My name is Vaidehi Sharma, and I'm the moderator for this webinar. Welcome to the Bharti Airtel Limited and Bharti Hexacom Limited Q3 e nded December 31, 2024 Earnings Webinar. Present with us today is the senior leadership team of Bharti Airtel and Bharti Hexacom Limited. I must remind you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. Post the management opening remarks, we will open up for an interactive Q&A session. Interested participants may click on the raise hand option on your Zoom application to join the Q&A queue. The participants may click this option during the management opening remarks itself to ensure that they find a place in the queue. Upon announcement of name, participants do kindly click on unmute yourself in the pop-up screen and start asking the question post-introduction. With this, I would now like to hand over to Mr. Gopal Vittal for his opening remarks. Thank you, Vaidehi. Very warm welcome to all of you, and with me on the call, I've got Shashwath, Soumen, Harjeet, Naval, and Akhil Garg. Let me start with one key development. We are planning to transfer about 16,100 telecom towers, approximately 12,700 from Bharti Airtel and about 3,400 from Bharti Hexacom to Indus Towers. Our belief is that this business is best managed by Indus since they know how to do this better than us. It will not only free up management bandwidth within Airtel, but will also create greater efficiency, scale, and ultimately long-term value at Indus. Now, let me give you an update of the quarter and the progress against our strategy. Let me start with ESG. There are three primary areas where we make an impact. Connectivity is the first and most important one. Our network investments are able to connect the most remote parts of India, which make a profound impact on the lives of people. Over the last two years, we've expanded our network to cover over 89,000 villages, actually, through the deployment of almost 43,000 sites. Our second area of focus is in lowering our carbon footprint and simultaneously lowering cost. There are two things we've done. Firstly, solarization is now adding pace. We did over 3,300 sites in the quarter and over 28,000 sites in the last six quarters. Second, we brought in AI at the heart of our network. As a result, we are able to turn off layers of radio technology based on real-time traffic patterns, which reduce our carbon footprint and also lower our energy bill. Finally, the Airtel Foundation makes a big impact socially through our focus on education. The foundation, through its various initiatives in 31,000 schools, has impacted over three million children and two lakh plus teachers. Let me now turn to a few highlights on our performance. We delivered another consistent quarter. Consolidated revenues came in at about INR 45,130 crores. India revenue growth, excluding Indus, was strong, with 4.8% sequentially to over INR 33,000 crores. EBITDA margins came in at 56.2%, an improvement of 1.4%. Effective Q3, Indus Towers is now consolidated into our financials. This quarter, we made an improvement to our disclosures. We are now reporting EBITDAaL, which is EBITDA after lease obligations. We believe this is a true reflection of our underlying margin and leverage. As a management team, this is the metric we track so as to drive the right behavior about the underlying health of the business. EBITDAL for the quarter stood at INR 16,306 crores, with a margin of 49.3%. We delivered strong operating free cash flow, and this is really EBITDAaL minus CapEx of INR 9,440 crores. CapEx for the quarter was INR 6,860 crores. We rolled out 5,214 network sites and over 13,950 route kilometers of fiber in the quarter. Fiber deployment remains a key area of focus. We rolled out more than 100,000 kilometers of fiber in the last 24 months. We continue to direct CapEx to future-proof our business around three areas: transport investments, homes, and B2B. Our focus on financial prudence is clearly visible in our balance sheet improvement every quarter. During the quarter, we prepaid DoT spectrum dues pertaining to 2016. With this prepayment, we've cleared all the dues prior to 2021 auctions. In fact, in the last six quarters, we've prepaid over INR 35,500 crores of high-cost spectrum dues. India net debt in relation to EBITDAaL now stands at 1.8 compared to 2.5 a year ago. Our efforts to build a solid balance sheet are a testament to the recent credit rating upgrade by Moody's. A quick update on each of our segments. In the mobile segment, we added 4.9 million customers during the quarter and 6.5 million smartphone customers. Postpaid net adds remained healthy at 0.6 million. This was somewhat impacted by tariff repair. ARPU came in at INR 245 compared to INR 233 last quarter, another quarter of industry-leading growth. ARPU drivers on an underlying basis remain intact. These are basically feature phone to smartphone upgrades, prepaid to postpaid upgrades, data monetization, and growth of international roaming. 5G coverage expansion continues as planned. We ended the quarter with a 5G base of 120 million. 5G shipments continue to grow, now contributing over 80% of overall smartphone shipments, and we continue to get our fair share from growing 5G handset adoption. In the broadband segment, we added nearly 674,000 customers and stepped up our momentum in this business. We've expanded our FW coverage and are now live in over 2,000 cities. It is clear that FW is increasing our addressable market for Wi-Fi services. We maintained an accelerated pace of fiber home pass addition of 1.9 million per quarter. We're also strengthening our content partnerships to build more value on Xtreme with more than 22 OTT apps on a single platform. To strengthen our content offering, we also added ZEE5 during the quarter. I must say that the Wi-Fi and the broadband business is seeing momentum month after month, and even January has begun better or has ended better than the previous month. In DTH, we added 29,000 customers in the quarter. Our focus on simplified pricing structure, strong content offering, and convergence has led to consistent share gains. Airtel business, we delivered a revenue of just under 5,650 crores. This is a growth of 8.7% over the same period last year. I will comment in greater detail on Airtel business in a moment. 