IIFL Capital in a 6 October note.
“Bharti should also benefit from the discontinuation of lower-value packs, which is likely to encourage subscribers to upgrade to higher-value plans,” the brokerage said. However, the benefit is likely to be limited to one month, as the changes were implemented in mid-August. Different recharge frequencies and timelines could also affect the extent of the gains.
In August, Airtel discontinued its entry-level ₹299 monthly prepaid plan, which offered 1GB of data a day. Subscribers seeking a daily data allowance for 28 days must now move to the ₹349 plan, a 16.7% price increase that comes with 1.5GB of daily data and unlimited 5G access.
Arpu, which measures the average monthly revenue earned from each mobile customer, is a key indicator of telecom spending. Airtel’s Arpu is expected to rise 2.7% q-o-q to ₹271 in the September quarter, according to the average estimates of five brokerages. Jio’s Arpu, by comparison, rose 1.5% sequentially to ₹218.8 in the same period.
In the April-June quarter, Bharti Airtel's consolidated revenue from operations rose 18.4% y-o-y to ₹58,539 crore, driven by growth in its mobile, enterprise, home broadband and Africa businesses. Net profit increased 37.3% to ₹8,167 crore, partly offset by higher depreciation and tax expenses and a one-time ₹353 crore charge at its Africa unit.
Ebitda (earnings before interest, tax, depreciation and amortisation) rose 19.3% y-o-y to ₹33,599 crore in the June quarter, which the company attributed to higher revenue growth. For the September quarter, Ebitda is expected to increase about 17% y-o-y to ₹34,493 crore, according to the average estimates of five brokerages.
“We estimate Bharti’s consolidated Ebitda margin to be flat qoq at 56.9% and expect capex to decline qoq (except home broadband capex),” said analysts at BofA Securities in a 6 October note.
At 1234pm, Bharti Airtel shares were down 0.7% at ₹2,051 apiece on the National Stock Exchange.
Subscriber trade-off
While higher tariffs could lift revenue per customer, the impact on subscriber additions will be closely watched.
Airtel had 376.5 million mobile subscribers in India at the end of the June quarter and a total customer base of 491.9 million, including fibre-to-the-home (FTTH), machine-to-machine and wireline connections.
“We build in India wireless revenue of ₹31,020 crore, a rise of 4% q-q (10% y-o-y), underpinned by subscriber additions of 1.9 million (vs 3.3mn in 1QFY27), with the EoP (end of period) subscriber base rising to 378.4 million,” said analysts at Nomura in a 4 October note.
Jio, meanwhile, added a net 9.1 million subscribers in the September quarter, taking its total base to 542.4 million.
“We will watch for any elevated churn from Bharti to peers given its unilateral tariff actions on low end prepaid plans and postpaid hikes,” said analysts at J.P. Morgan. “Our subscriber additions are softer as we expect some churn from tariff actions in prepaid plans. The impact of tariff actions on low end prepaid plan and postpaid plan hikes should be visible in 2HFY27.”
Africa and enterprise
Growth beyond the Indian mobile business is expected to provide additional support. Airtel Africa reported a 26% y-o-y increase in September-quarter revenue to $1.97 billion, while net profit rose 16% to $254 million.
The enterprise business is also expected to grow steadily. Airtel Business houses the company's enterprise connectivity offerings, including data centres, cloud and internet of things (IoT) solutions.
“We factor in steady growth for the Enterprise business in 2QFY27F, building in revenue growth of 10% y-y (2% q-q) to ₹5,780 crore and Ebitda of ₹2,550 crore, with margins remaining largely stable at 44%,” Nomura said.
When Airtel reports its results on Thursday, investors will look for signals on the scope for further tariff increases, capital expenditure as data-centre investments gather pace, and whether its recently introduced 5G slicing plans can accelerate postpaid adoption.