Bharti Hexacom Q1 FY27 earnings call

Bharti Hexacom reported a strong Q1 FY27, with consolidated revenue reaching ₹2,510 crores, marking a sequential growth of 4%. The company achieved an EBITDAaL of ₹1,210 crores, maintaining a robust margin of 48.2%. Operating free cash flow stood at ₹830 crores, reflecting efficient capital management. The net debt, excluding leases, was ₹960 crores, with the net debt to EBITDAaL ratio improving to 0.2, underscoring a healthy balance sheet.

The mobile customer base expanded to 29 million, with net additions of 210,000 during the quarter. Smartphone customer additions were particularly strong, totaling 344,000. The Average Revenue Per User (ARPU) for the quarter was ₹259, benefiting from an extra day in the reporting period. Management noted that while mobile net add trends were softer compared to historical patterns, they anticipate a higher trend of customer additions in the second half of the year.

The homes, office, and other businesses segment demonstrated strong momentum, contributing 75,000 net additions and achieving approximately 8% sequential revenue growth. The company's strategy in homes focuses on building a high-quality customer base through differentiated services and seamless experience. Despite a moderation in net adds due to tightened acquisition quality and rising chipset prices, management expects a return to previous growth rates in the coming quarters^⏳.

Bharti Hexacom's capital expenditure for the quarter was approximately ₹380 crores (derived from EBITDAaL minus operating free cash flow). This capex is strategically directed towards 5G densification, network modernization, and the expansion of its homes and IPTV businesses. The company emphasizes disciplined investment to capitalize on multiyear opportunities across mobile, 5G, homes, and B2B segments, while maintaining a strong balance sheet.

The company's home broadband strategy prioritizes fiber deployment, especially in the top 400 cities where the market is concentrated. Fixed Wireless Access (FWA) is deployed with sharper precision where fiber is not accessible, following lessons learned from aggressive low acquisition pricing that led to higher churn. Management confirmed that home broadband offerings include both content and non-content options, with all services bundled and customers counted once.

Depreciation saw a slight increase sequentially, attributed to an extra day in the quarter and the rollout of IPTV services. The EBIT margin for the home segment remains negative or immaterial, a common characteristic for CPE-based businesses until they achieve critical mass. Management expects this segment to naturally turn positive as it scales, emphasizing that the underlying unit economics are sound and comparable to other players.