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, and I will talk a little bit more on cloud later. Airtel Finance has served over a million customers till date across various financial products with over 4,600 crores of total disbursements and a current AUM of 2,500 crores. On the Payments Bank, the monthly transacting users stood at 87 million. Annualized revenue run rate now is about 2,800 crores, growing at 50% year-on-year. Deposits remain robust at over INR 3,300 crores, going up by 42% year-on-year. Let me now comment on each of our areas of focus. Firstly, we have committed to building a diversified and resilient portfolio. Both India and Africa are now consistently delivering strong underlying performance. Our portfolio is further diversified with the Indus consolidation. Africa accounts for 23% of revenues, India mobile 56%, India non-mobile for 14%, and Indus at 7%. Africa is performing well with constant currency growth of 5.6% sequentially. We're also sustaining investments to retool our portfolio in order to grow beyond wireless. Second area of focus is winning quality customers. And let me now provide some texture on each of our businesses: homes, mobility, and B2B. Broadband penetration in the country remains low but is growing rapidly, driven by fast-paced adoption of home connectivity and changing content consumption preference of customers. As I had mentioned earlier, we believe the current market can double from over 45 million to anywhere between 80 to 90 million homes over the medium term. While we have stepped up our performance, we believe there is significant room to increase our competitiveness. We have three areas of focus. First, increasing the addressable market by stepping up rollout of fiber home passes in FWA. Over the last two quarters, our FWA availability has increased meaningfully across key pin codes, and we're now live in over 2,000 cities. Our accelerated fiber home pass expansion continues with 1.9 million quarterly addition, with total home pass at 35 million. The second area is really to constantly improve the value that we deliver. Here, we are focused on a combination of convergence by improving the content slate we offer. We recently signed on ZEE5 and Glance on digital TV. Xstream now has over 22 apps, OTT apps as a part of its platform. We've also commenced the testing of IPTV. We believe that when this is launched, it will dramatically improve the ease of onboarding for our customers. The third area of focus is to really fire up all our channels. We currently sell broadband largely through our stores and online channels. We're now using our digital capabilities to bring in the power of our entire mass retail channel and plan to open up around 100,000 points of presence. In addition, our 30,000-strong fleet of home delivery engineers will also be activated. With these three areas ramping up, we expect to see continued momentum of homes leading to strong competitive growth. Let me now turn to mobile. On postpaid, our focus continues to be on the 80 million potential customers who we believe can upgrade to postpaid. Use of digital tools along with simple customer journeys across channels is powering our family offerings to further accelerate this. Rural markets account for over 65% of industry growth. Over the last two years, we've made substantial investments in seizing this opportunity. This has delivered results. Going forward, we expect to fill gaps in a couple of circles while we continue to sweat the sites deployed till date to give us gains into this year. Let me now turn to B2B. There are three key areas we're addressing: portfolio, go-to-market, and customer experience. Let me comment briefly on the portfolio. There are three parts to our portfolio. There's data centers, there's global, and there's domestic. Our data center business is growing steadily. Within the global segment, we have two parts: commodity voice and messaging, as well as monetization of cable investments. On the latter, which is cable investments, as you know, there was a slowdown to the extent of interest from OTT players, but we are beginning to see some change in this 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. 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 top line in the coming quarters, i t 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. Within the domestic segment, we are seeing strong growth on digital as well as sustained growth on connectivity. In fact, these digital adjacencies comprising of Cloud, Security, IoT, and CPaaS account for almost 90% of incremental industry growth. We're now stepping up our investments as well as our go-to-market muscle to drive faster growth here. We will be launching a comprehensive cloud solution in the next few months. At an aggregate level, given the growth of digital, I believe we need to move at a much faster pace and will do what it takes. This is one of the main reasons we have decided to shed the low-margin portfolio of commodity voice and messaging. 