How Airtel Africa Is Quietly Strengthening Bharti Airtel’s Long-Term Story
About the Context Behind CLSA’s View on Bharti Airtel
Brokerage commentary on Bharti Airtel often focuses heavily on the India telecom landscape, spectrum costs, and ARPU movement. However, recent observations from CLSA highlight that a significant part of Airtel’s resilience and optionality is emerging from its Africa operations. While India remains the primary valuation anchor, Africa is increasingly becoming a stabilising and growth-enhancing pillar.
CLSA has reiterated its positive stance on Bharti Airtel, maintaining an Outperform view. The underlying message is not about short-term price movement, but about how Airtel’s diversified geographic exposure is now translating into tangible financial strength.
Africa Operations: Performance That Exceeded Expectations
Africa has moved from being a balance-sheet concern to a profit and cash-flow contributor.
Airtel Africa delivered a strong operational performance, with revenue and EBITDA growth in the range of 33–41 percent year-on-year. These numbers are notable not just for their scale, but because they came in ahead of market expectations.
Revenue at approximately $1.7 billion and EBITDA of about $836 million underscore improved operating leverage and cost discipline across African operations. This performance reflects the benefits of network investments made over the last several years, which are now yielding consistent returns.
Importantly, this growth has not been driven by one-off factors. It has come from core services such as data usage and mobile money, indicating a structurally improving business profile.
Subscriber Growth and ARPU Dynamics
Scale continues to build even as pricing remains stable.
The Africa subscriber base increased by 5.6 million to around 179.4 million users. Subscriber additions of this magnitude signal sustained demand for connectivity and digital services across Airtel’s African footprint.
Average Revenue Per User remained flat quarter-on-quarter at approximately $2.5. While flat ARPU may appear unimpressive at first glance, it must be viewed in the context of strong volume growth and increasing penetration of data and financial services.
In emerging markets, stability in ARPU alongside expanding user base often precedes monetisation improvements as digital ecosystems mature.
Data and Mobile Money: The Real Growth Engines
Non-voice revenues are redefining telecom economics.
Data and mobile money revenues grew sharply, registering year-on-year growth in the range of 37–44 percent. This shift highlights how Airtel Africa is transitioning from a traditional telecom operator to a broader digital services platform.
Mobile money, in particular, has become a critical differentiator. In many African markets, mobile wallets are not just payment tools but gateways to savings, transfers, and micro-financial services. This creates higher engagement, lower churn, and improved lifetime value of customers.
As smartphone penetration increases and digital adoption accelerates, these segments are likely to remain Airtel Africa’s fastest-growing revenue streams.
Profitability, Cash Flow, and Balance Sheet Strength
Cash generation is now supporting strategic flexibility.
Africa operations reported a profit after tax of approximately $177 million, indicating that profitability is no longer fragile or marginal. This is a meaningful shift compared to earlier phases when Africa was viewed as a drag on consolidated performance.
Free cash flow generation in Q3FY26 stood at around $551 million, supported by disciplined capital expenditure and improved working capital management. Low leverage of about 1.9 times EBITDA further strengthens the financial position.
This combination of profitability, strong cash flow, and manageable leverage provides Airtel with optionality—whether for debt reduction, reinvestment, or shareholder value creation.
Airtel Africa Money IPO: Strategic Optionality
The IPO is more about unlocking value than raising survival capital.
The proposed Airtel Africa Money IPO is progressing and targeted for the first half of the year. While timelines and valuations will depend on market conditions, the strategic significance of this move is noteworthy.
A separate listing can unlock hidden value within the mobile money business, improve transparency, and potentially provide capital for expansion without burdening the parent balance sheet.
For investors, this creates optional upside while limiting downside risk, especially given that the core telecom business remains intact.
Africa’s Role in Consolidated Valuation
Africa is no longer peripheral to the Bharti Airtel story.
Africa currently contributes around 25 percent of Bharti Airtel’s consolidated earnings. While India continues to be the primary valuation driver due to scale and ARPU potential, Africa provides diversification, growth visibility, and currency optionality.
This geographic balance reduces dependence on any single regulatory or competitive environment and enhances the resilience of consolidated earnings.
From a valuation perspective, markets often underappreciate steady, cash-generating emerging market assets until they reach a critical scale. Airtel Africa appears to be approaching that phase.
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Investor Takeaway
CLSA’s positive stance on Bharti Airtel highlights a key shift in narrative. Africa is no longer just a growth story; it is a cash-generating, profitable, and strategically valuable business. While India remains the primary valuation anchor, Africa adds stability and optional upside.
For long-term investors, understanding this balance is crucial. The strength of Bharti Airtel now lies not only in competitive dynamics at home, but also in the maturity and monetisation of its international operations.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
