According to Gaurang Shah, Head Investment Strategist at Geojit Investments, the Africa business — once a drag on Airtel’s balance sheet — is now turning into a key growth engine.
“The African business, which earlier weighed on earnings, is now stabilizing and expanding its customer base. The key here is sustainability before improvement, and Airtel seems to be achieving both,” Shah told ET Now.
He added that higher realizations and improving subscriber mix are strengthening Airtel’s financial performance across markets.
ARPU headed toward ₹275–300, domestic growth strong
Shah said Airtel’s domestic operations continue to show strong momentum, with ARPU currently around ₹256 and expected to rise significantly in the coming quarters.
“ARPU levels are improving steadily. Across telecom service providers, we’re seeing ARPUs inch toward ₹275–300 over the next few quarters,” he said.He attributed this growth to the steady increase in smartphone penetration and higher data consumption among Indian users.“With India adding millions of smartphone users every month, the revenue potential per user will only grow. The domestic business looks absolutely robust and well-positioned for the next growth phase,” he noted.
EBITDA margin crosses 48%, beats estimates
Airtel reported an EBITDA margin above 48%, surpassing market expectations. Shah said this reflects the company’s operational efficiency and strong revenue mix from both data and voice segments.
“The margin performance is better than expected. Efficiency levels have improved considerably, and the data-to-voice ratio is driving profitability,” he said.
Airtel’s strategic focus on premium customers, broadband expansion, and cost optimization has contributed to the margin boost.
Africa business transformation a key positive
Once seen as a risky bet, Airtel Africa has become a major contributor to overall revenue growth. Subscriber expansion and improving realizations in key African markets have strengthened its earnings profile.
“Africa has turned from being a balance-sheet concern to a meaningful growth contributor. If the region continues to show stability and revenue visibility, Airtel will have a strong dual engine — domestic and African markets — propelling its performance,” Shah said.
Tariff hikes likely by late 2025 or early 2026?
Shah also hinted that the next round of tariff hikes could come by late 2025 or early 2026, potentially lifting sector-wide profitability.
“Street discussions suggest a likely tariff hike by the end of 2025 or early 2026. That could further strengthen EBITDA margins across telecom operators,” he said.
The expected tariff revision, coupled with higher ARPUs and efficiency gains, could cement Airtel’s market leadership.
Key takeaways
- Airtel’s Africa business turnaround is driving profitability.
- ARPU to rise from ₹256 to ₹275–300 over the next few quarters.
- EBITDA margin beats estimates at over 48%, signaling strong operational control.
- Tariff hikes likely by end-2025 or early-2026.
- Domestic and Africa segments together to sustain long-term growth momentum.