Detailed Narrative
Strong FY25 Financial Performance and Margin Expansion
Bharti Hexacom delivered robust financial results for FY25, with revenues growing by approximately 21% and EBITDAaL growth reaching about 27%. The company achieved an impressive EBITDAaL margin of 44.2% for the full year, reflecting strong operational leverage and efficiency gains. This performance underscores the company's ability to drive growth and profitability in a competitive market.
Q4 FY25 Operational Highlights and Customer Growth
In Q4 FY25, Bharti Hexacom reported revenues of ₹2,289 crores, marking a sequential growth of 1.7%. The EBITDAaL for the quarter stood at ₹1,220 crores, with the margin improving by 30 basis points sequentially to 46.6%. The company saw significant customer additions, particularly in smartphones, adding 7.1 lakh new smartphone users, a notable increase from 4.5 lakh in the previous quarter. ARPU for the quarter was ₹242, though management noted it was impacted by two fewer days.
Balance Sheet Strengthening Through Debt Prepayment
Bharti Hexacom continued its focus on balance sheet strength by prepaying ₹858 crores of high-cost DoT debt during Q4 FY25. This debt carried a coupon rate of 8.65%, and its prepayment contributes to a healthier financial position. For the full year FY25, the company's net debt excluding leases stood at approximately ₹3,700 crores, with a net debt to EBITDAaL ratio of around 1. The company now only has spectrum dues remaining for FY2021 and FY2022.
Fixed Wireless Access (FWA) Driving Home Broadband Growth
Fixed Wireless Access (FWA) has emerged as a significant growth driver for Bharti Hexacom, contributing the 'lion's share' of home acquisitions in Q4. This is particularly relevant in geographies where wired broadband infrastructure is less prevalent. Management emphasized that FWA is a 'very, very strong offering' in these areas, enabling the company to expand its market presence and deepen coverage for home broadband services.
Strategic Focus on Premiumization and Future Margin Improvement
Management reiterated its commitment to premiumization, stating that the 'job of premiumization of customers absolutely is valid,' albeit with tailored approaches for Hexacom's specific circles, such as focusing on data top-ups. The company also aims to 'increasingly target to improve our EBITDAaL margins' in future quarters, leveraging operational efficiencies and a projected downward trend in capex from FY25.
Tower Sale Process in Abeyance and Future Steps
The proposed tower sale to Indus Towers has been put in abeyance following a request from TCIL, a significant public sector undertaking and shareholder, for a fresh process. While management remains convinced of the business logic and merit of the proposal, they have agreed to undertake a new exercise in consultation with TCIL. This decision prioritizes corporate governance and transparency, and the company will evaluate the future course of this transaction.