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 declogged 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. The second area of focus is the need to build muscle in our account management teams to shape this agenda. We're doing a combination of things here. We're injecting capabilities into the team in the form of fresh talent. We're training all our existing people. We're injecting state-of-the-art tools backed by AI to help our frontline. And finally, we're setting up virtual teams to raise the bar on lessons learned at an industry vertical on key wins and losses. The final area of focus is customer experience. We're now making investments in upgrading existing network infrastructure to flawless networks for lower latency and high reliability for critical customers who depend on it. We're also extending our B2C platform capabilities to improve our delivery and process. The third pillar of our strategy is the obsession to deliver a brilliant customer experience. On the network, we extensively use data science and deploy digital tools to structurally resolve issues. Our in-house developed and operated AI/ML tool, which is the Airtel Self-Optimizing Network, gives us a granular view down to a device level. This has just delivered the best experience. We continue to win all the crowd-sourced awards on network experience. The icing on the cake is that this also helps us lower power costs on the fly, which I spoke about. The fourth pillar of our strategy is to build and leverage our digital capabilities. Our industry-first anti-spam tool has brought significant relief. We've been able to alert 252 million unique customers and effectively combat the spam menace. Powered by our AI-driven network, this identifies over 1 million unique spammers, making more than 130 million calls a day. That's roughly a trillion records that are processed on a daily basis. Additionally, our solution also detects over 7 million spam SMSs every day. We're now making a further pivot within the company to explore how we can move AI from experiments to make AI native at the core of the operation. Our strategy on building new digital revenue streams is anchored on our core strengths and capabilities, and that's why our services portfolio includes Airtel Finance, IQ, IoT, Cloud, Security, and SD-WAN. Let me just give you a few comments on Airtel Finance. We're lending to a very tiny fraction of our base and are now focused on a few areas, three areas. One is to expand the addressable user base, and the second is to enable the offer across all our channels, digital and physical, and finally, to increase supply. To increase supply, we partnered with Bajaj Finance to create one of India's largest digital platforms for financial services. The partnership combines Airtel's digital platforms and omnichannel capabilities with Bajaj Finance's portfolio of 27 product lines and strong underwriting strengths. Airtel will initially offer Bajaj Finance's retail financial products on its Airtel Finance app and later through our nationwide network of stores. The combined strength of this partnership will allow us to deepen the penetration of financial products and services. The fifth and last pillar of our strategy is war on waste. This is now ingrained in our ways of working. With the rigor to drive efficiency over the last few years, we have eliminated about $2 billion of wasteful expenditure. At the same time, there is still significant headroom to strip out waste further in several areas: network, sales, and even marketing. To sum up, overall, we delivered another quarter of competitive growth. Mobile saw some residual flow-through of tariff increase. The postpaid segment presents a significant opportunity, and we are well-positioned to capitalize its strong growth potential. In homes, FW expansion, continued fiber home rollouts, and convergence will sustain our growth momentum. B2B retooling is on course to accelerate the momentum going ahead. Our disciplined CapEx spending, financial prudence, and sustained deleveraging reflect in our balance sheet. We believe that our CapEx for the current year will be lower than FY '24, and this will continue to unwind in FY '26. Our focused investment approach to building digital capabilities is now paying off. Finally, I want to underscore that ARPU in India continues to be the lowest globally. Tariff repair is needed some more for the industry to be financially stable and deliver reasonable returns on a sustained basis. With that, let me hand back to Vaidehi. Thank you very much, Gopal. We will now begin the Bharti Airtel Q&A interactive session for all the participants. Please note that the Q&A session will be restricted to analysts and investor community only. Due to time constraints, we would kindly request you if you could limit the number of questions to two per participant to enable more participation. Interested participants may click on the raise hand option on your Zoom application and join the Q&A queue. Upon announcement of name, participants should kindly click on "Unmute myself" in the pop-up screen and start asking the question post-introduction. Participants are also requested to limit their questions to Bharti Airtel till 3:30 P.M., as the management will start the Q&A discussion on Bharti Hexacom from 3:30 P.M. onwards. With this, the first question comes from Mr. Manish Adukia. Mr. Adukia, you may please unmute your side, introduce yourself, and ask your question now. Yes, hi. Good afternoon. Thank you for taking my question. This is Manish Adukia from Goldman Sachs. My first question is on the CapEx, which for the India business is now tracking about 20% lower on a nine month basis versus the previous year. Now, going forward, which parts of your business do you expect continuously elevated CapEx? You talked about the retooling of the Airtel business. Would that warrant any meaningful CapEx investments in terms of your expansion into cloud, etc.? And which other parts of the business where