Bharti Airtel's enterprise arm, Airtel Business, is stepping up investments as well as go-to-market muscle to drive faster growth in its digital business segment. Airtel Business will be launching a comprehensive cloud solution in the next few months. However, Bharti Airtel will not be an early mover in offering GPU-as-a-service through its enterprise business. Airtel Business reported revenue of nearly Rs 5,650 crore in Q3 FY25, marking an 8.7 percent year-on-year (YoY) growth.
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Exiting Low-Margin Global Wholesale Voice and Messaging
Vice Chairman and Managing Director of Bharti Airtel Gopal Vittal highlighted the company's strategic shift towards high-margin digital services while exiting low-margin commodity voice and messaging businesses. This move, expected to impact topline figures in the coming quarters, will have minimal effect on margins.
"The second segment within global is wholesale commodity voice and messaging. A very significant part of this is very low-margin business and, in fact, what it does is it clutters management focus, it has a lot of people running around trying to strike deals, and the margins we make here are insignificant. We have made a decision to exit this low-margin business, which will have an impact on the topline in the coming quarters. It will take about six months for this to play out, but let me underscore that the exit in this business will have really no impact on EBITDA because this is a very negligible margin business," Vittal explained during the Q3 earnings call.
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Q3FY25 Statement from Airtel
"Airtel Business delivered revenue growth of 8.7 percent YoY despite of headwinds in the global segment primarily arising out of pressures on wholesale data and messaging. Domestic business saw healthy growth with emerging digital offerings seeing strong traction. During the quarter, we partnered with Z-scaler to launch Airtel Secure Digital Internet," Airtel said in its Q3FY25 results on February 6.
Strategic Overhaul of Airtel Business
"Airtel Business delivered stable performance but continues to remain challenged. We are in the middle of comprehensive re-tooling of our Airtel Business portfolio by stepping-up investments in digital services across Cloud, Security and IoT while shedding very low-margin commodity voice and wholesale business. This is likely to impact the top line of this business in the coming quarters but will have an insignificant impact on the margins," Gopal Vittal, Vice-Chairman and MD said in the Q3 FY25 results statement.
Digital and B2B Growth Strategy
Airtel Business is accelerating its Cloud, IoT, Cybersecurity, and CPaaS offerings, with the IoT segment witnessing strong growth. The company is set to launch a comprehensive cloud solution in the coming months to further strengthen its digital portfolio, according to Vittal.
"In digital businesses, we continue to focus on scaling our digital portfolio with CPaaS, Financial Services, IoT, Cybersecurity, and Cloud. Our IoT business is seeing strong growth with new order wins. Cybersecurity and Cloud services are beginning to see some step-up," Vittal explained.
These digital segments comprising, Cloud, Security, IoT, and CPaaS account for almost 90 percent of incremental industry growth, Vittal said, adding, "This is one of the main reasons we have decided to shed the low-margin portfolio of commodity voice and messaging."
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Clean-Up of the Mobile Business
"You will recall that a few years back, we did the same in our mobile business by shedding 49 million customers, who were using our network only for incoming calls. This changed the experience for our existing customers, it de-clogged our networks, and more importantly, it galvanized the organization internally on how we chose to win with quality customers. We believe this will do the same in our B2B portfolio," he continued.
Monetisation of Cable Investments
In the B2B space, Airtel is focusing on data centers, domestic growth, and global operations. While commodity voice and messaging segments are being phased out, the monetization of cable investments is gaining traction. Meanwhile, domestic business is seeing steady growth in digital offerings and connectivity services.
Regarding cable investments, there was a slowdown due to a lack of interest from OTT players. However, we are beginning to see some change in the current quarter in terms of the order book. "By the way, this is a very profitable part of the portfolio and so is now seeing signs of growth, which bodes well into the coming year," Vittal said.
AI and Talent Investments
To drive this transformation, Airtel is investing in account management capabilities, hiring fresh talent, training existing teams, and deploying AI-backed tools to enhance customer engagement.
"We are injecting capabilities into the team in the form of fresh talent, we are training all our existing people, we are injecting state-of-the-art tools backed by AI to help our frontline, and finally, we are setting up virtual teams to raise the bar on lessons learned at an industry vertical on key wins and losses," Vittal explained.
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Focus on AI Data Centers
Airtel Business will maintain its current capex levels for B2B and data centers, with an expected moderation in overall capex by FY26. The company has, however, decided to hold off on GPU-as-a-service due to rapid technological advancements and complex monetization challenges.
GPU as a service
"We mentioned that the GPU as a service, we have currently decided to park that because things are changing very fast in that space, the quality of the chips and the efficiency of the chips, also the money that you make on GPU as a service, a lot of it is dependent on sophisticated work around how you manage those workloads, so we have done multiple workshops to really understand the space well and we have decided that we will not be an early mover in the GPU as a service. But, AI data centers, the data center business continues to remain a focus for us. We are trying to see how we can expand it and so, while conversations are on, there is nothing to report right now," Vittal told analysts in the Q3 earnings call on February 7.
GPU as a Service (GaaS) is a cloud-based solution that provides on-demand access to high-performance Graphics Processing Units (GPUs). These GPUs are optimized for resource-intensive tasks such as artificial intelligence, machine learning, data analytics, and high-performance computing. By leveraging GaaS, businesses can avoid costly hardware investments and infrastructure maintenance.
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Capex into Business
"B2B continues to get capex the same levels as what it has been getting, and that is pretty much about it, and data centers continues to spend at the same level as what it was getting, so I would say at headline, you should see moderation of capex even in FY2026, and with the revenue growths that we are seeing, the capex as a percentage of revenues will continue to trend downwards and soon be at the levels of global peers," Vittal explained while answering a question about capex investments in the business.
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- Bharti Airtel Reports 120 Million 5G Users in Q3FY25 Amid 5G Network Expansion
- Airtel Expands Network to Cover Over 89,000 Villages in India
- Airtel 2GB Per Day Prepaid Plans With Unlimited 5G Data Are Driving Data Monetisation: CEO
- Airtel Fully Ready With 5G SA FWA, Can Launch When Required: CEO
- Airtel Solarises Over 3300 Network Sites in Q3, Infuses AI Into Network for Energy Optimisation
- Airtel MD Calls for Some More Tariff Repair, Highlights India’s Lowest ARPU Globally
