Bharti Airtel Limited (BHARTIARTL.NS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Vaidehi Sharma, the moderator for this Webinar. Welcome to Bharti Airtel Limited and Bharti Hexacom Limited First Quarter ended 30th June 2025 earnings webinar. Present with us today is the senior leadership team of Bharti Airtel and Bharti Hexacom Limited. 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's opening remarks, we will open up for an interactive Q&A session. [Operator Instructions] With this, now I would like to hand over to Mr. Gopal Vittal for his opening remarks.

Thank you, Vaidehi. A very warm welcome to everyone to -- for our earnings call for the first quarter ended FY '26. With me, I also have Shashwat, Soumen, Harjeet, 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 in 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% 2 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's scholars supported thus far, reflecting generally our commitment to foster gender equality and 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 INR 49,463 crores just under INR 500 crores, INR 49,500 crores. This was impacted by a decline in the B2B segment. As I've 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 INR 33,820 crores. And EBITDA -- EBITDAaL, which is stripped off the lease obligations, margins came in at 51.4%, improving by 65 basis points sequentially. The operating free cash flow, which is EBITDAaL minus CapEx, was at INR 11,928 crores. We continue to deleverage our balance sheet. During the quarter, we redeemed senior notes worth $1 billion. Disciplined CapEx spending and operational excellence underpins our solid balance sheet. India net debt to EBITDAaL now stands at 1.3. Our approach to financial prudence and the consequent strong balance sheet is recognized by lending -- leading agencies, the most recent being the credit rating upgrade that came in from CRISIL. A 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 from our customers. Network expansion is happening as planned, with about 1,830 network sites and over 8,300 kilometers of fiber deployed during the quarter. We are future-proofing our network with accelerated fiber deployment, reflected in over 1,30,000 kilometers fiber rollout in the last 3 years. We continue to expand fiber home passes for our broadband businesses, along with FWA rollout across 2,500 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 adds 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 INR 250 had the benefit of 1 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 ARPU 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 are 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 ran -- we lost around 2 lakh customers during the quarter, while the decline was somewhat compensated by the step-up in IPTV net adds. 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 extensive content slate. In the Airtel business segment, we reported revenues of about INR 5,060 crores. Discontinuation of the commoditized low-margin business is not 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 are 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 INR 3,100 crores, growing over 27% year-on-year. Deposits remained strong at about INR 3,750 crores, 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. EBITDAaL was INR 4,456 crores with a margin just under 37%. The balance sheet remains solid with net debt to EBITDAaL 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 is strong. Africa accounts for 24% of revenues, India mobile at 55% and India nonmobile 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. The second area of focus is to win quality customers. Let me start with broadband. As I mentioned earlier, we see a large opportunity -- penetration opportunity in homes. Our investments are now prioritized to capitalize on this growth. We continue to focus on 3 areas: deepening our network and market footprint and therefore, we're accelerating rollout of fiber home passes and want to get to a quarterly run rate of 2.5 million home pass, up from 1.6 million. FWA 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 WiFi customers will get access to 6 months of 100 GB 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 3 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, 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 made substantial investments in OPGW capacities, connecting all metros and major cities. In addition, we triggered a significant investment 9 months ago to connect data centers and cable landing stations in Mumbai and Chennai. On the submarine cables and capacities, we've invested over INR 2,000 crores over the last 5 years, and we expect to further light up from 45 Tbps capacity to 180 terabits per second 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 are 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 fourth of August. Let me give you a little bit of texture on this. Over the last 5 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, where it's a platform above all else. So let me explain to you how it works. It really works across 3 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've 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 the 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 4 things that they want to do with us in any business. Buy something, we build 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 on 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 save 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 into Airtel Africa, which is our subsidiary, we extended to Indus Towers, which is a totally different type of business. And we've also extended it to Airtel Payments Bank, which is again a very different type of business. I'm also pleased that we've 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 build. 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, life cycle 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 meters 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 stores 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 in any OTT platforms, whether they originate in India or abroad, our tool works. We'll 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 e-mails, 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 2 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 are 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 3 that I will illustrate today. On content, we have a slate of the most compelling content covering 25 OTT apps in India within the Xstream platform. We have a partnership with Amazon. We have a partnership with Disney. We have a partnership with Netflix. We have a partnership with Zee, 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 are seeing strong customer engagement within a few days of the launch and have already climbed to over 5 million and growing every day. The fifth and last pillar of our strategy is War on Waste. As I've 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 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 Vaidehi.

[Operator Instructions] With this, the first question comes from Mr. Manish Adukia.

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 INR 2.5 billion of CapEx. And while there could be some seasonality in the June quarter, it looks like for the full year, the CapEx may be trending down again in fiscal '26. Now if we were to take a slightly longer-term view at 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 bound. 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.

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 4 and quarter 1, 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 core 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 -- the B2B business gets its fair share of CapEx. That's normal. The data center gets its fair share of CapEx. Homes continues to be -- get its fair share. I think the one thing that I would say on cloud is that it's a modular CapEx. We have already invested in the cloud. We've got now 2 regions running and they are live. 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 2 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 it's really effectively a 3- to 6-month time frame for us to install more capacities because remember, we also have a data center business, which is Nxtra, which is in the middle of building our data centers. And so space will always be available.

