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 opening remarks, we will open up for an interactive Q&A session. Interested participants may click on Raise Hand option on the Zoom application to join the Q&A queue. The participants may click this option during the management opening remarks itself to ensure they find a place in the queue. Upon announcement of name, participants to kindly click on Unmute Myself in the pop-up screen and start asking the question post introduction. With this, I would now like to hand over to Soumen Ray for his opening remarks.
Thank you, Vaidehi. Welcome to the Q2 FY 2027 earnings call. I have with me Gopal, Shashwat, Akhil, and Naval. I will start with an update on our second quarter performance, then move to our portfolio, including new growth bets, post which I will hand over to Shashwat to talk about our India business, including the strategic priorities. We delivered another quarter of strong and consistent performance across India and Africa. Consolidated revenue came in at about INR 60,900 crore, growing 4% sequentially. Africa delivered yet another solid performance with a constant currency revenue growth of 6.7% sequentially. India, excluding passive infra, recorded a strong growth of 3.2%. Consol EBITDAaL came in at about INR 31,500 crore, growing at about 5.5%. EBITDA margin stood at 51.7%. CapEx for the quarter was about INR 12,500 crore, leading to a robust operating free cash flow, which is EBITDA minus CapEx of over INR 19,000 crore.
Our strong performance continues to be enabled by sharper execution, operational discipline, and continued cost efficiencies through war on waste. India EBITDA, excluding passive infra, came in at over INR 20,400 crore, growing 4%. EBITDA Margin stood at 52.7%, a 0.4% improvement. CapEx for the quarter was INR 7,430 crore. Operating free cash flow, which is EBITDA minus CapEx, was almost at about INR 13,000 crore. In addition, we invested about INR 2,900 crore in a strategic land parcel to pursue our 1 GW data center capacity ambition. You will hear more on this in the quarters to come. India Mobile delivered another quarter of strong growth, underpinned by continued portfolio premiumization. Homes maintained its growth momentum, aided by our conversion strategy. Airtel Business continued to perform well, while our digital portfolio sustained strong double-digit growth. More details on our strategy will be shared by Shashwat.
Our consolidated net debt to EBITDA improved to about 0.70, with India excluding passive now below one at 0.96. Prudent capital allocation, disciplined CapEx, and continued operational excellence underpins the strength of our balance sheet. Our diversified and resilient portfolio continues to deliver strongly, and I will explain that. Performance across India and Africa was strong. Africa now accounts for about 30.5% of our revenues, India Mobile about 51%, India Non-Mobile is about 13%, and Indus at 6%. We are building a future-ready Airtel by deepening our digital network capabilities, strengthening the portfolio, strengthening the core portfolio, and scaling digital growth engines. Let me move on to the new growth bets, and let me start with our financial services portfolio.
First on Airtel Money. As mentioned in the last quarter call, we went live with our lending services in Q2. The business is gaining strong momentum as we expand our offerings to newer geographies. Whilst we are in early days, we see a large opportunity ahead of us to serve financial needs of customers in a simple, secure, and accessible manner. At the heart of this ambition is our commitment to reimagine the lending experience through customer-first journeys, benchmarked against global best practices, and delivered through a seamless, intuitive, and frictionless digital platform.
Airtel Finance, the storefront of our financial services business, continues to scale strong, with monthly loan disbursement run rate now about INR 770 crore. This momentum is underpinned by the strength of our digital platforms, advanced data analytics capabilities, and disciplined operating model. Together, these capabilities provide our NBFC with a strong foundation to democratize access to financial services at scale. Airtel Payments Bank, the third pillar of our financial services portfolio, continues to deliver strong growth, deepening its reach and engagement with customers. It ended Q2 with monthly transacting users of over 125 million. Annualized revenue run rate is now over INR 3,500 crore, growing at 9% year-on-year. Deposits remain strong at over INR 4,400 crore, growing at 10% year-on-year. Let me now move to data centers and cloud.
First, data centers. Nxtra continues to deliver strong revenue growth, driven by capacity expansion and new contract wins. We are progressing well on our ambition on building 1 GW gigawatt capacity over the next few years. As I mentioned earlier, we have invested in a large land parcel in a strategic data center hub. This holds us on a strong footing on our ongoing expansion. We believe this is only the beginning of a multi-year growth journey in our data center business. Airtel Cloud is gaining strong momentum, with almost all critical services now live on our platform. Our customer logos have further strengthened with new wins. With continued expansion of our services portfolio, our go-to-market proposition is getting sharpened. We see a large growth opportunity ahead of us.
Lastly, let me give an update on group synergies. This is an important area of unlock for us. We run multiple charters to enable synergies across technology, network, operations, supply chain, and talent. We are increasingly working as one integrated platform, deeper cross-business alignment, sharper execution, and stronger operative outcomes. We have already realized tangible benefit in terms of growth in homes and B2B, as well as savings in CapEx and OpEx in Africa. Indus expansion will further bolster value creation for Africa business.
Let me spend also a moment on the progress of Indus Towers in India. The focus is centered around two work streams. The first is digital operations transformation, where Indus is adopting Airtel's telco-grade platforms that are proven at scale. The workforce management platform is bringing greater rigor to workflows, improving field productivity, and enhancing execution visibility. The second is energy optimization. Indus is working on a goal to eliminate diesel from sites through solarization and deployment of battery banks. Initial results are encouraging, with meaningful scope to scale further.
Finally, a landmark milestone. In October, Airtel Money Africa got listed on the London Stock Exchange at a valuation of about $7 billion, and reported as one of the London's largest IPOs. With this, two of our subsidiaries, Airtel Africa and Airtel Money, are now listed in London. With this, I will now hand over to Shashwat for an update on our India business.
Good afternoon, everyone. I will first share an update on the ESG, and then on each of our business segments, followed by an update on our strategic priorities. Let me start with ESG. Our ESG progress is closely aligned with our business strategy and the choices we make to build a more sustainable, efficient, and future-ready enterprise. We are using technology and digital innovation to improve the way we operate, reduce resource intensity, and drive greater efficiency across the business. A key priority in this journey is to increase the share of energy from alternate and renewable sources. This is reflected in our continued expansion of solar power deployment and reduction in diesel consumption across our network infrastructure. Over the last two years, we have accelerated solarization across our network, which is now operational on about 50,000 sites.
