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Shares of Bharti Airtel Ltd. opened higher on Thursday, May 14, after the telecom major reported its Q4FY26 earnings and announced a restructuring of its Airtel Africa shareholding.
Airtel's board has approved the acquisition of a 16.31% stake in listed Airtel Africa from ICIL, a promoter entity controlled by Sunil Bharti Mittal, in exchange for issuing 146.8 million new shares in Bharti Airtel at ₹1,923 per share, a 9.5% premium to the last closing price.
The total transaction value stands at approximately ₹28,220 crore. The deal is entirely cashless and leverage neutral, meaning it does not add to the company's debt burden.
Following the transaction, Airtel's stake in Airtel Africa will rise from 62.7% to 79%.
Management has indicated the deal will be earnings accretive, and brokerages largely agree, though some flag the increased exposure to the African market as a factor to watch.
Q4FY26 earnings update
On the quarterly numbers, Airtel's consolidated performance was broadly in line with estimates, with Africa and the homes business providing the upside while India mobile and B2B were relatively muted.
Consolidated revenue came in at ₹55,400 crore, up 2.6% QoQ and 15.7% YoY. EBITDA margin improved slightly to 56.9% from 56.4% in the previous quarter. Profit after tax rose 10.5% to ₹7,325 crore from ₹6,630 crore in Q3FY26.
On the India mobile front, revenue grew just 0.6% QoQ, coming in below market estimates of 0.7-1%.
This also compares unfavourably to rival Jio, which posted India revenue growth of 1.9% QoQ and 11.2% YoY in the same period.
India mobile ARPU slipped marginally to ₹257 from ₹259 in the previous quarter, partly due to seasonal factors and the impact of the Middle East conflict on international roaming revenues. Jio's ARPU stood at ₹214.
Total subscriber base rose 1.3% QoQ to 373.2 million. The homes business showed solid momentum, adding 1.1 million net subscribers in the quarter.
Capex for India operations, excluding towers, jumped sharply — up 59% QoQ and 8% YoY to ₹11,300 crore — driven by 5G densification, fibre expansion, cloud and data centre investments, and IPTV rollout.
On the debt front, consolidated net debt declined to around ₹1.12 lakh crore from ₹1.317 lakh crore in the previous quarter, aided by the infusion from the rights issue of approximately $1.7 billion.
For FY26 as a whole, consolidated free cash flow came in at ₹60,400 crore, with a net debt to EBITDA ratio of 1.2x and return on capital employed improving 100 basis points to 16.5%.
The board also declared a dividend of ₹24 per share for FY26, up 50% from ₹16 per share in FY25 and ahead of consensus estimates of ₹20 per share.
What brokerages say
The Street is largely positive on Airtel, with most brokerages maintaining constructive ratings, though price targets and concerns vary.
Morgan Stanley has an 'Overweight' rating with a price target of ₹2,450, citing that revenues were in line with estimates while EBITDA came in slightly ahead. The brokerage said that the board's approval for preferential issue to ICIL against 16.31% stake in Airtel Africa (share swap) should be accretive to minority shareholders.
BofA Securities reiterated its 'Buy' rating with a target of ₹2,320, calling the share swap a cashless, leverage-neutral transaction that should be earnings accretive for minority shareholders.
Jefferies also maintained its 'Buy' rating and raised its price target to ₹2,350, the highest on the Street, while bumping up FY27-28 earnings estimates by 5%. The brokerage said that the proposed share swap for Airtel Africa is on better than expected terms and may lower concerns on future stake sales by Singtel.
CLSA and Macquarie both have 'Outperform' ratings, with targets of ₹2,310 and ₹2,220 respectively.
JPMorgan maintained its 'Overweight' rating with a target of ₹2,300, flagging strong subscriber additions but noting the softness in ARPU and the sharp jump in capex as areas to watch.
The lone dissenting voice is UBS, which maintained its 'Sell' rating with a target of ₹2,030, pointing to the decline in India mobile ARPU on a sequential basis and rising capex intensity as concerns.
UBS said the deal simplifies group shareholding but increases Airtel's exposure to Airtel Africa although should be EPS accretive per management.
Bharti Airtel shares ended 1.78% higher on Wednesday at ₹1,788.10. The stock is down approximately 15% so far this year.