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 $1 billion of CapEx every quarter. Now just 2 subcomponent of that question is, one, 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?

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.

The next question comes from Mr. Piyush Choudhary.

This is Piyush from HSBC. Two questions. Gopal you talked about the value proposition of Airtel Cloud and 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 that you have signed with Singtel, Globe, Airtel 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?

Yes. Thank you, Piyush. I think 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 we're offering, we estimate that this market could well be in the ballpark of INR 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, there's huge opportunity. And this, as you recall -- this as you know, is a product that we've built for ourselves. It's called a road map 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, 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 -- is a development effort that's going in for Airtel India. And the subsidiary that we have set up, which is Xtelify, where all our people are housed is anyway supporting Airtel. So when you take this to market, which typically you have multimillion dollar deals over 5 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 WiFi band to provide connectivity. This is used in the B2B space through the IWAN sort of links that get provided. One of the challenges, particularly in dense urban areas is there's a very high degree of interference. So even if you -- that happens in the WiFi band. So even if you have 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, UBR definitely work. So we have done a lot of trials with this UBR piece, and we will see where to deploy it if we have to. But it will certainly not be in dense urban. 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 the 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 3 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 WiFi number of 930,000, fiber is actually pushing ahead with very, very fast growth and SWA complements. So that's really how we think of UBR and the delivery mediums.

The next question comes from Sachin Salgaonkar.

This is Sachin Salgaonkar from Bank of America. I have 2 questions. First question is on the enterprise business or Airtel business. Gopal, I 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 an anomaly, but close to around 11%, but on an annual basis, the numbers are coming down from 30% to 20%. As we go ahead, where most of the radio CapEx is done and we don't need any technology-led investments, i.e., move towards a 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?

Well, on Airtel business, if you look at the drivers of growth, we think of the business as having 5 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 and as the DISCOMs or the distribution companies have sort of 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 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 a 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. It requires very little CapEx just to let you know, we invested about INR 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 what many telcos do, which is just reselling public clouds, then your margins would be very low. We didn't want to be in that business because that's a commoditized business in 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 a 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. The question on CapEx that I would ask is if you look at the CapEx that we have put in over the last 4, 5 years, we've hovered around -- we had a couple of high years in the 30,000-odd crores region. But the reason that we were doing there is we were just investing rapidly. But at that point, our revenues were low because our ARPUs were even low. 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 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 ARPU. The revenue will come from more volume-led growth of customers and finally, it will come from tariff repair. So all of those are also factors. We do not expect major cycles of new radio CapEx that will happen, that's going to trend down. It's only CapEx is going into some of the new growth areas which I've already talked about.

Very clear. Just a small follow-up on the Enterprise business. Clearly, 5 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?

I think it's difficult to comment in those terms. I think in connectivity, you have the big players. You also have some of the newer players coming in, but that market is maybe 4, 5 players. In messaging, everything right in the telco network, but you've got a lot of aggregators sitting there. And then on cloud, there are the public cloud players as well as a few other Indian domestic players. IoT is really just the telco. So -- 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 bag.

The next question comes from Mr. Sanjesh Jain.

I got a few. First one, the site addition itself. This quarter site addition probably is a 5-year slow. We had a great run last few years, thanks to the rural expansion distribution-led team, which was giving us that market share win. Do you think to that extent, when we were doing because of distribution-led benefit will taper off with the expansion now slowing down?

Well, I think that 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 opportunity, 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 we may have made a few mistakes on the ground. So I think that's really the focus. Second area 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 adds in postpaid, fact is that the base is only 7%, 7.5%. We've got 90 million credit approved users who could be on postpaid. So -- and then feature phones, you still have 70 million, 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, users to actually move into some of these areas that I talked about.

No, no, fair enough. We can see the ARPU growth. I was just looking at this distribution...

And all those add up to market share. So that's why I talked about ARPU also, Sanjesh.

Got it. 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 the next few years? And what are we doing to address it out? Or we look at FTTH including FWA as one segment when you look at market share.

Yes, absolutely. We look at FTTH and fiber as one segment. We call it WiFi. We go to market as WiFi. We don't care whether the customer is on fiber or FWA as long as we get WiFi. 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, so where do you want it, do a check, if there's fiber, you will get fiber first. If there's fixed wireless access, you'll 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, the customer. They're having one conversation on WiFi. They're not having conversation on technology. I think we -- so therefore, we are not fussed about not winning on FWA. We are fussed about winning on WiFi. 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 WiFi 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 very good. I mean 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 to say, we are happy with the progress that we made in terms of market share as well.

Got it. Got one related question. This quarter, 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?

Yes. I'll allow Soumen to answer this question.

Sanjesh, this is -- CPEs, the FWA CPEs and also the wireline and the FTTH 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 CPEs both wired as well as wireless, FWAs and the fiber rollout.

But I thought fiber Soumen was in the wireless business, right? The transport network, where you...

