Airtel profit surges 33% to Rs 9,015 crore in Q2, outpacing Jio in ARPU growth

Bharti Airtel delivered strong operating growth in the quarter, but its profit fell short of market expectations. Consolidated net income before exceptional items rose 11.9% from Rs 8,057 crore in the previous quarter and about 32.7% from Rs 6,792 crore a year earlier. It was still below estimates of Rs 9,955 crore from Nuvama and Rs 9,146 crore from JPMorgan.

Revenue increased 16.7% year-on-year to Rs 60,878 crore and 4% sequentially. India revenue rose 9.4% to Rs 42,308 crore, while Africa revenue grew 25.7% in reported terms. Profit before tax climbed 27% to Rs 15,608 crore.

EBITDA rose 18% to Rs 35,240 crore, lifting the margin to 57.9% from 57.4%. Higher network operating costs offset gains from subscriber additions and premium-plan upgrades. The results show healthy growth, but also the cost pressure Airtel must manage.

ARPU is the average revenue a telecom company earns from each user during a month. It combines the effects of plan prices, upgrades, usage, and the mix of customers. A rising ARPU means the company is earning more from its existing customer base, even if total subscriber growth slows.

Airtel's ARPU rose from Rs 256 a year earlier and Rs 264 in the April-June quarter. The current-quarter figure was about Rs 271, representing a 5.9% annual increase. Airtel linked its performance to customers moving toward costlier plans and higher-value services.

This measure matters because telecom networks are expensive to operate. More revenue per user can help cover those costs and improve margins. Airtel's higher ARPU supported its India margin of 60.8%, although higher network operating costs still reduced the benefit and caused profit to miss estimates.

Airtel had both a higher ARPU and faster ARPU growth than Jio. Airtel's average revenue per user increased 5.9% annually, from Rs 256 to about Rs 271. Jio's ARPU rose about 3.5%, from Rs 211.4 to Rs 218.8. This gave Airtel a stronger revenue yield from each mobile customer.

The gap between the companies widened during the year. Airtel's ARPU was about Rs 52 higher per user each month, compared with roughly Rs 45 a year earlier. The difference reflects Airtel's focus on premiumisation, including postpaid additions and upgrades to costlier plans.

A higher ARPU can support better profitability when network costs are controlled. Airtel's India EBITDA margin was 60.8%, compared with Jio's 54.1%, although the article cautions that the businesses have different mixes. Jio still had more subscribers and higher monthly data usage.

Airtel's premiumisation strategy produced stronger customer value but weaker subscriber momentum. The company added a record 1.2 million postpaid customers and 2.9 million smartphone data users. However, its India mobile base grew by only about 716,000 during July-September, reaching 377.2 million.

That increase was sharply below the 3.3 million additions in the June quarter. Monthly churn, which measures the share of customers leaving, edged up from 2.6% to 2.9%. Airtel's total India user base still increased by 6.8 million to about 498.7 million, but Jio added 9.1 million subscribers.

The trade-off is clear. Airtel earned more from each customer, with ARPU reaching about Rs 271, but attracted fewer net mobile subscribers. Higher churn can weaken growth and raise the need for customer retention. Airtel therefore needs premium upgrades to outweigh slower additions and higher network costs.

Subscriber counts do not tell the whole revenue story. A telecom company can increase revenue by earning more from each existing customer, even when it adds fewer new users. Higher-priced plans, postpaid connections, smartphone data services, and greater usage can all raise the average amount paid per user.

Airtel added a record 1.2 million postpaid customers during the quarter, taking its postpaid base to 31.2 million. It also added 2.9 million smartphone data users, who represented 81% of its mobile base. These changes supported a 5.9% annual increase in ARPU to about Rs 271.

The strategy helped India mobile revenue grow 10.1% year-on-year to Rs 30,943 crore. However, mobile subscriber additions slowed to about 716,000, and churn rose to 2.9%. The model works best if higher revenue per customer more than offsets slower growth, customer losses, and rising network operating costs.

Airtel and Jio showed different strengths. Jio had 542.4 million subscribers and added 9.1 million during the quarter. Airtel's India mobile base was 377.2 million, while its broader India user base stood at about 498.7 million. Jio users consumed 44.2 GB of data monthly, compared with 36.5 GB for Airtel users.

Airtel led on customer value. Its ARPU was about Rs 271, versus Jio's Rs 218.8. Airtel's India EBITDA margin was 60.8%, compared with Jio's 54.1%. Airtel also grew ARPU faster, although the companies' business mixes differ and Airtel's India figures include tower and enterprise operations.

These figures reveal two business models in the quarter. Jio had greater scale, faster subscriber additions, and heavier data usage. Airtel generated more revenue per user and reported a higher operating margin. Airtel's challenge is sustaining that premium while improving additions and controlling network costs.

Telecom companies make money by selling mobile plans and related services to customers. Revenue depends on how many users they serve, how much each user pays, and how much data or other service they consumes. ARPU captures the average revenue per customer. Subscriber scale spreads network and business costs across a larger base.

Pricing and upgrades can lift revenue without equivalent subscriber growth. Airtel's postpaid additions and smartphone users helped raise ARPU about 5.9% to roughly Rs 271. Data usage also matters: Airtel users averaged 36.5 GB monthly, while Jio users averaged 44.2 GB. Churn reduces the customer base and can weaken future revenue.

Costs determine how much revenue becomes profit. Airtel's higher network operating costs offset some gains, even as EBITDA rose 18%. Its India EBITDA margin reached 60.8%. In general, stronger pricing, usage, scale, and retention help profits, while costly networks and customer departures pressure them.