you may see a reduction in CapEx? And related to that, I mean, for the wireless business in particular, you now are close to like a million base stations on the mobile broadband side. Is there like a theoretical upper limit beyond which you don't really need to expand? That's my first question, please. Thank you. Gopal, you're on mute. Gopal, you might be on mute. Sorry, sorry about that, Manish. Manish, I think we have seen a reduction in CapEx. We've also guided that we would be seeing a moderation in CapEx. Having said that, don't just look at the nine months. I think we are still not finished the year. So while CapEx will be lower than what we spent last year, I would not want you to extrapolate exactly what has happened in the last nine months. The components of CapEx, if you look at it, constitute for us radio, which has been a substantial part of our CapEx. This one has decelerated very, very significantly, and we expect it to continue to decelerate next year with the ceasing of the big rollouts that we saw. We're not putting any investments in 4G capacity. All we're doing is a few more 5G radios as we expand and see more devices coming in. The places where CapEx continues to be deployed, one of the big components is transport. I think for us, developing a solid backbone is crucial because this will be required for all our capacities, whether it's the broadband, B2B, or the mobile business. The core network tends to be a small component of the CapEx. And then there are other places where we deploy capital. One is homes, which is getting its due share. And in fact, we are keen to spend more. It's only constrained by the capacity of our, it's constrained by our ability to do and roll out more and more home passes. So that continues. B2B continues to get CapEx at the same levels as what it has been getting. And that's pretty much about it. And data centers continue to spend at the same level as what it was getting. So I would say at a headline, you should see moderation of CapEx even into FY '26. And with the revenue growth that we're seeing, the CapEx as a percentage of revenues will continue to trend downwards and soon be at the levels of global peers. That's really how I would see the CapEx situation. Thank you, Gopal. Quite helpful. Just a couple of follow-on questions there. One, when we look at the free cash flow profile of the business, which continues to improve quite substantially, probably north of $3 billion of free cash flow last 12 months in the India business X ofthe prepayments. Now, with most of the high-cost spectrum debt repayment done, except maybe the fiscal 2025 spectrum of 8.65%, which is, again, less than $1 billion, what are the areas where, again, the free cash flow may get channelized in terms of whether those are, I don't know, M&A opportunities or returns to shareholders, or you still have other debt that you think you may need to reprioritize? And second follow-on question on your comments around investments on home broadband. Again, versus, let's say, the other listed peer group, your home broadband adds, while they're still very strong, remain meaningfully below what they are reporting. Is there any fundamental reason as to why your number should not, let's say, catch up or converge with what your competition is doing in terms of home broadband and FWA rollout? Thank you. Yeah, I think a great question, Manish. Your opportunities for free cash flow, I think, will be some amount of deleveraging, which will continue, as you also pointed out. There will be a step-up of dividend, for sure. And that is a second area of free cash flow. And the third, we'll be selective and very prudent in any investments we make. We are looking at investments into adjacencies in B2B in some of these digital areas. Obviously, these will be bolt-on acquisitions. We haven't got anything to report. And if there's some substantial value asset that is around, we'll keep looking at it. There's nothing really that is on the anvil, but we'll be very prudent, like we always have been. The home broadband business, I would say, is the way I would look at it, Manish, is that I would say keep looking at every quarter progress that we're making. In fact, we look at it on every day, are we making progress? So certainly, every month, we are making progress. I already spoke about January being better than December and February having begun better than January. We are as dissatisfied about the fact that we are not competitively where we should be on home broadband. But suffice it to say that every month, we are getting better than where we are. And I will just step back and explain to you why we've been behind on this. I think the first, there are three drivers of home broadband. One is supply. On supply, we are matched. There's no issue on supply, whether it's home pass, and in the towns that we've rolled out FWA. The second is on delivery of value. Again, we are very competitive in the marketplace on a combination of both the price we offer as well as the content that we bundle with it. And the third is the access, which is the access to leads, access to customers using all our channels. Here, I think our focus has been on largely the direct-to-customer channel, which is the place that we've got all our growth, and also the digital channels. I think one of the things that we've done, and we've done experiments in four or five circles. We have fired up the mass retail channel. In these circles, which were serious underperformance circles like Northeast, circles like Odisha, we have seen substantial gains, so much so that we are now neck to neck. I would say that we are now rolling this out all over the country. It gives me great confidence that I think we're on the right trajectory. But at the same time, it