Let me have a quick run-through on each of our businesses. Mobile. In quarter two, we added 0.7 million revenue-earning customers and 2.9 million smartphone data customers during the quarter. Our postpaid segment delivered yet another quarter of solid performance, with the highest-ever net adds of 1.2 million. Postpaid customers now account for 8.3% of our total customer base, and over the past four quarters, they have accounted for nearly 30% of all customer net adds. ARPU for the quarter came in at INR 271, up from INR 264, benefited by one extra day in quarter as well. In homes, we delivered a net adds of 670,000, with momentum building up from the last quarter.
We are seeing strong and consistent traction on the connected homes, driven by our convergence agenda. Digital TV, we lost over 4 lakh customers during the quarter, led by the DTH business, while our IPTV adoption continues to remain strong. Our IPTV take rates continue to deliver on our convergence agenda, and you will hear more about it in the coming quarters. Airtel Business revenues came in at about INR 5,800 crore, growing 3.8% sequentially and 11.4% over last year's same quarter. During the quarter, we secured large deal wins across both core connectivity and the digital portfolio. We continue to see strong funnel and order bookings in the business.
Our digital portfolio delivered another quarter of solid performance, with revenue growth of about 4% sequentially. We are seeing strong traction across our portfolio, including cloud, cybersecurity, IoT, digital platforms, and CPaaS, and we saw some notable deal wins during the quarter. Let me now provide an update on our strategic pillars. First, winning quality customers. Let me start from homes. We continue to see a significant penetration and growth opportunity here. Growing smart TV adoption, greater in-home data usage, and rapidly growing digital content consumption continue to fuel the need for high-speed broadband connectivity. As I mentioned earlier, demand remains concentrated in the top 1,000 cities, and we have sharpened our acquisition strategy to scale our presence in these towns, targeting customer cohorts with stronger engagement and retention.
Our strategy is centered on building a high-quality customer franchise by delivering a superior connectivity, differentiated offerings, and a seamless service of proposition. We are investing in fiber home pass expansion at an accelerated pace, as I want to reiterate that fiber remains the best experience for in-home connectivity. We have scaled back our FWA-led expansion, and it will only serve as an interim solution to capture demand till we can fiberize a particular area. Encouragingly, these actions are already translating into improvements in our portfolio quality and customer durability. Convergence remains a key differentiator of our home strategy. The One Airtel plan brings our services together in a unified experience, offering customers greater convenience and flexibility. As adoption grows, convergence is deepening our customer relations, driving engagement across our portfolio, and strengthening customer lifetime value.
Let me now switch to mobile. Our focus remains on accelerating ARPU growth through portfolio premiumization while maintaining a healthy customer acquisition. Leveraging deep customer insights and serving them with more precision through personalization will continue to drive our customer value and monetization. We continue to see strong traction in postpaid upgrades, driven by a differentiated proposition that brings together exclusive experiences, premium content, affordable international roaming, and a superior network experience powered by Fast Lane. As I mentioned earlier, the long-term ARPU growth ultimately depends on a more rational pricing structure, where the industry is able to monetize the continued growth in data consumption more effectively.
Let me now move to B2B. We see large growth opportunities across both core connectivity and our digital portfolio. Our execution agenda is anchored on three priorities. First is to strengthen our infrastructure backbone to meet the demanding needs of enterprise customers. This includes sustained investments in network quality, reliability, and resilience, with a clear focus on delivering a world-class B2B network. Second is sharpening our offerings around customer needs across industries and segments, building capabilities across cloud, cybersecurity, and IoT, and strengthening our account management to translate the breadth of our portfolio into deeper customer relationships and a larger share of wallet. Third is strengthening our delivery and service assurance through digital platforms and AI.
The focus is on disciplined delivery, automated root cause analysis, and proactive fault resolution to deliver a consistently superior customer experience. These priorities underpin our ambition to capture a larger share of the enterprise opportunity and drive sustained growth across our portfolio. Moving on to the second pillar of our strategy, which is obsession to deliver brilliant customer experience. Customer experience underpins everything we do, from how we invest in our networks to how we design our digital journeys. On the network, we are building for quality and resilience. We are strengthening the transport layer beneath the 5G network and building edge data centers that make the network more resilient. Capabilities such as Fast Lane, built on 5G network slicing, add a differentiated experience where customers need it most in busy networks. In homes, our focus is on getting the fundamentals right across installation, service, and workmanship.
Our AI-led workmanship tools running on the field engineer's own handset are helping standardize the quality of our execution on ground. Underpinning all of this is our unified customer data platform, which brings the customer's journey across channels and touchpoints into a single view. At the core is our converged data engine, which combines data, AI, and analytics to bring real-time context to every interaction, anticipating customer needs and delivering a personalized experience at scale. The result is a simpler, more relevant interaction and a deeper relationship with our customers. The third pillar of our strategy is to build and leverage our digital capabilities. AI is increasingly woven into the fabric of our business. Over the past two quarters, we have laid the foundation to embed AI at the heart of Airtel's digital platforms.
We have built our homegrown agent platform called Agent Bridge and added GPU capacity across our data centers. This is enabling us to activate AI use cases much faster across both customer-facing and internal journeys. In parallel, we have run several AI experiments to reimagine our operating models with an intent to redesign how work gets done at Airtel. Going forward, our focus is on scaling the use cases already creating strong value. Let me share a few highlights. For customers, our real-time context-led decision engine has now generated over 10 billion next best actions and is scaled across key inventories across our channels. We use individual-level context to deliver more than 1 billion personalized content and recommendations. Since launch, our AI-led anti-spam solution has identified over 100 billion calls for spam and nearly 5 billion messages and blocked over 1.7 billion fraudulent links.
For networks, AI is helping us lower our fuel and power wastage, which reduces operating costs while also improving customer experience. Our AI-enabled RAN dynamically orchestrated over 14 million sleep hours each day across our network sites during quarter two, reducing the energy consumption and generating some cost savings. We see substantial headroom to further optimize our energy costs as these capabilities scale across the network. The third area is internal functions, where AI tools are now changing the way our internal processes are run. Call center bots were the early use case we adopted. Now, AI-led processes are changing across areas like quarterly financial book closure, recruitment, mass interview screening of candidates, or video KYCs for our customer acquisition. As we scale AI across Airtel, we are also remaining focused on clear guardrails around customer safety, privacy, and data sovereignty. The fourth pillar of our strategy is bottom-based.
