Bharti Airtel's dream run may be behind it

Bharti Airtel’s fortunes have multiplied since the telecom shakeout of 2019. That phase of industry consolidation, along with the company’s expansion into digital services—broadband, OTT aggregation, DTH and more—fuelled an exceptionally bullish narrative. As subscriber numbers grew and India’s ARPU (average revenue per user) remained far below global levels, Airtel was touted as a high-growth opportunity. Its share price soared, and so did its valuation. At the time, the stock’s EV/EBITDA multiple (since P/E was not reliable due to inconsistent profits) hit a multi-year high of over 12 times. Fast forward six years, and while the business has evolved into a solid cash-generating machine, the narrative hasn’t changed. The stock now trades at a P/E of 40 times and an EV/EBITDA of around 13 times. While these multiples may not appear excessive in isolation, Airtel is by far the most expensive telecom stock globally on this basis. The question is no longer whether Airtel is a good company—it clearly is. The real question is: does it still deserve the bullish growth narrative? Or are we paying a premium for growth that has already played out? No room left for ARPU expansion To begin with, growth from user additions appears largely done. Even Airtel’s own management has acknowledged that mobile subscriber growth has plateaued. The only viable lever left for revenue growth is ARPU expansion. However, ARPU expansion is not as easy as it is often portrayed. Some compare it to petrol prices—claiming that incremental hikes will be absorbed by users without much resistance. However, this analogy ignores the fundamental nature of telecom: it's a heavily regulated utility. Steep hikes don’t just lead to backlash—they invite regulatory scrutiny. Unlike petrol, telecom pricing cannot be raised at will. One common defence of the growth narrative is that India’s ARPU is still far lower than in developed markets. That’s true in absolute terms but misses the broader context. ARPU must be seen relative to per capita income. On that front, India’s ARPU adjusted for income is not drastically different from developed countries. When benchmarked to affordability, the “room to grow ARPU” thesis doesn’t hold as much weight. Is India's ARPU really the lowest? A global comparison of ARPU normalised by income reveals a different reality Country Monthly ARPU ($) Annual ARPU ($) Per Capita Income ($) ARPU as % of PCI India 1.8 22 2,481 0.87 Indonesia 3.0 36 4,876 0.74 Thailand 6.3 76 7,182 1.05 China 7.1 85 12,614 0.68 Malaysia 10.7 128 11,379 1.13 South Korea 20.3 244 33,121 0.74 Singapore 30.1 361 84,734 0.43 US 34.8 418 82,769 0.50 Canada 43.7 524 53,431 0.98 Source: Bhar

This article was originally published on May 31, 2025.