Bharti Hexacom Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Bharti Hexacom delivered a consistent Q2 FY26 with sequential revenue growth of 2.4% to ₹2,317 crores and a strong EBITDAaL margin of 47.5%. ARPU reached ₹251, supported by an extra day and improved portfolio mix. While the overall mobile customer base saw a marginal dip due to seasonality, the homes business recorded its highest ever net additions of 60,000. The company maintains a robust balance sheet with low net debt, though SG&A cost decline was a one-off, and homes business ARPU saw directional reduction.

Highlights

  • Revenue of ₹2,317 crores, growing 2.4% sequentially, demonstrating consistent performance.

  • EBITDAaL at ₹1,098 crores with a strong margin of 47.5%, indicating robust operational efficiency.

  • ARPU improved to ₹251, partly due to an extra day, but also reflecting underlying portfolio mix improvements.

  • Homes business achieved 60,000 net customer additions, marking its highest ever in any quarter, driven by sustained momentum.

  • Strong balance sheet with net debt (excluding leases) of ₹2,814 crores and a low net debt to EBITDAaL ratio of 0.6x.

Concerns

  • Mobile revenue earning customer base saw a marginal sequential dip to 28 million, attributed to pronounced seasonality.

  • SG&A cost decline was noted as a 'one-off' event, suggesting it may not be sustainable at current levels.

  • Homes business ARPU experienced a 'directional reduction' due to the 'land grab phase' and acquisition of customers with lower-priced packs.

Key financials

  1. Revenue ₹2,317 Cr +2.4%QoQ
  2. EBITDAaL ₹1,098 Cr
  3. EBITDAaL Margin 47.5%
  4. ARPU ₹251
  5. Revenue Earning Customer Base 28 Mn
  6. Operating Free Cash Generation ₹730 Cr

What they filed

Q1 FY27: revenue up 10.9%, net profit up 23.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,098 2,251 2,289 2,263 2,317 +10%2,360 +5%2,414 +5%2,510 +11%
EBITDA1,002 1,152 1,168 1,161 1,208 +21%1,254 +9%1,267 +8%1,322 +14%
Net profit253 261 468 392 421 +66%474 +82%447 −4%482 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹368 Cr
    Operating free cash generation, which is the EBITDAaL less capex, was a strong Rs.730 Crores.
  • Debt Net ₹2,814 Cr · 0.6× EBITDA
    Our balance sheet is robust with a net debt excluding leases, of about Rs.2,814 Crores and a net debt excluding FLO versus EBITDAaL of about 0.6%.

Guidance & targets

Capex

  • Capex Trend Capex · over time · Medium confidence Directionally holding/decline on an annualized basis, moderating over time
    Thanks, the capex trend, like we have mentioned, directionally, it should moderate over time. I am not taking a time limit of FY2026 or FY2027 or whatever. Within quarters, there are executional challenges, there are weather-related challenges, there is prioritization, a lot of those happen, so, I would not read too much into the quarterly phasing. At an annualized basis, like we have guided, directionally, there is a holding/decline in capex.

    — Soumen Ray

Subscriber Growth

  • Homes Business Growth Trajectory Subscriber Growth · ongoing · Medium confidence Expected to continue
    it is expected that homes growth trajectory which we have done in the last couple of quarters should continue.

    — Soumen Ray

Profitability

  • Seasonality Impact Correction Profitability · Q3 · Medium confidence Expected to get corrected
    It is just that, because of an aberration in seasonality, which we hope will get corrected in Q3.

    — Soumen Ray

What to watch in Q3 FY26

Mobile Revenue Earning Customer Base

next quarter (Q3 FY26)
Current 28 million (marginal sequential dip)
Target Correction of seasonality impact, leading to growth

Why it matters

Seasonality caused a dip this quarter; recovery in Q3 is crucial for overall subscriber growth and revenue trajectory.

It is just that, because of an aberration in seasonality, which we hope will get corrected in Q3.

Risks & concerns

  • Seasonality Impact on Mobile Customer Base

    medium

    Pronounced seasonality, including migratory populations and local disruptions, led to a marginal sequential dip in the mobile revenue earning customer base.

    Management acknowledged

  • ARPU Dilution in Homes Business

    medium

    The 'land grab phase' in the homes business is leading to a 'directional reduction' in ARPU as the company acquires customers with lower-priced, content-driven packs.

    Management acknowledged

  • Sustainability of SG&A Cost Reduction

    low

    The decline in SG&A costs was identified as a 'one-off' event, suggesting it may not be indicative of a sustained trend.

