BHARTIARTL The Cleanest Quarter in Years Made the Headline Growth Number Look Smaller

A Quarter With Nothing to Explain Away

The last post on Bharti Airtel spent most of its length unwinding two distortions: an investor deck that recast history to overstate FY2025 EBITDA by 11.3%, and a 432% profit headline that was really a one-time Rs5,913.3 crore tax credit dressed up as operating momentum. This quarter has neither problem. The audited results show zero exceptional items in either direction for the first time across every quarter this site has covered, and the "before exceptional items" and "after exceptional items" net income lines are, for once, identical numbers: Rs5,947.9 crore, up 103.4% YoY from Rs2,925.1 crore.

That creates an unusual, almost backwards distortion worth naming explicitly: the headline year-on-year growth rate looks smaller than the real one, not bigger. Owners' net income (the "after exceptional items" line most coverage will quote) grew "only" 43.0% YoY, from Rs4,159.9 crore to Rs5,947.9 crore - a real, solid number, but one that undersells what happened, because the Jun-24 comparative quarter carried its own one-time boost: a Rs1,234.9 crore exceptional credit that inflated that base (see the 2024-06 post). Compare the two quarters on the company's own clean, like-for-like basis instead - net income before exceptional items - and growth was 103.4%, not 43.0%. EBIT grew 69.7% to Rs15,882.4 crore, EBITDA margin came in at 57.3%, essentially flat with Mar-25's 57.4% high rather than a fresh record (see Key Financial Metrics), and revenue grew 28.5% to Rs49,462.6 crore, still substantially inflated by Passive Infrastructure Services (Indus Towers) now sitting in the base for a second consecutive full quarter.

Two threads from the last post moved, in opposite directions again. The Bharti Airtel-side leg of the tower transfer to Indus - the ~12,700-tower slump sale that closed in March with an escrow holdback - was formally reconciled this quarter at a final consideration Rs111.0 crore lower than originally disclosed (see Beyond the Usual). The Bharti Hexacom leg - put "in abeyance" last quarter after a state-owned shareholder asked for a fresh process - wasn't mentioned once this quarter, in either the filings or the earnings call. Silence isn't the same as resolution; see below.

The Prescription

Bharti should keep pushing the pivot Gopal Vittal spent unusually long on this call: turning its own internal data, workflow, and Cloud platform into a business it sells to other telcos, not just a tool it uses on itself. The company has already signed platform deals with Singtel and Globe Telecom - explicitly not group companies, which Vittal called out as "a measure of the credibility that we have been able to build" - on top of extending the same stack to Airtel Africa, Indus Towers, and Airtel Payments Bank internally. This is a real, credible diversification story for a business that's spent three straight quarters shedding low-margin B2B commodity revenue (Airtel Business revenue fell another 7.7% YoY this quarter, on schedule with that exit), and Airtel Business's own capex actually fell 11% YoY this quarter after last quarter's 83% spike for the Cloud build-out - the investment-then-normalize pattern management promised is playing out exactly as described.

What it should stop doing: giving the same non-answer on dividend policy for a fourth straight quarter while the balance sheet keeps making the case for a real one. Asked again about a formal payout framework, Vittal's answer was functionally identical to last quarter's: "we will certainly look to step up dividend over the years... our leverage goes down." Net debt to EBITDA (annualized) fell again this quarter, to 1.70x from Mar-25's 1.86x, the company redeemed a further $1 billion of senior notes, and operating free cash flow grew 67.9% YoY - a company deleveraging this consistently while cash generation compounds this fast has run out of good reasons to keep deferring an actual stated framework instead of restating the same directional intention every quarter.

Key Financial Metrics

Q1 FY26 (quarter ended Jun 30, 2025) vs. Q1 FY25, consolidated, audited

FX rates below are the company's own disclosed RBI reference rates for the quarter: INR 85.42 = USD 1 (average, for income-statement lines) and INR 85.56 = USD 1 (June 30, 2025 close, for balance-sheet and market-cap figures); the year-ago quarter used INR 83.36 (average) and INR 83.45 (close).