There are two parts of fiber. There is a common fiber backbone and there is dedicated homes fiber. So that's the difference.

Clear. Gopal, one last question probably philosophically, on the capital allocation, India at 1.3 net debt-to-EBITDA, Africa, less than 1x, I think balance sheet looks pretty strong and solid. How should we look at capital allocation, one into the M&A? Number two, distribution to the shareholder? And number three, anything else you're looking beyond this?

Well, Sanjesh, I already mentioned that we will certainly look to step up dividend over the years. You've already seen that playing out right now. We'll continue to look at that. We are certainly going to see opportunities for in-market growth in adjacencies. So in some of the B2B areas that I've already talked about, in data centers, certainly, 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 sort of fructified for various reasons. But this -- we are clear that we could see opportunities in making in-market acquisitions around adjacencies.

The next question comes from Mr. Vivekanand Subbaraman.

My first question is an extension on what Sanjesh asked. Sorry, I am Vivekanand Subbaraman 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 3 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 Nxtra, 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 2 aspects of tariff?

Yes, I think the second one first. And I will comment briefly on the Xtelify piece and so on. And then maybe I'll invite Harjeet to just take the other part. On tariff, I mean, our view is that like I mentioned before, I think, 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 clearly there. The second is that, as I again mentioned in the past, the architecture of pricing in India is quite skewed where 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 will 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 an unfortunate situation where people who can afford to pay, the rich are paying less and the poor are -- we don't need to charge the poor anymore. So I think that's the real issue on the tariff side. You're already aware of the 3 listed entities, Africa, Hexacom and Indus. Yes, there are obligations to list the bank at some stage, Nxtra is 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 Xtelify. 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. Harjeet, do you want to comment on anything on the value unlock?

Yes, sure. Thanks, Gopal. I think you've covered the thematic pretty well. So maybe Vivekanand, I can give you the perspective around -- you mentioned what is 3, 4 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 3 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 3 is our stand-alone, but minority stakes, whether it's Axiata in Bangladesh or Axiata's Dialog operations in Sri Lanka. So in the infra space data centers, you commented right, there is a minority shareholder. We are not mandated to necessarily list, but that's the natural path to take forward. Our belief is that while the business is probably more than doubled in the last 3 years, it's really still early. It can scale up faster. Data center globally, you know better than us, commands over 20x EV/EBIDTA 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 the EBITDAs in the next 2, 3 years and have possibly a listing of the data center entity over the coming years. No hurry, no mandate, no anxiety, very strong value, growing well, [ values ] 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 the fiber. Again, some other players have done an InvIT structure. It is possible, multiples of 100,000 route kilometers are available. We don't need to deconsolidate any debt. We don't need to do any deleveraging, but this could be a disciplined way of running a large intra -- core infra vehicle. Is it necessary? Again, no. Is it possible? Yes. So that's another 3, 4, 5 years out journey. You may think that some of these things will come by. In financial services, Airtel Money has 4 private equity players, including sovereign's QIA and Royal Family of Abu Dhabi. They own 20%, 22% of Airtel Money in Africa. That is also a business which generates multiples of teens of EV/EBITDA. It's $0.5 billion EBITDA business in Airtel 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 Airtel Money's IPO is probably more visible in the future, whether it's 3 quarters or 6 or 9, I don't know, but it should happen. Airtel Payments Bank is under licensing guidelines from RBI. And at least next 2, 3 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 and Dialog. I think suitable intervention will 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 things -- or these interventions, you will see will come by generate more episodic liquidity, also illuminate value. And thirdly, create path to exits to whosoever they need to. But our intent continues to be owning all of these businesses, but for the stakes in Axiata in South Asia.

The next question comes from Mr. Aditya Suresh.

Aditya Suresh from Macquarie. Gopal, I had a few questions for you on the partnership side, particularly on Perplexity, which I think is a really interesting partnership. Could you maybe comment about how the economics would work through 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 2?

Well, I think -- on the first question, -- we are a very large platform in the country, access to perhaps the best quality customers as reflected in our ARPU. And therefore, any company that is looking to get distribution, we are the first port of call. Suffice it to say that I can't disclose the economics, but it's really at a very, very marginal cost because this is really providing the distribution platform to complexity, and we're very delighted with the partnership. On the -- the value being delivered to customers is very high, but the cost is marginal for us. On the overall finance side, yes, we have partnerships with Bajaj. We also have partnerships with other NBFCs. It's currently nice -- scaling up nicely. So we've lit up the EMI card across multiple channels, which include our digital interfaces as also our stores. And increasingly, we will spread into other channels as well. And for us, the real focus is to make sure that we lend to the right person so that even the 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 are currently seeing in the month of July, substantial growth of almost 15% over June, and that's continuing to sort of grow traction across.

And then 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 there like a strategic pivot or shift more towards B2B versus your B2C business?

Yes. I think the -- well, I wouldn't say there's a greater focus towards the B2B business. So I would say there's greater action going on in the B2B business to retool the portfolio. 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'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 a very strong linkage with your existing business, and they also leverage very strong relationships that we already have with all 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 happening as we speak. And so there are multiple not just 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.