makes us all very restless that we're not still where we need to be in terms of competitive performance. That's really what we are focused on. Thank you, Gopal. I just will sneak one last quick follow-on question. I mean, you spent a disproportionate amount of time, or at least a reasonable amount of time, of your opening remarks talking about Airtel Finance. And given you have a lot of free cash in the business, is any kind of inorganic expansion in that segment likely at all, or is this likely to be an organic build-out for you, the Airtel Finance business in particular? That was my last question. Thank you. I think it's a bit early to answer that. I mean, it's not that we are close to any option. We have a lot of strengths in the quality of the intelligence and the data infrastructure that we have. We have enormous strength in the distribution that we bring, the muscle that we have through the relationships that we have with customers, and the fact that we are omnichannel and have a digital orchestration layer to be omnichannel. So we are not close to it. But at the same time, if you ask me if there's something on the anvil just now? No. Thank you. All the best. The next question comes from Mr. Piyush Choudhary. Mr. Choudhary, you may please unmute your side, introduce yourself, and ask your question now. Yeah, thanks a lot. This is Piyush from HSBC. Good afternoon. Two questions. Firstly, in mobile segment, barring tariff hikes that you talked about, how much of ARPU improvement is probable using subscriber mix improvement and the other organic levers which you have talked about? And can I ask the second question also, can you tell us what is the network coverage in FWA using 5G SA? And what's the rollout plan over there? And in FWA, what is the ARPU mix of subscribers and average data usage of subscribers? Thank you. On the mobile, your question on tariff was. Sorry, your question was how much of ARPU will come outside of tariff? That was your question, I suspect, Piyush. The answer to that question, I think, is to look at the trajectory that we've seen in the past. Whenever we've seen ARPU growth without any tariff increase, you can trend it and see what it is. I see no reason for that to change because the underlying drivers, which I mentioned earlier, remain intact, whether it's feature phones to smartphones, prepaid to postpaid, international roaming, or data monetization. On network coverage of SA on fixed wireless access, firstly, it's a myth to say that SA gives you more coverage than NSA on fixed wireless access, so that is just not true. I think what SA does is, as the NSA network, as the networks of 5G start to congest, which is very far from where we are today, but as it starts to congest, you could have some challenges on the uplink speeds, and that is where SA comes in, where the uplink speeds can be better, but today, with an empty network, we have not reached that point, so as we speak, we have already tested fully the SA solution for FWA. We have proven it, and given the empty network, we're not seeing any uplink differentiation. Secondly, we are fully ready to launch FWA. If it can be done tomorrow morning, we can do it tomorrow morning if we want to. And so we will do it at the point that we need to. That's really how we approach it. This is not about technology for the sake of technology. It's to really deliver true outcomes, whether it's in terms of experience or cost. So I think that's the way that we approach it. So we are fully ready. There are many thousand customers who are already being tested on this for the last three-to-four months. And we know we can flick it on. By the way, our core network is fully ready on a converged basis. So all the enablers are there. It's just about now flicking it on because it's software. And for software, there's a small fee that you need to pay. So sorry, just to clarify, so you're saying your FWA customers are also on NSA primarily at the moment, and you can flip it on the SA network whenever you want, basically... Yes. based on the capacity plan. Okay. Okay. And any color on the usage behavior? What is the data consumption of our FWA customer? Yeah, we don't see much difference right now in the way we're selling it. We also want to keep the selling motions quite simple. So the selling motion is quite simple. It's Wi-Fi everywhere. We offer plans from 40 Mbps up to 100 Mbps. We don't offer anything more than 100 Mbps on FWA. But the customer doesn't know whether it's FWA or fiber. The customer just sees it as Wi-Fi. Our sales system just sees it as Wi-Fi. Depending on where we have fiber, we prioritize fiber in our installation. And where we have FWA, we install FWA. So that's the way we look at it. The consumption, therefore, because the plans are similar, the usage is similar, then very similar to fixed broadband. Okay. And may I know what's the fixed broadband usage per month? We don't report it out, but I mean, we can offline, Piyush, we can give you. I don't have it already available. Okay. Thanks a lot. Thanks a lot. The next question comes from Sachin Salgaonkar. Mr. Salgaonkar, you may please unmute your side, introduce yourself, and ask your question now. This is Sachin from Bank of America. Congrats on a good set of numbers. My first question, Gopal, is on the incremental EBITDA margin, what we ended up seeing on cellular business. It's pretty high at 90%. Two questions out here. Is there something in the quarter which specifically led to the margin moving out there, or this is a new normal going ahead? Sure. I don't know if you can answer this question, but I can just tell you that this business is a fixed-cost business. So when tariff goes up, that flows directly to the EBITDA margin. Is this the expected margin on an