Bharti Airtel is no longer fighting for survival. The network is strong, the balance sheet is healthy, and operational execution is solid. Yet, the stock has entered an uncomfortable phase where investors aren’t questioning the quality of the business—but the urgency of management’s decisions.

This is not a turnaround story anymore. It’s a capital allocation story.

What’s Working Well

Africa Is Doing the Heavy Lifting

While India remains Airtel’s cash engine, Africa is where momentum is clearly visible.

• EBITDA growth in Africa rose 6.8% QoQ, far ahead of India’s 2.2%

• Subscriber additions and data adoption continue to accelerate

• There is significant ARPU upside:

  • Data ARPU at ~$2.70

  • Voice ARPU at ~$1.10

• Data usage per user is only about one-third of India’s, suggesting a long growth runway

The opportunity is simple: as more African users migrate to data, premiumisation kicks in naturally. The risk, however, remains currency volatility, which can dilute reported earnings.

A Fortress Balance Sheet

Airtel’s financial position leaves little room for concern:

• Net debt to EBITDA stands at a comfortable 1.2x

• India mobile alone generates nearly ₹50,000 crore in annual free cash flow

• The company expects another ~₹16,000 crore from the final call of its rights issue

In short, Airtel has ample financial flexibility. The debate isn’t about capability—it’s about intent.

What’s Frustrating Investors

India ARPU: Progress Has Slowed

India ARPU growth has stalled at a time when expectations were higher.

• Q3 FY26 ARPU rose just 1.1% QoQ to ₹259

• Management continues to avoid premium pricing for 5G

• Migration from prepaid to postpaid hasn’t meaningfully boosted revenues

• International roaming remains a marginal contributor

The result? Heavy 5G capex without a clear monetisation roadmap.

Management argues that pricing discipline avoids customer confusion—but markets are increasingly impatient with this conservatism.

The Capital Allocation Dilemma

Investors are effectively asking Airtel to pick one of two paths.

Option 1: Use the Balance Sheet to Accelerate Growth

The telecom sector can comfortably operate at ~2x net-debt-to-EBITDA, leaving Airtel under-leveraged today.

Potential deployment areas:

• Scaling data centres aggressively

• Inorganic acquisitions in digital infrastructure or cloud adjacencies

Airtel’s data centre arm, Nxtra, currently holds about 12% market share. The stated ambition is to reach 25% over the next 3–4 years, scaling capacity from ~130 MW to nearly 1 GW. This could become a meaningful growth engine if pursued decisively.

So far, management has indicated it is not inclined toward aggressive leverage.

Option 2: Return More Cash to Shareholders

If growth capex isn’t the priority, investors want payouts.

• Free cash flow is strong

• Cash accumulation is visible

• Higher dividends could immediately improve stock perception and valuation

Yet, Airtel has made no firm commitment on materially higher dividends.

Doing neither—no leverage-led growth, no enhanced payouts—creates the impression of capital inefficiency, even if the business itself remains strong.

AI Partnerships: Interesting, but Not Immediate

Airtel’s partnership with Perplexity AI has drawn attention, especially alongside Jio’s tie-up with Google Gemini.

While revenue-sharing models do exist, the bigger question is behavioral:

• Will Indian consumers pay for AI tools bundled with telecom plans?

• How quickly will adoption scale?

Realistically, AI monetisation through telco plans is a long-dated optionality, not a near-term ARPU catalyst for FY27.

The Jio IPO Overhang

This is one of the most under-discussed risks.

Today, Airtel enjoys a scarcity premium as the only large, listed, profitable telecom operator in India. That changes once Reliance Jio lists.

Potential implications:

• Airtel’s ~10x FY28 EV/EBITDA multiple comes under scrutiny

• Investors will directly compare growth visibility, pricing power, and capital returns

• Capital that currently has “no alternative” may rotate

Ironically, a strong Jio IPO could also force industry-wide discipline on tariffs—eventually helping ARPU. But until that clarity emerges, the overhang remains real.

India vs Africa: A Clear Split

India is stable and cash-rich. Africa is volatile but fast-growing. Airtel benefits from both—but markets want sharper execution on capitalising that mix.

Competitive Snapshot: The Indian Duopoly Is Clear

Airtel leads on efficiency and pricing, Jio dominates scale, and Vodafone Idea remains in survival mode.

The Market’s Current Verdict

“Excellent business. Conservative management. Few near-term triggers.”

Airtel is at a strategic crossroads:

• Leverage up for data centres → growth re-rating

• Increase dividends meaningfully → yield-driven re-rating

• Do neither → range-bound stock, especially post-Jio IPO

For investors, the next few quarters aren’t about network quality or subscriber adds. They’re about whether management is willing to deploy capital with intent.