Cost discipline remains core to how we operate, and as cost pressures build, funding the growth will depend on how much waste we take out of the system. The bottom-based initiatives continue. We are also looking beyond efficiency towards innovation that change the cost equation itself, in areas like energy and in virtualizing set-top boxes for Airtel TV, for example. These initiatives are helping us mitigate inflationary pressures arising from ongoing geopolitical headwinds.
To sum up, overall, we have delivered another quarter of strong performance underpinned by our portfolio premiumization, razor-sharp execution, and sustained operational excellence. We remain confident in the growth potential across our businesses, supported by continued ARPU expansion in mobility, deeper penetration of homes, and the increasing scale of our B2B portfolio. Our investments are channelized towards future-proofing Airtel. AI is now becoming integral to the way we work, enabling us to enhance productivity and improve agility. At the core of all these investments and initiatives is a relentless focus on delivering superior customer experience. With that, let me hand this back over to Vaidehi for the Q&A session.
Thank you very much, Shashwat. We will now begin the Bharti Airtel Q&A interactive session for all the participants. Please note that the Q&A session will be restricted to the analyst and investor community only. Due to time constraints, we would request if you could limit the number of questions to two per participant to enable more participation. Interested participants may click on raise hand option on your Zoom application to join the Q&A queue. Upon announcement of name, participants to kindly click on unmute myself in the pop-up screen and start asking the question post-introduction. Participants are also requested to limit their questions to Bharti Airtel till 1:00 P.M., as the management will start the Q&A discussion on Bharti Hexacom from 1:00 P.M. onwards. With this, the first question comes from Mr. Piyush Choudhary. Mr. Choudhary, you may please unmute your side, introduce yourself, and ask your question now.
Hi, good afternoon. It's Piyush from HSBC. Thanks for the call and opportunity. Two questions. Firstly, on mobile ARPU, can you share what proportion of increase sequentially came from the adjustment to product offering, like discontinuation of your 299 plan, and what is driven by premiumization factors? Do we see kind of residual impact coming in third quarter, and how much would that be? Second question is on the network side. We saw in Thailand with rising AI demand, higher uplink capacity, AIS has expanded its 5G advanced uplink coverage to improve customer experience. Do you think Airtel would also need to strengthen its uplink capacity, and any CapEx implications when you strengthen the uplink capacity? Thanks.
Hi, Piyush. Thank you for that, and so let me just take that. On ARPU, see, we continue to see significant headroom for growth on ARPU levers that we have spoken about, and which is a mix of upgrades of plans, postpaid, international roaming, and top-ups. Overall, for the intervention that we have taken on pricing on prepaid ladder in quarter two has already kind of played out, and now we are looking at all the other levers forward in terms of continuing to grow ARPU steadily over the coming quarters. I see a sustained growth of ARPU possible on the base as we continue to unlock these levers. For AI demand, yes. Two things I want to call out, Piyush, here, which is, look, today, the AI traffic on our networks is very small, and it'll grow. We are watching this space very carefully.
You are right about the fact that AI traffic requires much higher uplink, and we are building all capabilities as well as the network investment needed to sustain this growth of capabilities required here. But at this point of time, it is not substantial. It is too small. As required, we will keep investing on this space.
Thank you, Shashwat.
The next question comes from Mr. Manish Adukia. Mr. Adukia, you may please unmute your side, introduce yourself, and ask your question now.
Thank you for taking my question. This is Manish Adukia from Goldman Sachs. My first question is a follow-on to Shashwat, what you mentioned in your prepared remarks about you scaling back your FWA-led expansion. T wo questions there. One, is this like a short-term measure, and over time, you expect to scale it back up again? T wo, is this a function of your expectation of what the TAM or the depth of the profit pool would look like for this particular sub-sector of FWA? If you can maybe just throw some light on what drives this scaling back of FWA expansion.
Okay. Manish Adukia, on FWA, for us, fiber is the clear area where we are focusing. It is the heart and center of our home strategy. What we are seeing, it is globally as well, and what we have seen on our own customer base as well, is this is the best experience. This is what leads to the stickiest customers and the best value creation in the long term. This is not a stop-start strategy in that sense. I think we've seen what the market is playing out, as well as the experience that we have got. We are clear that we have to go all out on fiberizing the country, and expanding the market on fiber. As we expand here, there will be some augmentative needs of some wireless capture of demand, which FWA can play on the fringes.
We will, however, fiberize each of those areas where we see density of demand coming up. T hat's the play we are absolutely focused upon, and we'll stay there. I don't think this is a play which is a stop-start contextually that we are in that sense.
Got it. Thank you for that. My second question is a follow-on to Piyush Choudhary's question earlier. You've talked about, in this call and in the past, about fixing the pricing architecture. The intervention that you made in the month of August, would you call it a step towards that, fixing pricing architecture? In your opinion, is there more room to go for you to fix that architecture? A related question also on the postpaid side, some of the changes that you made, I think, last month. In postpaid in particular, you are the market leader and you are the pricing leader there. I n postpaid at least, is it safe to say that you don't think there's a need to meaningfully address the pricing architecture, and over time you may see some interventions, but postpaid you're happy with where things are?
Yeah. I think, just to take those two questions. Look, when we speak about pricing architecture in the industry, it's largely got to do with the fact that it's a very flat architecture and at very low ARPUs, you're giving away unlimited usage and data, and you're not monetizing consumption in any way. Data is, in that sense, not charged. Therefore, that change of architecture will require, I think, the industry to move more decisively. I n that sense, I would leave that aside, saying, no, the intervention of 299 is more of experimentation on our own base, keep moving ARPUs up. T he architecture correction is a much broader correction that is required in the industry to charge for data in many ways.
Postpaid, we are happy, in the sense, Manish, that I think postpaid is a separate, is a more premium differentiated offering that we want to create in the market. We have been working consistently to strengthen the proposition on postpaid. I think Fast Lane for us was a big intervention. We have now made more value for customers who are traveling overseas, and we will continue to strengthen our proposition and the differentiation of postpaid to have many more customers choosing postpaid as their service over time and premiumize. I think that is how we look at it.
