Bharti Airtel's dream run may be behind it

Is India's ARPU really the lowest?

A global comparison of ARPU normalised by income reveals a different reality

5G in the US – where's the ARPU boost?

Despite growing 5G penetration, ARPU in the US remains flat

High industry concentration is not unique to India; it's a global phenomenon

High industry concentration is not unique to India; it's a global phenomenon

So while the structure may be favourable, it does not guarantee industry-leading returns.

Capex moderation: A limited booster

With revenue growth prospects dimming, another hopeful argument is that capex will decline, boosting free cash flows and profitability. Airtel has indicated that FY24 marked peak capex (Rs 40,000 crore) due to front-loaded investments in 5G. Going forward, management expects capex to moderate to 15–17 per cent of revenues. That still translates to Rs 25,000–30,000 crore annually—not exactly light spending.

Telecom remains a capital-hungry business. The nature of investment may shift from expansion to optimisation and enterprise-focused solutions, but the absolute requirement remains high. While free cash flows may improve, the ramp-up will be gradual, not exponential.

Some point to Airtel’s bundled offerings—such as Airtel Black and Xstream—as a strategic edge. These combine mobile, broadband, DTH, and OTT in one plan, aiming to drive stickiness and improve ARPU. But bundling also has costs:

• Licensing premium content (Netflix, Disney+, etc.) adds to expenses.
• Managing multi-service delivery increases complexity and operational overhead.
• The target audience is largely urban and upper-middle class, limiting mass-scale adoption.

Bundling is a useful retention tool, but it’s unlikely to materially shift Airtel’s growth curve.

A utility, not a rocket ship

None of this is to say Airtel is a weak business. On the contrary, in a capital-intensive, tightly regulated industry where most players struggle to stay afloat, Airtel has not only survived—it has thrived. It is now a stable free cash flow generator and a dominant player in the Indian telecom market.

But the issue lies in the valuation. Airtel’s market cap has crossed $130 billion, making it valued amongst several global telecom giants that have larger pools of revenue and profit. For comparison:

• Global incumbents like Verizon, Deutsche Telekom, and NTT have higher ARPUs and larger operations but trade at significantly lower P/E multiples.
• Leave aside multiples for once, look at the absolute valuation size. T-Mobile US, the largest telecom operator in the US and the most valued telecom company in the world, is valued at just twice Airtel’s market cap. This gives a perspective as to how much room for an upside is left with a company like Airtel.

This raises the key question: are we paying for the growth that has already happened, or the growth that lies ahead? The evidence suggests the former. Growth prospects today don’t match the heady narrative. If valuations continue to price in yesterday’s story, future returns could disappoint.

Bharti Airtel is no longer the disruptive, underdog challenger it once was. It has matured into a resilient, cash-generating utility, much like global peers in other markets. That is a tremendous achievement. But as with any mature utility, the pace of returns from here is likely to be slower and harder. The company will likely remain dominant and profitable, but the dream run may already be behind us.

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This article was originally published on May 31, 2025.