Bharti Airtel’s next decade: Mittal outlines tighter control in India, bigger Africa bet

NEW DELHI: Bharti Airtel Ltd plans to increase its stake in Airtel Africa Plc by up to 90% in the coming years, chairman Sunil Bharti Mittal said on Thursday, outlining a long-term capital allocation and ownership roadmap as it prepares for a generational transition within the group.

The comments come a day after Bharti Airtel issued a statement. ₹28,200 crore share swap agreement to acquire promoter group entity Indian Continent Investment Ltd’s (ICIL) 16.3% stake in Airtel Africa. In return, Airtel will issue approximately 146.7 million shares, representing 2.4% stake in Bharti Airtel. This transaction will increase Airtel’s share of the African business to 79%.

“We’ll probably own more of Africa over the next few years, so we’ll be able to funnel more revenue to our mothership, Bharti Airtel, and reward our shareholders even more,” Mittal said during the company’s earnings call.

succession planning

Mittal, who will turn 70 soon, also spoke about preparing for a leadership transition and handing over the reins to the next generation in the next 10 years.

On February 26, Mittal had said that the new generation of his family was “building muscle in different shapes and forms” by running independent businesses outside the group structure. Calling it a “unique experiment” unlike other Indian promoter organisations, he said family members experienced their “failures and successes” and “pain points of businesses” while also learning to run businesses independently.

Mittal reiterated that promoter Bharti Telecom should remain the sole controlling shareholder of the company. “My wish is that in the next decade, when I reach a point where I hand over the reins to future generations as shareholders, Bharti Telecom will go back to controlling 51% or just over 50% stake. So there’s another 10% left.”

On Wednesday, Mittal was reappointed as chairman of Bharti Airtel for a five-year term. Bharti Telecom currently holds 40.5% stake in Airtel. Singaporean telecom operator Singtel owns 20 percent of Bharti Telecom, while Bharti Group owns 20.46 percent.

Singtel holds a 7.5% direct stake in Bharti Airtel through Pastel Ltd, while Mittal-led promoter Indian Continent Investment holds 0.9%, according to BSE shareholding data for March.

“So the basic direction or vision that I have in mind is that all the shares (we can buy) from both Indian Continent Investment and our Bharti family entities and Singtel should get into Bharti telecom as much as possible,” he said.

He said there “remains a belief that everything should be achieved through a single company, which should have a controlling, encouraging shareholder.”

He said dividends over the years and future buybacks will provide Bharti Telecom with the financial capacity to increase its stake in the company over time.

“Singtel had a spread of about 7 per cent, more precisely it had a direct stake of 7 per cent in Airtel and about 6 per cent which had to be equalised. Now with this (share swap) transaction, once this is done and the shares are issued, this gap comes down to 3.6,” he said. The transaction will increase promoter ICIL’s stake in Airtel to 3.32%.

Airtel Africa’s ongoing buyback program and future block deals will help Bharti Airtel grow its shares steadily in the coming years, Mittal said. He added that there are no plans to allocate capital towards the acquisition of other global telecom assets.

Interest in Africa is driven by demographic growth, increasing digital adoption and AI-driven demand.

“The combination of Airtel and India presents a once-in-a-lifetime opportunity for any company anywhere in the world, a growing country hungry for more services and products, a very rare opportunity,” Mittal said, adding that India and Africa create a “very strong two-play market” opportunity.

“After allocating all these, if we still have more money left, we will do more dividends, we will do buyback programmes. But we will not be like IT companies that just take money as dividends and buybacks without doing anything and become a shadow of themselves,” Mittal said.

Pricing pressure

Airtel Africa reported that its revenue rose 33% year-on-year to $1.75 billion in the March quarter, while net profit more than tripled to $199 million.

Bharti Airtel’s operating free cash flow increased by 18% in FY25 ₹73,746 crore.

Bharti Airtel on Wednesday reported that its net profit rose 33.5% year-on-year. ₹7,325 crore in the March quarter due to one-time items and high base effect. Consolidated revenue increased 15.7% YoY ₹55,383 million crore driven by growth in mobile services, enterprise business, premium offerings, 2G to 4G/5G upgrades, postpaid subscribers and African business.

Average revenue per user (Arpu) declined for the first time in five years ₹257 per month ₹It stood at 259 in the previous quarter, indicating demonetisation momentum is slowing due to the lack of tariff increases. Airtel attributed this decline in part to weakened international roaming due to the West Asian war.

When asked about the need for tariff increases, vice president Gopal Vittal said “the price architecture in this country is broken.” Monthly expenses of Indian users consuming large amounts of data are effectively capped ₹He said 340-350 causes high-end users to pay less and entry-level users to pay more due to unlimited plans.

Vittal said structured small, medium, large and extra-large plans will create a natural upgrade cycle and support higher Arpu growth over time.

The company also expressed concerns about rising smartphone prices and slowing phone shipments, especially the pace of switching from feature phones to smartphones. He added that the impact of the West Asian conflict has so far been largely limited to increased prices and limited availability of servers, memory and chipsets. Airtel said rising memory and chipset costs over the last three to four months have made fixed wireless access broadband deployment significantly more expensive than fibre.