Thank you. Just one last question from me. On CapEx, your overall India business, ex of towers, growing at double-digit revenue, faster at the EBITDA level, and on CapEx, you are investing in home broadband and also in data centers, et cetera. D irectionally, when we think about CapEx over a two, three-year period, would you say that given just the underlying earnings growth of the business is very strong, that CapEx at least should not grow in line with what your revenue or EBITDA growth is? I am just trying to think where are maybe the upside risks to CapEx, in your opinion, across your various businesses where you see maybe you may need to keep investing or keep increasing your CapEx over the next three, four years?
Manish, on CapEx, the core business will continue as per guidance. As you can appreciate, if there is a built-out strategy from 200 MW, 250 MW to 1 GW , we are dialing up our cloud capability. Some of these new growth bets, we will invest for growth for the future. At this point in time, I cannot give you a guidance, of course, but we will not shy away from investing in the new businesses to drive growth, because this is what will bring, what you said, double-digit growth consistently for the years to come.
Sorry, the new business when you refer to is on the enterprise B2B side. You are not referring to wireless or homes. Their CapEx would continue as is?
I am referring to data center, I am referring to cloud. These are the places which will need investments.
All right. Thank you. Thanks a lot for taking my questions. All the best.
The next question comes from Mr. Gaurav Malhotra. Mr. Malhotra, you may please unmute your side, introduce yourself, and ask your question now.
Yeah. Hi. Thanks. This is Gaurav from Axis Capital. Just had a couple of questions. First of all, given the kind of price increase in smartphones that we have seen, have you started to see impact of this on the whole 2G to 4G upgrade cycle, and maybe from 4G to, say, 5G smartphone cycle?
Gaurav, see, we have seen some softness in customer upgrades. I think entry-level smartphones prices have gone up substantially, and shipments have slowed. However, one other thing we are seeing also is in India, there is a very strong refurbished phones market which is expanding, which is supporting the smartphone upgrades at the entry level. A little bit of softness was seen, but I still think India is the refurbished market is still bolstering this up.
Got it. And what about the 4G to 5G? Because that premiumization would also be getting impacted, or that you are not seeing any softness as of now?
As of now, no, because almost 92%, 93% of all new shipments of smartphones are 5G now. T hat shift from the OEM side is also helping. R ight now, no.
Okay. Thank you. That's it.
The next question comes from Mr. Sanjesh Jain. Mr. Jain, you may please unmute your side, introduce yourself, and ask your question now.
Yeah, good afternoon. Thanks for taking my question. I got a few of them. First on the wireless business, we have seen a 1 million postpaid addition in previous quarter and 1.2 in this quarter, which is significantly more than what we were adding earlier at 0.8, almost a 50% rise there. How much is it aided by our Fast Lane or a priority service, and do you think these numbers are sustainable?
Sanjesh, you have three questions. Let's take the questions, and I'll respond.
Okay. Second on the B2B business. Data center, we said that we have bought a land, and last quarter we mentioned that we are looking to still plan upon go-to-market strategy for 300 and 350 MW of capacity. What is this land pertains to, and how much capacity can we add there? A related question there that now it appears that adding new capacity in U.S. will become more and more challenging. That means we will have a larger opportunity opening up in India from an overseas market.
How are we trying to think about that or cater that? And the related probably, we have always been averse to get into GPU as a service. I think that market also becomes a little more attractive for Indians. How are we thinking holistically in terms of data center and GPU as a service in B2B? Rest of the questions are bookkeeping. I will take after this.
Sanjesh, I will take the first one, and maybe, [inaudible], you can come in on the data center piece. On wireless postpaid additions, Sanjesh, the way we look at postpaid is we have today 30, 31 million postpaid customers, and our data models then look at what are the postpaid localized customer base in the market. We see a very large headroom in front of us to upgrade customers to postpaid. The real need there is, of course, our go-to-market as well as the differentiation of postpaid. We are consistently, we are not splitting out saying which element of differentiation is causing what level of growth, but overall differentiation of postpaid continues to accelerate, and this differentiation is helping us accelerate. Whatever acceleration we have seen is because of all the differentiation efforts that have happened.
We need to do more because the headroom for growth is a lot. The question is not about whether we can sustain it. We are actually internally trying to see how much more can we accelerate the rate of postpaid upgrade. I think that is on postpaid I will leave you with. On data center, Gopal, are you—
Yeah, I can take that. I think, on the data center side, the land that we have acquired gives us the optionality of, over time, putting in at least a 400, 500 MW plant. It is a large tract of land, and also it is concentrated in the right locations where the demand seems to be high. We will continue to look at other options for land and build-out. As you are rightly saying, some of that demand from the U.S. may get directed towards India. I think the third thing I would say on data centers is that we are also working to compress the time to build.
There are several things we are doing in terms of putting together a toolkit for very fast build with the right strategic partnerships, both on the build side as well as things like chillers and so on and so forth, t hat we can kind of compress the cycle and have modular units that can keep getting created. The final thing I would say on data center is that the 56 edge data centers that we are consolidating from the 100-odd MSCs that we have to state-of-the-art facilities, we are also looking at slightly higher, larger pieces of land at the edge, which gives us the option of building our data centers even at the edge. T hat's really on the data center side. On the GPU as a service, I think there are three parts to this business.
One is just GPU bare metal leasing, which is a commoditized business. I mean, right now there is froth, and that's just a CapEx to OpEx game. Counterparty risks remain given the amount of crazy demand that's there, particularly amongst the smaller players. GPU as a service is where there's a little bit more software and orchestration that needs to be done, as some of the neo-clouds do. That's an area which we are currently studying. The third thing, which is AI, where we're actually building it for our own use cases. For example, one of the things that we worked on is actually optimizing the model cost within the Airtel sort of use of AI, and we've built a platform that allows us to do that.
The demand that we are hearing from our enterprise customers is, we also want you, as part of the cloud, to offer a full AI stack that allows us this. T hat's an area that we're looking at. I think it's still early days, but it's an area we're actively studying.
Right now, our focus, Gopal, remain largely on the colo side of the business, right? The entire CapEx what we are incurring today is largely towards the colo.
Mostly on the data centers, because these are lumpy CapExes with land buys that you do, or let's say, the build-out that's going to happen in Visakhapatnam will have some lumpy CapEx over the next 12- 18 months as you build it out. But beyond that, I think on the cloud, it's more graded CapEx.