Metric	Q1 FY26 (INR)	Q1 FY26 (USD)	Q1 FY25 (INR)	YoY
Revenue	Rs49,462.6 crore	~$5.79B	Rs38,506.4 crore	✅ +28.5% (still inflated by Indus Towers now sitting in the base as a full-quarter consolidated subsidiary)
EBITDA» (audited results' own "profit before D&A, finance costs, share of JV, exceptional items and tax")	Rs28,347.5 crore	~$3.30B	Rs19,944.2 crore	✅ +42.1%, margin 57.3% vs 51.8% - essentially flat with Mar-25's 57.4% high
EBITDAaL» (EBITDA after lease payments, company-reported, deck-only metric)	Rs24,994.5 crore	~$2.93B	Rs20,264.4 crore	⚠️ the Q1 FY25 base here comes from the deck's own "re-instated" comparative basis, not an audited figure - same caution flagged in the last three posts applies
Operating Income» (EBIT, derived: audited EBITDA minus audited depreciation & amortisation)	Rs15,882.4 crore	~$1.86B	Rs9,355.0 crore	✅ +69.8%, margin 32.1% vs 24.3%
Profit before tax (audited, statutory)	Rs10,504.4 crore	~$1.23B	Rs6,025.3 crore	✅ +74.4%
Net Income» before exceptional items (owners, company's own like-for-like basis)	Rs5,947.9 crore	~$696M	Rs2,925.1 crore	✅ +103.4% - the real growth rate, and identical to the "after exceptional items" line below since this quarter had none
Net Income (total profit for the period, after exceptional items, audited)	Rs7,421.8 crore	~$869M	Rs4,717.5 crore	✅ +57.3%
...of which, attributable to Bharti Airtel's own shareholders (audited)	Rs5,947.9 crore	~$696M	Rs4,159.9 crore	✅ +43.0% (understates the real growth - see above)
...of which, attributable to non-controlling interests» (audited)	Rs1,473.9 crore	~$173M	Rs557.6 crore	✅ +164.4%
Basic EPS	Rs10.26	~$0.12	Rs7.21	✅ +42.3%
Capex (company-reported)	Rs8,307.0 crore	~$972M	Rs8,007.0 crore	⚠️ +3.7% - broadly flat, a real like-for-like comparison since neither quarter needs a recast adjustment
Operating Free Cash Flow» (EBITDA minus capex, company-reported style)	Rs20,040.5 crore	~$2.35B	Rs11,937.2 crore	✅ +67.9%
Total Cash (cash and bank balances, balance sheet, audited)	Rs5,323.3 crore	~$622M	Rs5,017.9 crore	✅ +6.1%

Note on the Profit-before-tax row: this quarter's Rs10,504.4 crore figure is identical to "profit before exceptional items and tax," confirming the audited results show a genuine nil for exceptional items this quarter - the first time that's happened across any quarter this site has covered. The prior comparable quarter (Jun-24) did carry an exceptional credit of Rs1,234.9 crore, which is why the owners'-net-income YoY comparison (line above) reads lower than the clean like-for-like comparison.

Balance sheet metric	Jun 2025 (INR)	Jun 2025 (USD)	Jun 2024 (INR)	YoY
Total Assets	Rs515,036.7 crore	~$60.20B	Rs445,090.7 crore	⚠️ +15.7% (Indus Towers not yet a consolidated subsidiary a year ago)
Total Liabilities	Rs354,288.5 crore	~$41.42B	Rs333,057.2 crore	⚠️ +6.4%
Equity attributable to owners (book value)	Rs119,723.6 crore	~$13.99B	Rs88,306.7 crore	✅ +35.6%
Book value per share (company-disclosed, adjusts for partly-paid shares)	Rs204.6	~$2.39	Rs152.5	✅ +34.1%
Net Debt (company-reported, incl. leases)	Rs191,579.4 crore	~$22.39B	see note	⚠️ see note below
Net Debt excluding lease obligations	Rs125,489.3 crore	~$14.67B	see note	⚠️ see note below
Net Debt/EBITDA (annualized, company-reported)	1.70x		n/a - see note	✅ improved from Mar-25's 1.86x
Interest Coverage Ratio (company-reported)	6.32x		n/a - see note	✅ improved from Mar-25's 6.27x

Net Debt's YoY row is deliberately left as "see note" rather than a percentage: the deck's own Jun-24 comparative in this quarter's presentation (Rs187,620.6 crore incl. leases) is explicitly flagged in the deck's own footnote as a re-instated, not originally-reported, figure - continuing the recast issue flagged in detail in the Mar-25 post and the post before it. The real, originally-reported Jun-24 net debt (incl. leases) was Rs202,580.3 crore, per the 2024-06 post - materially higher than the deck's Rs187,620.6 crore recast figure, and a reminder that this recast distortion isn't confined to older, pre-Indus quarters; it still reaches into the deck's own "recent" comparative column shown in this quarter's own presentation. The more reliable comparison is quarter-on-quarter: net debt including leases fell to Rs191,579.4 crore from Mar-25's Rs203,838.4 crore, a real, current-quarter, non-recast figure both times.

Key Operational Metrics

A press release, investor presentation, and earnings call transcript were all available for this quarter.

