Bharti Airtel Could Boost Free Cash Flow in Next Two Years: Report

Bharti Airtel, the second-largest telecom company in the country, is likely to generate significant cash flows in the next two years. This will be due to several reasons including moderation of capex (capital expenditure), and a boost in revenues through frequent tariff hikes, the upgradation of consumers from 2G to 4G, and the expansion of homes services. The telco is expected to deliver 13-16% growth in consolidated revenues compounded annually through FY24-FY27. Airtel is focusing on growing its non-mobile business, along with operations in Africa. The recent management changes are made in view of this only.

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The free cash flow (FCF) generation will be boosted majorly as the telco cuts down on network spending compared to the previous years when heavy emphasis was given to the rollout of 5G.

In a note seen by ET, Motilal Oswal said, “With a moderation in capex intensity, Airtel is likely to generate significant free cash flows of Rs 33,000 crore-Rs 43,000 crore in FY25-FY26, which should lead to significant deleveraging and improvement in shareholder returns.”

Bharti Airtel has the industry-leading average revenue per user (ARPU) of Rs 233. This figure is expected to grow significantly in the next two to three quarters, as a result of the tariff hike which took place in July 2024. With higher revenues, and lowered costs towards network rollout, Airtel will be able to generate better shareholder returns.