Great. Thanks for the initial answers. My remaining questions are largely bookkeeping. First, on the gross debt payout for last three quarters, gross debt has remained broadly in the same range as INR 120,000 crore. I know we have a larger debt towards spectrum and AGR, which has a longer payout period. A part from that, do we intend to pay out remaining debt now that we carry a lot of cash on the book? How should we think on gross debt coming down?
That's one. Number two, on the absolute CapEx number or cash flow CapEx is around INR 13,800 crore for last two quarters. Our reported CapEx is around, or capitalized CapEx is around INR 10,000 crore. How should we reconcile this, and when should this converge wherein we have a lot more cash flow coming in? One last question. On the tax, now we are paying INR 4,300 crore as the cash tax. Have we exhausted all the accumulated losses, and now current tax should broadly reflect in the cash outflow for us?
I'll take those three housekeeping, bookkeeping, as you say, Sanjesh. Larger debt, this debt, there are some part of operating debt, there are some operating country debt in Africa. We constantly look at reducing debt in all countries, subject to operations. This quarter, you would have seen a little bit of drop on gross debt, if the dividend payouts were not there, as you would appreciate in Q2. Indus, Airtel, and Airtel Africa all had very large dividend payouts, of course. G ross debt you will see directionally coming down opportunistically basis the country and the operations. CapEx and WIP mismatch, well, this will continue to happen for large projects as we do more DCs. C ore business, I can assure you, there is no divergence. They continue to do at the same trend.
If you look at the trend of CapEx on the BAU part, you will see a complete convergence between CWIP and CapEx spend and actual capitalization. On taxes, yes, you could take the current run rates as the going forward run rates for tax provisions and payments. Thanks.
Thanks, team, for answering all those questions, and best of luck for the coming quarter, and happy Diwali.
Thanks.
The next question comes from Mr. Sachin Salgaonkar. Mr. Salgaonkar, you may please unmute your side, introduce yourself, and ask your question now.
Hi, thank you for the opportunity. First question is on data center. Just wanted to understand, again, and I know multiple questions were answered on data center, let me be specific on three sub-parts of the question. How much of a data center capacity currently is in-house versus external customers? How do we see that changing? Secondly, as we look to scale data center towards 1 GW, is it purely will be done by debt, or is there a risk of an equity raising also, especially as we look to scale it up in a much faster process? And Gopal, while you mentioned on GPU as a service, ideally should we also expect Airtel buying NVIDIA or TPU chips and hence the CapEx associated with that?
Soumen, you want to take that?
Yeah, I will take that. How much is external capacity? Nothing is external capacity. We build data center for a living. It is our business. We have not leased capacity to sell it to someone else. T hat answer is an unequivocal no. Equity versus debt. We have just done about $800 million of equity raise, which came in in June, July. W e, as of now, have cash in the bank. Will there be a mix of debt? Certainly, yes. These are large infrastructure projects, very high quality, long term, so we will, of course, have debt to fund these. Will there be an equity raise happening one year later, two year later? We will leave that as a treasury discussion between the cash that the three owners of Nxtra has, who have substantial, versus what is the debt pricing, and we will take a treasury call at the opportune time.
C ertainly, there would be some debt which will come in. Everything will not be built by equity. Will Airtel go to buy GPU chips from NVIDIA or TPU chips? I think we already have. Shashwat, in his opening remarks, mentioned about the workloads that are running for internal use. W e have that. I f we have to, but we have not, as Gopal explained, we are observing the space of either lending out bare metal as ML or GPU as a service, like a neo-cloud, or the full AI stack. A s of now, I do not have anything to inform you. We are, of course, buying chips for our internal use.
Got it. Thanks, Soumen. The second question is on comments from Bharti Airtel promoter in one of the media interviews, where he did mention that eventually BT and OneWeb, which are long-term investments, will be consolidated under Bharti Airtel. Understand it is more a long-term thing, but how should this transaction, how should one think about this transaction getting sort of transacted out there in the sense that, will Airtel be buying these stakes over a period of time? Is there a incremental investment required for that?
No, there is no intention to buy out these stakes from Airtel.
Sorry, so Bharti Airtel would not acquire these stakes from enterprises? Is this a—
No. Yeah, there is no intention to do this.
Okay. Thanks for the clarification. Bye-bye. Thank you.
The next question comes from Mr. Kunal Vora. Mr. Vora, you may please unmute your side, introduce yourself, and ask your question now.
Kunal, we can't hear you.
Kunal, you may unmute your side, introduce yourself.
Am I audible?
Yes, you are.
Am I audible? Okay, sorry.
Yes.
Y eah, a question on the mobile business. We have seen a slight increase in churn. Customer additions, prepaid side were muted. Tower sides were flattish quarter-on-quarter. This is happening at a time when the third player has started investing. I understand there is a large gap in the prior investments, but how should we think about incremental revenue market share between the three players? Earlier, we had two larger players gaining share. Do you think it gets difficult now?
Look, the churn that you are seeing in quarter two is for us largely a combination of two things. There is some seasonality of quarter two which comes in, as well as the pricing intervention that we took, where there is always a temporary impact on customer continuity. We will keep playing this out in terms of ARPU versus base growth. Having said that, I think from a competitive intensity lens, I think it remains the same, what we are seeing for the last few quarters, because the investment and the market aggression of three operators in, let us say, half the country, and then the two-operator market in the rest of the half the country is in a set pattern, and we have been gaining share.
We are not shy of competition in that sense at all, Kunal, and we will continue to focus on optimizing the market and gaining share by expanding it there. That does not change for us.
Okay. Second question on AI. Airtel is offering Perplexity AI services, and I think the 12 months would have now expired. What is the plan now? Do you see a need to continue with something similar? Separately, some of the Chinese operators are selling AI tokens to customers. Is this something which you would look at as a long-term opportunity?
See, I think two separate parts to this. One is really in terms of bringing more and more value distribution play for various subscriptions, et cetera, to our customers. We keep doing it. We did Perplexity, we did some work with Adobe. Today, Adobe tool is available to our customers. These continue. We keep looking at opportunities of what else can we bring to the customers. That is one part of the play, which is to drive more engagement and stickiness of our customer base with us. On the other side, this whole space of monetizing tokens, I think we have not seen yet an economy of tokens playing out at scale, where customers are paying for tokens at scale in India. We are watching this space. If this economy were to develop, we will definitely look at ways of participating. As of today, it is just not substantial to think about.