Metric	Jun-25	Jun-24	YoY
Total customer base (consolidated)	~605,485,000	~567,561,000	✅ +6.7%
India customer base	~436,096,000	~412,145,000	✅ +5.8%
Africa customer base	~169,389,000	~155,416,000	✅ +9.0%
Mobile Services India ARPU»	Rs250	Rs211	✅ +18.8% (benefited from one extra day in the quarter and continued mix improvement, per management)
Postpaid net additions (India, quarter)	0.7 million (57% of total net adds)		steady with the pace flagged in recent posts
5G customer base (India, per management commentary)	~152,000,000	~105,000,000 (per Sep-24 post)	✅ +44.8% YoY vs Mar-25's ~135,000,000
Homes Services net additions (quarter)	939,000 (highest ever, per management)		✅ new record, beating Mar-25's 812,000
Fixed Wireless Access (FWA) net additions (quarter)	~540,000		management flagged this as the main driver behind the Homes record above
Digital TV (DTH») customer losses (quarter)	~200,000 lost		⚠️ continued subsidy-elimination fallout, partly offset by IPTV growth
Airtel Payments Bank monthly transacting users	~97,509,000	not sourced this quarter	✅ growing, no clean YoY base available

Management's ARPU framing continued the same emphasis as the last two posts - Vittal reiterated that "feature phone to smartphone upgrades, prepaid to postpaid upgrades, data monetization, and international roaming continue to be central to our ARPU growth in the absence of any tariff repair" - with no fresh mention of the "broken" tariff-structure language from last quarter's call. The industry-wide tariff-increase ask has gone quiet for now, replaced by continued confidence in mix-driven ARPU growth alone.

Segment Comparison

Bharti Airtel still reports seven consolidated segments; an eighth, Mobile Services South Asia, remains disposed since June 2024 and reports nil. This is the second consecutive quarter where Passive Infrastructure Services (Indus Towers) has a full quarter of genuine, audited consolidation behind it - so unlike the last two posts, the YoY comparison for that segment is still not available (Indus wasn't a subsidiary in Jun-24), but every other segment's YoY comparison below is now clean and real.

Segment	Revenue (Q1 FY26)	Revenue (Q1 FY25)	YoY	Segment Result (Q1 FY26)	Margin (Q1 FY26)	Margin (Q1 FY25)
Mobile Services India	Rs27,396.6 crore	Rs22,527.4 crore	✅ +21.6%	Rs8,425.4 crore	✅ 30.8%	21.5%
Mobile Services Africa	Rs12,083.4 crore	Rs9,636.9 crore	✅ +25.4%	Rs3,826.1 crore	✅ 31.7%	29.0%
Airtel Business	Rs5,057.1 crore	Rs5,476.5 crore	⚠️ -7.7%	Rs1,556.7 crore	✅ 30.8%	26.9%
Passive Infrastructure Services (Indus Towers, full quarter)	Rs8,091.3 crore	n/a - not a subsidiary yet		Rs2,763.0 crore	34.2%
Homes Services	Rs1,717.9 crore	Rs1,367.0 crore	✅ +25.7%	Rs295.7 crore	⚠️ 17.2%	25.5%
Digital TV Services	Rs762.8 crore	Rs777.1 crore	⚠️ -1.8%	Rs2.3 crore	⚠️ ~0.3%	10.7%
Others	Rs107.8 crore	Rs81.6 crore	✅ +32.1%	Rs66.2 crore
Total segment revenue	Rs55,216.9 crore	Rs39,960.6 crore	✅ +38.2%	Rs15,784.5 crore

("Segment Result" is profit before finance costs, charity/donation, exceptional items and tax - an EBIT-level margin - per the audited segment note, consistent with prior posts.)

Mobile Services India remains both the largest segment and the strongest margin story on the site, extending the reversal tracked since Dec-24 with margin up another 9.3 percentage points YoY to 30.8% - a new high across every quarter covered here. Airtel Business's margin kept improving even as revenue kept shrinking (26.9% → 30.8%), the same pattern flagged last quarter as confirmation that the exited commodity business barely contributed to profit - see below for this quarter's capex confirmation of that thesis. Homes Services margin fell further, to 17.2% from 25.5%, now the largest single-segment margin decline on the site, as FWA-related capex continues to run ahead of the revenue it's generating. Digital TV's segment result all but disappeared, down to a 0.3% margin from 10.7% - worse than Mar-25's near-breakeven result, confirming management's own warning last quarter that the DTH subsidy elimination "should help cash flow even as it likely keeps pressuring near-term segment margin during the transition."

