Bharti Airtel (Airtel) and Reliance Jio’s (Jio) capex is likely to moderate from FY25 as capex has been front-loaded in FY23-FY24 due to their aggressive target to roll out 5G pan-India by March’24 and December’23, respectively, said analysts on Wednesday.

Vodafone Idea’s capex continues to be muted amidst continued delay in its fund-raise, they said.

“Further, notwithstanding a near-term delay in a tariff hike, we continue to believe average revenue per user (ARPU) is on a structural uptrend given the consolidated industry structure and future investment needs. Our calculation suggests that the industry needs to achieve an ARPU of ₹267-297 in the next three-four years for a pre-tax RoCE (return on capital employed) of 12-15 per cent,” they said.

“Bharti (Airtel) carried 164PB/day traffic in the first quarter of FY24, and stated that its capacity utilisation in 4G is just 60-65 per cent. We expect capex acceleration to take data capacity by FY24-end, to around 3.5x of the first quarter FY24 traffic levels. Bharti’s capex-to-sales should come off to 20 per cent by second half FY26 from 29 per cent in second half FY24,” said IIFL Securities in its latest report.

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With 5G capex in the core Indian business having peaked (according to company guidance), and the group continuing to grow rapidly, Airtel is now rapidly deleveraging, said NewStreet Research.

“The net debt/EBITDA was down to 2.6x in the first quarter FY24 and we anticipate leverage to be 2.3x by the end of the year, and rapidly heading below 2x. There are no major spectrum auctions anticipated within Bharti’s footprint, and as a result we don’t think Bharti needs to retain significant capital for either spectrum or capex. As revenue and EBITDA are expected to continue to grow rapidly, we see the potential for Bharti to significantly increase the dividend,” it said.