Thank you. Just one last question. On home broadband, we have seen the EBIT margin deteriorate over the last one year. Is it getting more difficult to acquire quality customers, and how should we think about growth and CapEx in home broadband from here?
Look, I think for me, if you look at home broadband, I look at this business from the lens of saying, we are in acquisition and growth phase in this business. We are doing everything that we need to do to expand this business properly. We are in expanding, and so a lot of investment has gone into fiber as well as CPEs, which are the two big CapEx and play that comes in. As a result of which, EBIT has looked a little bit softer. Also, last quarter, I touched upon this topic that we had seen some issues in terms of quality of acquisition at low ARPU, et cetera, in the market for a couple of quarters, which we are now correcting, which also impacted a bit of the short-term EBIT that has played out on this business.
I would look at the larger picture on this business of saying this is an investment phase of this business, and we really have to accelerate further.
Okay. That is it for me. Thank you.
The next question comes from Mr. Ankur Rudra. Mr. Rudra, you may please unmute your side, introduce yourself, and ask your question now.
Thank you. This is Ankur from JP Morgan. Firstly, just on your mobile business, it was very heartening to see the sharp ARPU recovery, quite healthy from the tariff action in the quarter. Now, should there be any sector-wide tariff hikes by peers over the next few quarters, will you be more constrained to participate, particularly at the low end of the pricing table, given these actions may have brought some of the benefits forward?
Ankur, anything else you have? If you have questions, we can list them down and then we will respond.
Sure. The second question is on the home side. Can you maybe comment a bit about how you think it is doing versus your expectations? I understand you have commented many times that you are focusing on high-quality customers. W hat explains the sharp ARPU decline we have seen and the fact that additions are still a bit soft versus a few quarters ago? Is convergence a reason for the dilution on the ARPU side? Lastly, if you could just comment on the overall thoughts on capital allocation as it stands across CapEx for core business, new growth bets, purchase of any further stakes in subsidiaries like Africa or Indus, and shareholder returns. Thank you.
Okay. L et me take the questions on both the business ARPUs, and then I will hand over to Shomu for capital allocation. L ook, on mobility, we have seen whatever comes on tariff, we come to it when it comes to. Usually tariff hikes have worked well for us with the quality customer base that we have. I would not speculate beyond a point on this. I would say I do not see a constraint in terms of the headroom or tariff growth, et cetera, that we have. If ever and when this happens, we feel strongly about the fact that we lead this increase in ARPU. We will continue to just keep building industry-leading ARPUs in this business.
On homes, I think I'll just leave it at the fact that, look, ARPU of this quarter is just a pull-through of what we had spoken about in terms of acquisition and certain low ARPU commissions, wrong sales practices, et cetera, that we had to correct last quarter. This is a one-off, so I wouldn't worry about this beyond a point.
On the capital allocation piece, I would say that the core business, we've always mentioned, I think, over the last few quarters that the radio CapEx has kind of moderated, and that will continue because a lot of the build-out has already happened. I think if you look at the new towers being installed, it's almost very little now. It's less than 1,000, in the ballpark of 500, 600 sites this year, this quarter. Of course, there will continue to be some expansion of 5G. Core CapEx is a function of what happens to volumes and how much data consumption grows, and that tends to be a small component. Then the transport CapEx tends to be a large CapEx because there's a lot of fiberization that is being done within the company. So that will continue, but the core business, I would say, is kind of consistent.
We don't see any spikes. A lot of the incremental CapEx will really go behind the growth bets, which is on data centers, as we spoke about, and cloud. We've already announced a potential continued buyback in Airtel Africa. We've also done that in Indus. So, that will continue. We've also said in the past, and you see that reflected in our conduct, that the dividend payouts will keep increasing over time. I think all of those will work through.
Thank you.
The next question comes from Mr. Sumangal Nevatia. Mr. Nevatia, you may please unmute your side, introduce yourself, and ask your question now.
Yeah. Hi, this is Sumangal from Kotak Securities. Thanks for the chance. Great quarter. I have two questions. One, just continuing on CapEx. For the first time, if I am not wrong, the CapEx for the wireless business is lower than home satellite business and DTH put together, even without the land purchase. C an we extrapolate this trend now over the medium term till we get into 6G? And also, is it possible to share some ballpark capital intensity, say, per megawatt for the data center investment which we are doing? That's the first question. Second, it's quite encouraging to see that data consumption per subs has been outperforming our peers since last few quarters. T he gap versus peer, which without adjustments was around 35%-40%, is now down to 20-odd percent.
Just want to understand how should we look at this trend, what is working well for us, and how are we looking at monetizing this beyond the plan rationalization which we did few months back? Thanks.
Soumen, you want to just talk about the CapEx and I will come back?
Yeah, I think on the CapEx bit, look at a trailing 12 months annual number because, for example, I can tell you that the weather typically in Q2 is bad. Some of the wireless CapEx does not happen. Do not get into that. Look at 12 months, trailing 12 months. I think that will give you a fair idea. As far as per megawatt CapEx is concerned, I cannot give you a number because there are very many variabilities, I mean, changes that happens. It is about where is it located, what is the design, what is it fit for purpose. There is no thumb rule that I can give you that per megawatt my CapEx is going to be in this range only.
I cannot give you a number, but as you know, India is very competitive compared to some of the other developed markets in terms of CapEx per megawatt. On the data point—
Yeah. Sumangal, I think on data consumption per sub, I think it is a function of strengthening network as well as upgradation that we have done of our customers on the plans. On this one, I feel in terms of how do we monetize data consumption per sub going forward, I think it is back to what we discussed earlier. I think we had a detailed discussion on what we need to do on pricing architecture. I think it is consumption has to be like people who consume so much must pay for data. That, I think, is the shift eventually the industry will have to make. If we are able to make that, it just gives us organic growth of ARPU, which is consumption-led, which will sustain us for many years to come. I think that, for me, is a pivotal shift that we need to make.
Got it. Thanks and all the best.
