India’s telecom leader posted another strong quarter with ARPU hitting Rs 259 and free cash flow at Rs 194 billion.Â
Bharti Airtel continues executing flawlessly, posting its third consecutive quarter of steady growth with average revenue per user climbing to Rs 259 and free cash flow generation hitting Rs 194 billion. The company added 4.4 million subscribers while expanding margins to 57.6%. By any operational measure, this is a machine is firing on all cylinders.
On the valuation front, though, Nuvama sees the stock reaching Rs 2,600, calling Bharti “the best way to play the Indian telecom sector,” Emkay Global, on the other hand, maintains a “reduce” rating with a Rs 2,000 target saying “the street is building optimistic revenue growth.”
The one question lingers: can Bharti sustain double-digit ARPU growth for three more years?
The Quarter Delivers on Expectations
Revenue grew 3.4% quarter-on-quarter to Rs 546.8 billion, “in line with our expectation of Rs 550.4 bn,” Nuvama reports. Bharti has now posted nine consecutive quarters of sequential revenue growth, demonstrating the durability of its duopoly position alongside Reliance Jio.
“India mobility grew +1.9% QoQ to Rs 286.5 bn driven by steady ARPU growth to Rs 259 (+1.1% QoQ) while subscriber addition inched up to +4.4 mn sub adds (+1.4 mn in Q2FY26),” per Nuvama. That ARPU progression—from Rs 256 to Rs 259—may seem incremental, but annualises to roughly 4% growth, and that’s before factoring in potential future tariff hikes.
Emkay Global provides context on the subscriber performance: “This was offset by 4.35 mn QoQ subscriber additions (street: 2.5 mn).” Bharti added nearly double the expected subscribers, suggesting market share gains continue even as the industry matures. “4G subscriber addition came in healthy at +5.2 mn subs (+5.1 mn in Q2FY26) to 291 mn subs,” Nuvama adds, showing the migration from 2G/3G to 4G remains a multi-year tailwind.
However, Emkay notes a miss on the key metric: “Bharti’s India Mobile ARPU rose 1.3% QoQ to Rs 259, but missed the street’s expectation (Rs 261).” That two-rupee shortfall hints at potential headwinds to aggressive ARPU forecasts.
Margin Expansion Continues
Profitability improved across segments. “EBITDA margin improved 29bp QoQ to 57.6%,” Nuvama reports on a consolidated basis, while Emkay highlights that “India Mobile services revenue grew 1.9% QoQ, largely in line with expectation; EBITDA margin expanded by 20bps QoQ to 60.5%.”
The India mobile business generating 60.5% EBITDA margins represents world-class profitability. For context, most global telecom operators struggle to exceed 40% margins. Bharti’s margin profile reflects both pricing discipline in a rational duopoly and the operating leverage from a massive subscriber base spreading fixed costs.
“Consolidated EBITDA margin (57%) expanded by 30bps QoQ, aided by 30bps and 70bps margin expansion in enterprise and Africa segments, respectively,” Emkay notes. The Africa business—often viewed as a distraction—is actually contributing to margin improvement.
The Cash Generation Story
Free cash flow generation remains the most compelling aspect of Bharti’s investment case. “FCF generation remained healthy at Rs 194 bn (Rs 186 bn in Q2FY26),” Nuvama reports. That’s Rs 776 billion annually—roughly $9 billion—from a company with a market capitalization around $100 billion.
Emkay confirms the cash strength: “With lease-adjusted net debt-to-EBITDAaL at 1.02x and OFCF generation (ex-of lease liabilities) of Rs 159.2 bn in Q3FY26, majority of Bharti’s capex toward 5G coverage expansion is behind.”
This is the critical inflection point for Bharti. “Capex remained moderate at Rs 118 bn (Rs 114 bn in Q2FY26),” per Nuvama, suggesting the heavy 5G investment cycle is largely complete. With peak capex behind and revenue/margins still growing, free cash flow should accelerate further.
“Bharti is in an enviable position today generating ~Rs 200 bn of quarterly FCF, which should further improve with peak 5G capex behind,” Nuvama emphasizes. The brokerage notes “its recent call for partly paid rights should further strengthen the balance sheet.”
Strategic Investments in Growth Areas
Management is deploying cash into adjacent opportunities. The homes/fiber broadband segment “reported a strong 7.3% QoQ growth, adding 1.2 mn net subscribers and taking the installed connected home base to 13 mn,” Emkay reports. “With the current fixed broadband market size at ~45 mn homes, growing over 30% in FY26, the management reiterated its focus on seizing the incremental 50 mn connected home market opportunity.”
The data center ambition is substantial. “Management highlighted capex shall follow a non-linear trajectory (while maintaining peak capex to be behind) and is optimistic about investments in data centre, IoT and cloud,” Nuvama states. The company “has stepped up investments in its data centre business, Nextra, with plans to scale up capacity to 1GW over next few years. Currently, it operates 120–130MW of capacity and has a ~12% market share with an aim to take it upward of 25%.”
The Valuation Divide
Here’s where the analyst community splits sharply. Nuvama “retain ‘BUY’ with a TP of Rs 2,600 (earlier Rs 2,500)” based on sum-of-the-parts methodology, “valuing India mobility business at 15x, other businesses at 7x EV/EBITDA and Tower/Africa business at a 20% discount to current market cap.”
Emkay Global takes the opposite view: “We maintain REDUCE on Bharti and SOTP-based TP of Rs 2,000.” The brokerage’s concern centers on growth expectations versus valuation. “We believe that the street is building optimistic revenue growth, driven by 10.3% ARPU CAGR over FY25-28.”
Nuvama’s optimism rests on execution and market position. The brokerage highlights “industry-leading ARPU, steady subscriber additions and robust FCF generation” as reasons to believe Bharti can sustain premium valuations. The view is that in a duopoly with rational pricing, Bharti and Jio can continue extracting value from subscribers through tariff optimization and service upgrades.
The data center opportunity, homes business expansion, and Africa growth provide additional levers beyond core mobile. “We continue to see Bharti as the best way to play the Indian telecom sector,” Nuvama states directly.