incremental basis when there's no tariff repair? No, absolutely not. It will be still in line with improved leverage because that will be our effort to continuously get operating leverage. But when you get a tariff jump up, just like if you have a tariff reduction, you'll see the flow through immediately onto the bottom line. It's exactly the same because of the fixed-cost nature of the business. Soumen. Do you have any more color to add on this? No, that was the point, Gopal. Okay. Thank you. Second question, again, I wanted to understand your approach towards FWA and any color you could give from a margin perspective. The way you said it is customer sees it at Wi-Fi. And I presume your fiber deployment is more into urban areas. So directly, this is, as an FWA, offered more in non-urban areas, or is it offered across the board in urban and non-urban areas? So currently, Sachin, we are offering it wherever we don't have fiber. But I can tell you, I mean, where I think you're going with the question is an important point. If you have a high-rise building, which is over four stories high, then it makes a lot of sense to have fiber there because it should be much the payback periods that you get, the payback for the investment that you put on fiber will be very, very much better than what it would be on FWA. But on the other hand, if you have—and the reason for that is because you're putting a CPE in every home. If you have a multi-port CPE, the cost of that FWA unit economics will drop. So if it's a multi-port, if it's a single-port CPE, then the economics will work better than fiber in a high-rise area. But the moment you start going out into flatbed geographies for two reasons. One is that you don't have as much congestion in there on the 5G networks, or you will not—not that you don't have, you will be unlikely to have in the future as much congestion. The economics of FWA tend to be quite competitive to fiber because fiber then needs to pull a longer amount of last mile to connect that home. That said, we also have an LCO model beyond the 100 cities, as you're aware, which economically works really well for us. So we are quite relaxed right now of where the demand is coming from. I think for us, at a high level, roll out fiber everywhere as far as possible, especially in places which have four floors and above, and even otherwise, try and roll out as much of fiber, focus on sweating that fiber within three months, six months, nine months. Wherever fiber is not there, get that customer on FWA because it's a land-grab phase as far as broadband is concerned. Thank you. Thank you, Gopal. When you say the economics are very similar to that of fiber, is it fair then to say the EBITDA margins of the FWA business is similar to that of home services? Yeah, I mean, it's in that same ballpark. Got it. And can I double-check on this? Where are the users of FWA and CapEx of FWA being counted into? Is it a part of home services? Soumen? Yeah. Yeah, it is a part of homes. Okay. So the incremental CapEx, what we are seeing an increase in home is largely an FWA-led investment, right, along with the fiber investment? Yes. No, no, no. Fiber is also our routers. We put CapEx even on the routers. Correct? Soumen? No, yeah. As Gopal said, it's routers. We are not slowing down our fiber rollout. So that CapEx continues. On top of that, we have FWA rollout, which is why you are seeing a bit of elevation in the CapEx in the home segment. Got it. And my last question. Just let me qualify that. This is not the radios of 5G. This is only the connection that we provide on FWA in the home, which is what sits in the home services CapEx. Thank you, Gopal, for the clarification. And my last question is a follow-up on your free cash flow. You did mention focus on deleveraging, stepping up dividends, selecting prudent M&A. Any general thoughts on data center as an investment, given what we are seeing on AI? Should that pick up going ahead as well? No, we are looking at it closely, and if we have something that is meaningful, we'll certainly get in there. I think we are watching that space. We have mentioned that the GPU as a service, we have currently decided to park that because things are changing very fast in that space. The cost of 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. We've done multiple workshops to really understand the space well, and we've decided that we will not be a fast follower in GPU as a service. We'll be a - I'm sorry, we'll 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's nothing to report right now. Got it. Thank you. The next question comes from Mr. Sanjesh Jain. Mr. Jain, you may please unmute your side, introduce yourself, and ask your question now. Yeah. Hi. Good afternoon, all. I'm Sanjesh from ICICI Securities office. Gopal, first question on the 5G customers. How has been your observation on the 5G customer? We have now taken them to at least 2 GB per day plan. Can you help us understand, are they using much more than that? Are the new customers coming in, upgrading more than 2 GB per day? That was earlier anticipation and expectation that the 5G will get monetized. Is that getting brewed on the ground today? Yes. The answer to that is yes. I think this is one of the primary drivers. Data monetization, when we talk about, there are two parts to it. One is higher-end plans, which offer 5G as part of unlimited data, and the second is lower-end plans where the data allowance runs out, and contextually, you're able to sell an additional pack for those few hours where the allowances run out, so both those are in play. We have seen this as one of the drivers for upgradation onto the 2 GB plus data packs. A nd the want of 2 GB is what they are upgrading, or just because 5G is not available