The next question comes from Mr. Gaurav Rateria. Mr. Rateria, you may please unmute your side, introduce yourself, and ask your question now.
Hi, this is Gaurav from Morgan Stanley. I have a couple of questions. On the mobility business, sequential revenue growth was close to 3%. ARPU increase just from the number of days itself gives us 1%, and then there is always a mix improvement led by the postpaid and other factors that drive some improvement in the overall revenue growth. When I look at the pricing intervention, I am not able to understand that has that been really a revenue accretive or not for us at the overall business level? It may be ARPU accretive, but has it been revenue accretive or not? My second question is on Airtel Business portfolio. Our mix must be changing in favor of the digital portfolio compared to, let us say, last year, but we haven't seen the benefit of that accruing in the form of revenue growth accelerating in this business.
What is the mark or what is the level at which our digital portfolio reaches and we start seeing the benefit in terms of the mix change driving acceleration in the overall revenue growth? Lastly, on the Home portfolio, how are you measuring the quality of the business? Is there any retention metrics that you can share that help us to understand that the quality of the portfolio has improved compared to two quarters back? Do we intend to go back to the historical high net adds that we used to add, maybe two quarters back in the coming quarters or not? Thank you.
Thank you, Gaurav, for those questions. Let me just take them one by one. I think on the mobile ARPU piece, I think we are happy with the way the pricing interventions have gone. Overall, I think the overall plans that we wanted this pricing intervention to play out, did play out. I think in terms of what you feel on the mobile revenue growth, I think it has helped us on the revenue growth side. I would not comment beyond that.
On B2B, Gopal, would you like to add on the B2B bit?
Yeah, I do want to come in here because we've talked about this in the past. Our portfolio comprises of three, actually four components. The first is the core business, which, like we've always mentioned, is growing modestly because the market grows modestly. The second is the commodity messaging and all of that, which has its own pressures because there's some traffic that moves to WhatsApp. There's also continued pricing pressure on that, and we are happy for it to either be flat growth or kind of marginally decline. Then there is data centers, which we've spoken about already. Finally, is the digital businesses. I t's a mix of all of this, and that's what drives growth.
Now, if you look at the 11.5% growth that we've had, obviously you can see that there is an acceleration that's happening on the digital side, which is actually compensating for some of that managed decline on the core commodity messaging and so on and so forth. Not a couple of quarters ago, this growth used to be about 7%. Y ou can see a movement in the trajectory, and our hope is that this continues over the coming years.
Gaurav, your last question, which was on Home. I would just say that this is a business where we look at, like, we have our strategy of fiber and overall growth and acceleration and net adds is for me right now the metric to look at on this business. I would just leave it there and say we have to accelerate. There's a lot of work that's going on in terms of just expanding our fiber footprint, pivoting our GTM and marketing towards that, and staying very focused on where the market growth is and accelerating this piece. This will take a little bit of time, but we want to see the acceleration that you're also asking for.
Thank you for patiently answering all the questions. Just a bookkeeping question on 5G user base, if you can provide. Thank you.
What is the question?
Sorry, can you repeat it, Gaurav?
5G user base, if you can provide on the mobility business.
200 million user base.
More than 200 million.
Thank you.
Thank you, everyone. I would like to remind the participants to kindly stay connected on the call for the next session on Bharti Hexacom. I would like to invite Shashwat to give his closing remarks on Bharti Airtel.
I just want to say thank you for all your insightful questions and very detailed discussions on the results, and thank you all for your engagement. With that, we bring the Bharti Airtel Limited discussions to a close.
Thank you very much, Shashwat. With this, I would now like to hand over the call to Soumen Ray for his opening remarks on Bharti Hexacom performance.
Thanks. Thanks, Vaidehi. Good afternoon, everyone. Welcome to the Bharti Hexacom Q2 FY 2027 earnings call. I have with me Kartik and Naval on the call. Let me start with a quick update on our Q2 performance. We delivered strong performance with revenue of over INR 2,580 crore, growing at about 2.9% sequentially. EBITDA for the quarter came in at over INR 1,377 crore, with a margin of 53.3%. We ended the quarter with mobile customer base of 29 million. Smartphone customer additions were strong at 14,000. ARPU for the quarter was INR 264, which benefited, amongst other things, from one extra day in the quarter. Our homes, offices, and other businesses continue to see strong momentum, with net adds of 71,000, resulting in a revenue growth of about 3.7% sequentially. We continue to invest in 5G expansion, network modernization, and growing our homes and IPTV businesses.
Our operating free cash flow generation, which is EBITDA minus CapEx, came in at about INR 920 crore. Balance sheet remained robust, with net debt excluding leases at about INR 1,575 crore. With that, I would hand over to Vaidehi to open the floor for questions.
Thank you very much, Soumen. We will now begin the Q&A interactive session. Due to time constraints, we would request if you could limit the number of questions to two per participant to enable more participation. Interested participants may click on the raise hand option on the Zoom application to join the Q&A queue. With this, the first question comes from Mr. Saurabh Handa. Mr. Handa, you may please unmute your side, introduce yourself, and ask your question now. Mr. Handa, you may please unmute your side, introduce yourself, and ask your question now.
Yeah. Hi. Sorry. Thank you for the opportunity. Just in terms of the subscriber additions in mobile, it has turned negative now. You did speak about this on the Airtel call as well. The increase in churn, would this largely be due to tariff intervention and also seasonality, and therefore, should this normalize from the current quarter? That is the first question. Secondly, on postpaid, on the tariff intervention that you did earlier in this quarter, I think the net impact is roughly a INR 50 increase. Is that what should flow through in terms of ARPU, or there are some deductions in terms of what you were charging earlier for roaming if that goes away? T hese two questions, please.
Thanks, Saurabh. I will take the first one. Well, as all of us know, we have been in this industry for some time. Whenever there is a pricing intervention, there is a temporary impact on customer continuity. T hat is given. We try to balance it out, and the things are around being accretive to revenue, customer continuity, and value maximization. T hat did have an an impact. I think, compared to some others, the reason we are more negative is because of very adverse weather impacts, primarily in the Northeast, which impacted continuity very badly in the last quarter. We are all aware of the unfortunate weather events that happened in that area. In terms of how are we seeing, we are seeing improvement, significant improvement, versus what we had in the last quarter. L et us watch this space for Q3, but we are seeing early signs of improvement.