    Management acknowledged

Q&A highlights

4 direct
Mobile Revenue Growth vs. Airtel Direct
Well, there are two different geographies. There are times when it is a little higher but there are times when it is a little lower. As I mentioned in my opener, Sanjesh, seasonality was pronounced, which led to a marginal drop in customer base, which had a headwind, but other than that, there is no major difference, if you see, ARPU growths are also similar. Overall, nothing major. It is just that, because of an aberration in seasonality, which we hope will get corrected in Q3.

Analyst questioned Hexacom's mobile revenue growth (2.1%) being lower than Airtel's (2.6%), prompting management to explain the impact of pronounced seasonality in its specific geographies.

Asked by Sanjesh Jain

Seasonality Factors Direct
Seasonality, there is a migratory population and the two places where we have our operations are not extremely urbanized. So what happens is, there are people who go there and come back to their place of work, which leads to a little bit of seasonality and however it might seem awkward, Rajasthan had a very high share of rains and a bit of dislocation of public services as well, so, between the two, we had an impact and as I mentioned, Q3, we seem to be charting well versus how we have started.

Management elaborated on the specific drivers of seasonality in Hexacom's operating regions, including migratory populations, non-urbanized areas, and local disruptions like heavy rains in Rajasthan, providing context for the customer base dip.

Asked by Sanjesh Jain

SG&A Cost Decline Direct
SG&A, there is a bit of a one-off which has come and hit. You can take an average of the last trailing two quarters and you will get a fair number.

Analyst inquired about the QoQ YoY decline in SG&A costs, and management clarified it was a 'one-off' event, implying it might not be a sustainable efficiency gain.

Asked by Sanjesh Jain

Homes Business ARPU Trend Direct
First and foremost, on the ARPU being lower, I do not think what Gopal mentioned was a continuous decline. There is a mix impact that is happening, where more and more customers are wanting to take content-driven packs, which is helping us in customer acquisition, that is a key enabler. It also ensures that customers do not churn, because the content is a way by which customers stick to a service provider, so, that is no different here. As you expand the footprint of any product or service, the initial adopters are well informed and they typically take a higher priced pack, whereas, when you go into a land grab phase, the marginal customer is not as evolved as the first customer and hence, you tend to sell lower priced packs, so, that is the trend where you see that there is a directional reduction in the ARPU of homes.

Analyst questioned the potential ARPU dilution in the homes business, to which management explained it's a 'directional reduction' due to the 'land grab phase' attracting customers with lower-priced, content-driven packs, which are strategic for acquisition and retention.

Asked by Vivekanand

2 min read 5 chapters

Detailed narrative

Q2 FY26 Performance Overview

Bharti Hexacom reported a consistent Q2 FY26 performance with revenue reaching ₹2,317 crores, marking a sequential growth of 2.4%. The company achieved an EBITDAaL of ₹1,098 crores, translating to a robust margin of 47.5%. ARPU for the quarter stood at ₹251, benefiting from an additional day in the reporting period and an improved underlying portfolio mix. Operating free cash generation, calculated as EBITDAaL less capex, was strong at ₹730 crores.

Mobile Business Dynamics

The mobile revenue earning customer base for Bharti Hexacom was 28 million, experiencing a marginal sequential dip. This decline was attributed to pronounced seasonality, particularly in the company's non-urbanized operating geographies, which are characterized by migratory populations and local disruptions like heavy rains in Rajasthan. Despite the overall dip, the company added 193,000 smartphone customers during the quarter. Management expects the seasonality impact to correct in Q3.

Homes Business Performance

The homes business demonstrated sustained momentum, recording 60,000 net customer additions in Q2, which was the highest ever in any quarter for this segment. This growth is expected to continue, driven by accelerated FTTH home pass deployment and FWA expansion. However, management noted a 'directional reduction' in the ARPU of the homes business. This is a strategic outcome of the 'land grab phase,' where the company acquires customers with lower-priced, content-driven packs to drive acquisition and reduce churn, leveraging FWA technology in its two key circles.

Capital Allocation and Balance Sheet

Bharti Hexacom maintains a robust balance sheet, with net debt excluding leases at approximately ₹2,814 crores. The net debt excluding FLO (Finance Lease Obligations) to EBITDAaL ratio stood at a healthy 0.6x. The implied capex for the quarter was ₹368 crores (EBITDAaL of ₹1,098 crores minus operating free cash generation of ₹730 crores). Management indicated that the capex trend is expected to moderate over time, with a directional holding or decline on an annualized basis, despite current elevated capex due to parallel home pass rollout and 5G deployment.

Operational Efficiency & SG&A

The company's SG&A costs saw a decline QoQ YoY. However, management clarified that this reduction was a 'one-off' event, suggesting that it might not be sustainable at the current level in future quarters. Investors were advised to consider the average of the last two trailing quarters for a more representative SG&A figure. The company continues to focus on leveraging technology and digital innovation to drive sustainability and enhance efficiency across operations.

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