Airtel Business: the capex spike normalized exactly as guided

Last quarter flagged an 83% YoY capex jump in this segment for a one-time Cloud-platform and data-center build-out ahead of a June market launch, with CFO commentary at the time suggesting the spike would normalize afterward. It did: Airtel Business capex fell 11% YoY this quarter (Rs731.2 crore vs Rs818.1 crore a year ago), even as the Cloud platform itself actually launched (publicly announced August 4, 2025, the day before this quarter's results were approved) and already has paying external customers in Singtel and Globe Telecom. Revenue fell 7.7% YoY exactly as the low-margin B2B exit implied, but segment EBITDA still grew 8% and margin expanded 6.3 percentage points to 42.6% - a segment getting both smaller and more profitable at the same time, which is the intended shape of the strategy, not a contradiction.

Mobile Services India and Homes: still the two engines, still diverging on capital efficiency

Mobile Services India added roughly 1,831 network towers this quarter (a slower pace than the ~3,300-tower additions flagged in the last two posts, consistent with management's repeated guidance that "the tower-rollout pace will substantially slow down" now that coverage is largely complete). Homes Services posted a third consecutive record quarterly net-add figure (939,000, up from Mar-25's 812,000), but margin compression continued alongside it - the segment is still buying growth with FWA-related capex (routers, CPE) faster than that capex is converting to segment profit, the same tension flagged in each of the last two posts with no sign yet of an inflection.

Beyond the Usual

The finalized tower-sale consideration came in 5.5% lower than what was originally disclosed

Last quarter's post reported that the ~12,700-tower slump sale from Bharti Airtel itself to Indus Towers closed on March 24, 2025 for Rs1,828.8 crore in cash plus Rs203.2 crore held in escrow pending final site-count reconciliation - a combined provisional total of Rs2,032.0 crore. This quarter's standalone financial results disclose that the reconciliation is now complete and the sale consideration has been finalized at Rs1,921.0 crore - Rs111.0 crore (5.5%) lower than the provisional combined total disclosed three months ago - with the balance released from escrow to Bharti Airtel by Indus after the quarter closed. Nothing in the filing explains what drove the reduction (a lower final site count, a valuation adjustment, or something else), and the company isn't obligated to explain it in this level of disclosure; but a nearly 5.5% swing on a related-entity asset transfer, quietly resolved in a single sentence of a standalone-results footnote, is exactly the kind of number worth a reader knowing about rather than assuming the original headline figure was the final one.

The Bharti Hexacom tower-transfer pause wasn't mentioned once this quarter

The Mar-25 post covered management's disclosure that the ~3,400-tower Bharti Hexacom leg of the same transfer had been put "in abeyance" after TCIL, a public-sector-undertaking shareholder in Hexacom, requested a fresh, more transparent process. That thread went completely quiet this quarter: it appears nowhere in the quarterly results, the investor presentation, or either the Bharti Airtel or Bharti Hexacom halves of the earnings call - a contrast with last quarter's candor on the same topic. The Hexacom Q&A this quarter did field a direct question on capital allocation and payout policy, but nobody raised the pending tower transfer at all. Silence doesn't mean the deal is dead or that anything improper is happening; it does mean a reader has no way to tell whether the "fresh process" TCIL asked for has started, stalled, or been quietly shelved, and it's worth watching whether it resurfaces - or stays buried - in the next post.

Two smaller, genuinely interesting items from this quarter, neither a criticism of the company:

Bharti Airtel and Bharti Hexacom signed definitive agreements with Adani Data Networks Limited to acquire rights to 400 MHz of spectrum in the 26 GHz millimeter-wave band across six states (Gujarat, Mumbai, Andhra Pradesh, Rajasthan, Karnataka, and Tamil Nadu), pending regulatory approval. Adani Data Networks won a large chunk of 26 GHz spectrum in India's 2022 5G auction but has never built a commercial mobile network on it; this deal, if approved, hands Bharti additional millimeter-wave capacity in some of its biggest revenue markets from a rival that appears to be exiting spectrum it never deployed.

Airtel Africa's own ongoing $100 million share buyback programme continued into its second tranche: after completing the first $45 million tranche (26.3 million shares) on April 24, 2025, the company began a second $55 million tranche on May 14, 2025 and had returned a further $16.9 million (7.1 million shares) by June 30, 2025. Combined with a separate direct purchase, Bharti's effective economic stake in Airtel Africa crept further to 62.47% (from 62.35% at the end of last quarter) - the same steady, mechanical stake-creep pattern tracked across the last three posts, continuing at an unremarkable pace.