On the postpaid ARPU, yeah, broadly, it is a INR 50 increase. B arring a bit of ARPU, yes, certainly. There could be some excess charges for the people who actually go on international roaming. But at the ARPU level, yes, broadly, it should be a flow-through.
Thank you, sir.
The next question comes from Mr. Gaurav Malhotra. Mr. Malhotra, you may please unmute your side, introduce yourself, and ask your question now.
Yeah. Hi. This is Gaurav from Axis Capital. Thanks for taking my questions again. I just had two questions. When we see the ARPU increase of Hexacom versus Airtel, Hexacom seems to have benefited lesser from either premiumization or the tariff intervention. The reason why I'm asking this is because Hexacom's data consumption actually is higher than Airtel's. So, if you can just give us some sense as to why the ARPU increase was slower for Hexacom.
Well, Gaurav, different kind of customers, different kind of mixes, different kind of affordability. To start off, the base ARPU itself is different between the two organizations. I f I had to call out one major reason which impacted Bharti Hexacom as opposed to Bharti Airtel, it was around Northeast. Whilst I called out Northeast as a reason of having softer net adds because of this, it also impacted existing customers' continuity because those days they could not recharge. I would not read too much into how is this exactly different to the last rupee. One day has come, which has come for Airtel as well as come for It has come for every player who is on a number of days pack. Outside of that, it's the mix of customers and so on and so forth. So, won't read too much into it.
I mean, Airtel did very good numbers in terms of their postpaid net adds as percentage. Hexacom is going there. There are a few changes. You can't expect the exact number to get replicated.
Got it. Thank you so much.
The next question comes from Mr. Rishabh Dhancholia. Mr. Dhancholia, you may please unmute your side, introduce yourself, and ask your question now. The next question comes from Mr. Sanjesh Jain. Mr. Jain, you may please unmute your side, introduce yourself, and ask your question now.
Thanks, Soumen, for taking my question. First, on the mobile revenue, we have grown slower than Airtel, 2.7% quarter-on-quarter growth versus Bharti's 3.4%. I understand you mentioned that Northeast had that disruption, which negatively hurt more to Hexacom. Even for next two quarter, it's fair to assume that we will slightly underperform Airtel just because Airtel has a larger base of postpaid customer, larger base of 4G, 5G customer, where both premiumization and price increase will have a higher impact. S tructurally, for temporarily, we should underperform Airtel. Will that be a fair assumption?
First of all, Sanjesh, you and I both know that I can't do forward-looking statements or guidances.
Correct.
Having said that, see, I could argue the other way that because there has been an unusual dip, let's say on an average in Northeast, an average customer could not did three days less recharge. There could be a tailwind going into Q3. I know these are group companies, but the demographic profile, the geographical profile in which they operate are pretty different. My request would be, of course, you would benchmark, and we also benchmark, but do not interpret it other than structural. For example, the point that you made around the postpaid. Yeah. If somebody has lesser percentage of customers on postpaid, then the flow-through as percentage of top line would be lesser. That's anecdotal.
O on the prepaid cohort, whether growth will lag Airtel or lead Airtel is something which will be played out in the market competitively, how is the market growing, and so on and so forth. It's very difficult to predict that in the near future, Hexacom will either lead or lag or be equal to Airtel.
No, I appreciate that, Soumen. Second, on the home broadband, the customer addition over last two quarter has decelerated. We were adding over 100,000 customer per quarter, now around 70,000. Anything which has changed or it's a deliberate move to see that we add only quality customer and this number over a period will accelerate for us?
I think you were, I am referring to the Airtel call because I know you were there in the Airtel call, you asked question. The issue is the same. The issue is there was a period where there was very high competitive intensity and the customer acquisition was not appropriate, let me put it that way. W hat we have now clearly decided that we will drive quality customers, driven primarily through fiber. Of course, Northeast, there are places where the fiber is a challenge and so on and so forth, but we are working on that. Will this clawback? It will certainly clawback. T he clawback will be around potentially high-quality customers with a larger price and put down and all of that. T his correction, you should look at being a step towards reinforcing our commitment to making a robust homes broadband business in Bharti Hexacom.
Got it. One last question, Soumen. On the access charges, that will remain slightly higher for us because we are rolling out home broadband and it is growing very fast, and hence the access charges will remain higher for us. Will that be a fair assumption?
Well, if home broadband grows a little too fast, yes, but I would say home broadband is a very small part of the business. If you look at the trend of access charges, IBR, look at it at a trailing 12- months basis, because there is seasonality and all of that. There are a lot of other things. I would say you could directionally, for some time in the future, directionally look at it basis the growth in a trailing 12-month basis, and not dive too much into how much is it coming from homes and so on and so forth.
Got it. Thanks, Soumen, for all those answers and best of luck for the coming year.
Thank you.
The next question comes from Mr. Aditya Bansal. Mr. Bansal, you may please unmute your side, introduce yourself, and ask your question now.
Thanks for taking my question. This is Aditya Bansal from Motilal Oswal. Just wanted to check again on the ARPU. Given that minimum recharge or voice-only plans have been launched, like any contribution in terms of the ARPU drag that we can expect for Hexacom, given that you talked about slightly inferior mix versus Bharti?
I will not say too much because this cohort of people who are only on voice plans is very small, and it is coming down. We are talking of upgrades of feature phone to smartphone, slowing or becoming fast, and so on and so forth. T his is a very small cohort, and my estimate is that it will not make a significant difference in the headline ARPU of Bharti Hexacom Limited.
Thank you. The next question is around the difference in reported and cash CapEx for Bharti Hexacom. I can understand for Airtel, given that land purchase is there, but why is there a sharp difference for Bharti Hexacom?
Reported and cash CapEx. I don't have a ready answer for you, Aditya Bansal. Allow me to circle back to you on this one, today itself.
Thanks a lot, and all the best.
Thank you.
Thank you, everyone. I would like to pass it on to Soumen Ray for his closing remarks on Bharti Hexacom.
Thanks all for joining the Bharti Hexacom quarter. Festivities around. Wish you and your loved ones all the best, and look forward to meeting up with you in Q3. Thank you.
Thank you, everyone, for joining us today. Recording of this webinar will be available on our company website. Wishing you all a very happy Diwali.