below that, hence they are pushed to buy more 2 GB plus plan? No, no, no. It's 2 GB with the unlimited data is the draw. Is it draw? Okay. Okay. But we have not seen material increase in the customers beyond 2 GB plan in the 5G as well. Will that be a fair assumption? There's no reason for them to take anything more than that because it's 2 GB plus unlimited data. 2 GB plus unlimited data. Unlimited prepaid. Unlimited prepaid, yeah. Yeah. Yeah. But once we align it with the 4G, can that be one of the levers for us to grow the ARPU? Of course. I mean, because then you will have more data monetization. Got it. Got it. That's clear. Gopal, second on the CapEx side, now that we are touching close to 350,000 sites, will it be fair to assume that from here on, we will again go back to that earlier growth rate of adding another 7,000, 8,000 annually? Will that be the rate which we will normalize? For this year, we guided 25,000 towers to be added. I think it will come down meaningfully, Sanjesh, I think, on the rollout because by and large, our rollout is complete with the exception of a few places like Gujarat and MP and all that where we've not yet gone as deep. The fact is that there is a lot of headroom there, but it's going to be substantially lower than last year. Got it. One last question from my end. Will the FWA drive a faster rollout of the fiber or strengthening the backhaul because the data consumption per site will go up materially with FWA catching up? Will that push us to add more backhaul capacity faster than what we earlier thought? Sanjesh, we have a grassroots blueprint. And you see, the challenge with fiber is that you can't roll it. You can't turn it on and off every month. It's got long gestation because you have to plan it, you have to get right away, then you have to trench it, then you have to sort of put it there, then you have to repair the places where you have trenched it. So this is a long duration period, it takes six months, seven months to really get something going, and so about two years back, we created a five-year transport blueprint. And all we are doing is trying to accelerate that blueprint. I mean, for the last two years, the only effort has been to say, "Do more, do more, do more," so that that blueprint is actually met. We are not yet in line with exactly where that blueprint is, but every month in the last eight quarters, every quarter, we have made progress, and we are now more or less caught up with where we need to be. So we will continue to do that. Because the difference between our fiber on the ground today to the number one player or the peer is almost 2x. So on the fiber side, probably we may need to do more. Will that be a right assumption? No, we are doing as much as we can. So let me say that. There are three types of solutions we look at. One is fiber nodes. Second is FTTH, which is basically 1 Gbps type of fiber, which is like home fiber, but that also makes the tower 1 Gbps ready, and the third is E-band spectrum using the microwave backhaul. So all three are being looked at. E-band is a temporary reprieve in case there's an event where a particular site we feel needs fiber before the fiber is actually coming. So we can then put an E-band there. But the moment fiber comes, we take that E-band and put it somewhere else. So I think it's a moving thing. I mean, suffice it to say, as far as backbone and transport is concerned, there is no reason for us to be uncompetitive. But there's a blueprint on fiber is what I was referring. The next question comes from Mr. Vivekanand Subbaraman. Mr. Subbaraman, you may please introduce yourself, unmute your side, and ask your question now. Hello. Thank you for the opportunity. I'm Vivekanand from Ambit. My first question is on the enterprise revenue and EBITDA trajectory. Now, Gopal, I appreciate your point on the commodity voice business taking up a lot of bandwidth, but isn't this decision also likely to impact your Airtel IQ CPaaS business? That's one observation that came to my mind. Please clarify on this. And secondly, you alluded to no EBITDA impact on account of such a decision, but that does not seem to be playing out in your numbers, at least for the first nine months of fiscal 25. That's question one on the enterprise side. I have one more. Do you want to address this before I move to the next one? Yeah. So the simple answer, I think there's no impact on CPaaS and IQ. And the second thing is that you don't see this reflected in the numbers yet. This is only being triggered month of February. Okay. So then what's the key reason for the B2B EBITDA decline in the first nine months? I think the primary reason for the EBITDA decline is a. Maybe, Soumen, you can answer this. It's the hardware sales that had the one-off there. So just take this up. Yeah. So the reduction that you said is because we have moved to selling converged solutions where there is connectivity, there are services, and there is also hardware bundled into it. For example, let's take security. When we do a security deal, there are security services as well as security licenses. So unlike connectivity, which is entirely our product, some of these products have a resale component built into it. So that is why you see some dilution in EBITDA margin over these last nine months. You have to understand that connectivity is, of course, growing, but these kind of products are growing much faster, and hence their weightage will keep increasing. So to that extent, there will be an impact. Okay. Understood. But I must also tell you, Vivekanand, that if you take the commodity businesses out, which have negligible margins, obviously, EBITDA margins will go up, right? But the question is the growth side of the portfolio, which is adjacencies, have a lower