Management's Framing: A Cleaner Story, and a New Platform Pitch

Vittal's opening remarks spent noticeably more time than in recent quarters on the Cloud and software-platform business - not a passing mention, but a multi-minute walkthrough of the company's internal data/workflow/channels architecture and how it's now being sold externally, including the naming of Singtel and Globe Telecom as paying non-group customers. This belongs at the top of the read precisely because it's the strategic story of the quarter (see the opening section and The Prescription), distinct from this quarter's financial performance. On capital allocation, the answer on dividend policy was, almost verbatim, the same non-committal "directional increase" language used on the last call - management continues to describe intent without stating a framework. Notably, unlike last quarter, nobody on the call - not analysts, not management - raised the Bharti Hexacom tower-transfer pause (see Beyond the Usual), a quiet contrast to the transparency management showed on that same topic three months ago.

The Stock Rose 15.9% This Quarter, and 128.6% Over Two Years

Bharti Airtel's shares closed at Rs2,009 on the BSE on June 30, 2025, per the company's own disclosed closing price - up 15.9% from the Rs1,733 close on March 31, 2025 covered in the last post, a sharper move than that quarter's 9.0% gain. Zooming out further, the stock is up roughly 128.6% over the two years to June 30, 2025 (from Rs878.75 on June 30, 2023, independently sourced) - marginally below Mar-25's roughly 131% figure, simply because the trailing window's older endpoint (June 2023) sits at a slightly higher base than March 2023 did; the underlying trend is the same steady, uninterrupted climb documented in every post on this site so far. The company has not split its stock since 2009, so no split adjustment is needed for either price. As always: the stock's mood swings quarter to quarter regardless of what the underlying business is actually doing - this quarter, once again, both happened to move the same direction.

Target Valuation Range

Enterprise value Rs1,397,500 crore, implying a perpetual FCF growth rate of roughly 6.0% - up from ~5.8% last quarter, reversing the first-ever sequential decline. The stock got more expensive on every headline multiple this quarter, and unlike last quarter, this isn't a trailing-EPS-base illusion - the reverse DCF confirms the market is now pricing in genuinely higher growth expectations than it was three months ago.

Market cap → enterprise value	Q4 FY25	Q1 FY26
Market capitalization	Rs1,037,800 crore	Rs1,205,900 crore (~$140.9 billion)
Book value/share	Rs195.99	Rs204.6
Enterprise value	Rs1,241,600 crore	Rs1,397,500 crore (~$163.3 billion)

Peer-multiple sanity check	Q4 FY25	Q1 FY26
Trailing P/E	29.37x	32.42x (company-reported; the first sequential increase across the last three posts - trailing EPS still includes Mar-25's one-time tax windfall, but the share price genuinely outran even that inflated earnings base)
P/B	8.69x	9.67x (company-reported, Market Price/Book Value; tracking the share-price gain more than book-value growth)
EV/EBITDA	11.33x	12.40x (company-reported; consistent with the broader re-rating across every multiple this quarter)

Reverse DCF: Solving for the perpetual free-cash-flow growth rate implied by enterprise value, using the trailing four quarters' company-reported Operating Free Cash Flow (Sep-24 through Jun-25: Rs16,512.6 crore + Rs19,895.9 crore + Rs13,003.5 crore + Rs19,859.8 crore = Rs69,271.8 crore) and a WACC of approximately 11.3% (updating the methodology used in the last several posts: an ~11.9% cost of equity off a ~7.1% risk-free rate, 0.8 beta, and 6% India market risk premium, blended against an estimated post-tax cost of debt of roughly 7.2%, weighted at the ~86.3%/13.7% equity/net-debt split implied by this quarter's enterprise value - a higher equity weighting than last quarter's 83.6%/16.4% split, since net debt fell while market capitalization grew), the market's Rs1,397,500 crore enterprise value implies a perpetual FCF growth rate of roughly 6.0% - up from Mar-25's implied 5.8%, reversing the first-ever sequential decline flagged in that post. Both enterprise value and trailing free cash flow grew this quarter, but enterprise value grew faster (up roughly 12.6% from Rs1,241,600 crore) than trailing FCF (up roughly 10.5% from Rs62,709.1 crore) - the market is now paying up slightly ahead of the cash-flow growth it's actually getting, a mild reversal of last quarter's "cheaper on a cash-flow basis" read.

The honest read this quarter: nothing here says the stock is overvalued outright - a ~6% perpetual growth assumption is not an aggressive ask for a business still growing EBITDA at 42% - but the gap between price appreciation and fundamental cash-flow growth that opened up this quarter is worth tracking into the next one, since it's the first quarter on this site where the market moved ahead of the business rather than the other way around.

---