Airtel sees $3-4 billion annual capex, bets on post-paid to monetize 5G

Bharti Airtel Ltd signalled that elevated network spending is here to stay, with chairman Sunil Bharti Mittal saying the telecom operator expects to keep investing $3-4 billion (approximately ₹28,500-38,000 crore) annually despite completing the bulk of its 5G rollout

The guidance signals that even as the peak 5G rollout phase winds down, technology upgrades and network expansion will continue to require multi-billion-dollar investments. It also comes as telecom operators grapple with a key challenge: turning heavy 5G investments into meaningful revenue growth.

“This is a highly capital-intensive industry. A large part of our cash flow that generates, gets into networks, whether it is cables, data centres, towers, more radio base stations, transmission elements and indeed laying out fibre across the country. We will continue to do so,” Mittal said at the company's 31st annual general meeting (AGM) on Monday.

According to Mittal, Airtel's capex has typically been $3-4 billion a year, with a large part of its 5G investments made over the past three years.

“Over a period of time, you should start seeing tapering off of the capex, but I would say that, given the nature of industry, where technology shifts keep on happening at a breakneck speed, capex will always be multi-billion dollars - $3 to $4 billion a year,” he said.

Airtel spent about ₹1.45 trillion on capital expenditure, including its 5G rollout, between FY23 and FY26, according to quarterly reports. Annual consolidated capex stood at $5-5.9 billion between FY24 and FY26, as per its March quarter earnings report.

Mittal's comments are significant because much of Airtel's recent spending was driven by 5G deployment. Yet the company acknowledged in its FY26 annual report that monetisation remains challenging due to limited compelling consumer use cases.

Airtel bought 5G spectrum worth ₹43,084 crore in the August 2022 auction, about half of Reliance Jio's ₹88,078 crore purchase.

Betting on premium users

To improve returns on its 5G investments, Airtel is betting on premium post-paid customers and its fixed wireless access (FWA) home broadband business.

“Post-paid remains a very core pillar of our growth. It's something where we feel we have a chance to differentiate our services for quality customers. Recently, we launched our fastlane technology predicated on 5G slicing and this is something that's received very encouraging signs in the market, and customers seem to be liking it. So post-paid will continue to grow,” Shaswat Sharma, managing director and chief executive of Airtel India, said at the AGM.

The company's Fastlane service, which offers a differentiated experience for post-paid users, has also drawn scrutiny. Some experts have argued it could violate net neutrality rules.

Net neutrality requires internet service providers not to discriminate, restrict or interfere with the treatment of internet content, including by blocking, degrading, slowing down or granting preferential speeds. The rules also prohibit discrimination based on the sender or receiver, communication protocols or users' equipment.

The telecom department has sought views of the regulator on changes or clarifications required in the net neutrality rules for 5G slicing, according to a report by The Economic Times last week.

Analysts at brokerage CLSA, in a 1 July note, said, “Slicing-based 5G services have been launched in many countries led by USA, Singapore, UK and Malaysia. Bharti’s launch is first in India and positions Airtel ahead of the competition and will boost its post-paid revenue.”

According to CLSA, Airtel has differentiated its post-paid offerings through 5G, family plans, international roaming and now network slicing. Bharti's post-paid tariffs are about 70% higher than its prepaid tariffs, meaning a larger post-paid base should lift blended average revenue per user (Arpu).

At the end of March, Airtel had 373.2 million mobile users in India and 482 million customers overall, including FTTH, machine-to-machine and wireline connections. Its post-paid base stood at 29 million. The company sees an opportunity to upgrade nearly 90 million customers to post-paid plans while converting feature phone users to smartphones.

Airtel reported an industry-leading monthly Arpu of ₹257 at the end of the March quarter.

“In India, we achieved a highest ever mobile revenue market share of 39.7%, while sustaining strong momentum in home broadband and IPTV,” Mittal said, adding that the enterprise business, including data centres, cybersecurity and internet of things (IoT), continues to grow strongly.

He added that data centres and sovereign cloud are also strategic priorities alongside financial services.

Shareholder returns

Investors also asked management how Airtel plans to deploy future cash flows, including whether it would pursue acquisitions or increase shareholder payouts.

“We are here to generate more value in the hands of our shareholders. And if that cannot come through our investments into new businesses, new territories, more money will be returned back to the shareholders in the form of either dividend and buybacks,” Mittal said.

Mittal also reiterated Bharti Telecom's ambition to raise its stake in Airtel from about 40% to more than 50% over the next several years through dividends, buybacks and market purchases.

Bharti Airtel is scheduled to report its April-June quarter earnings on Tuesday.

Shares of Bharti Airtel ended 1% lower at ₹1,952 on the National Stock Exchange on Monday.