margin than connectivity. So as you look at a long-term basis, the question that we will have to address ourselves is, can we grow this business faster, and can we grow absolute EBITDA? I would not be so concerned because there's not a CapEx. These adjacencies don't have heavy CapEx. They're very light on CapEx. Got it. The next question is on the digital revenue streams that you have and also your recent partnership on Airtel Finance. Your competitor, Jio, they spoke about their non-connectivity digital revenue annualizing INR 150 billion, almost half of yours. Just wanted to understand, is competition so elevated, or what's the challenge? I mean, you are not able to grow at perhaps the same pace as they are showcasing. They say 60% growth. So what's really working for them, which is perhaps not fighting for you? And a related question is on the finance side, where if you could elaborate on the Bajaj Finance partnership on how you monetize through this, that would be great. I think the performance of our competitors, that question is best directed at them rather than us. I think we report what we are doing, which is we think that there's a big opportunity for us to scale our digital services. The reason that we spend so much time on actually getting the model of Airtel Finance right is only for this. Some of the partnerships that we've had are with smaller NBFCs. With Bajaj, this is a really big-scale partnership, and the idea here is to create value together. Obviously, we bring a lot to the table where there are almost 200 million customers who have probably never taken a Bajaj product or Bajaj doesn't have much information on. They get access to that user base. They get access to all our channels, to our distribution, and we're putting the full might of the Airtel system to really ensure that this works for this partnership. On the other hand, what we get out of it is the deep underwriting expertise of Bajaj, their AI capabilities, their understanding of this whole business, and their insights around it. And this has the sponsorship of their senior team. And therefore, collectively, we are both committed to making this work. So I think that's the way that we see this partnership. Obviously, it should create value for both entities and give us, give more and more people access to credit. Fair enough. Just one follow-up on this partnership. Will it get accounted for? The revenue streams get accounted for in Airtel Payments Bank or in the enterprise bank? No. Not in Payments Bank because Payments Bank is not allowed to do this by its license. So by the way, Airtel Payments Bank is the second part of our financial services portfolio but sits in a separate entity. And that also has done very well. We're now averaging about $46 billion of GMV. That's growing handsomely. We have 87 million monthly transacting users. We have an enormous amount that offers headroom to grow. So that's a business that now is actually getting its momentum on its own, and we'll continue to focus there. Of course, as you know, the margins there are very thin, which is why you need the scale to actually drive that value there. But this will not sit there. This sits as part of the ecosystem unit which gets consolidated into Airtel. Airtel. Gets consolidated wherever it gets consolidated. It gets consolidated as a part of Bharti Airtel. Bharti Airtel. Okay. Great. Thank you and all the very best. The next question comes from Mr. Aditya Suresh. Mr. Suresh, you may please unmute your side, introduce yourself, and ask your question now. Hi, good afternoon. This is Aditya Suresh from Macquarie. Gopal, firstly, congratulations. Strong execution on a really clearly articulated strategy. So you've kind of addressed quite a few of the issues. I had two questions. First, on postpaid, you mentioned this as a kind of significant opportunity, and I wanted to understand a bit more about the comment in itself. So is that comment more from the dimension of the count of the opportunity, number of subscribers, or it being on the pricing structure? I guess the reference there is that I look back in time, postpaid has been, let's say, four or five times higher than where prepaid tariffs are at. Today, we're much, much lower than this, right? So just your thoughts on this opportunity. So I think when I was commenting on the opportunity, our user base is a small fraction of the overall 80 million base that potentially is creditworthy based on the data models that we have. So the ability to actually convert more and more onto post paid, I think, is really what I was commenting on. There's no reason why we shouldn't get upwards of 50 million over the next few years on post paid, which because there's an 80 million base that is ready to actually get onto post paid. That said, I think your observation is also right, which is the overall compression of the price table has meant that post paid pricing is now not very different from prepaid. Of course, it's at a premium, two-ex premium, but it used to be much higher. If the price architecture changes in India, where prepaid starts moving up like the way it is in Indonesia, which goes from 100 to 200 to 400, then clearly there's a headroom for growing postpaid pricing because a lot of value gets delivered through postpaid in the form of bucket allowances, rollovers of data, content being bundled, and so on and so forth. In this house, now we consolidate the accounts. Are you able to articulate any updated priorities here for that specific entity? That entity or the passive infrastructure kind of business which rolls up under Bharti? Sorry, Aditya, I'm not able to hear you. Maybe Vaidehi can get to the next one. The next question comes from Varatharajan Sivasankaran. Mr. Sivasankaran, you may please unmute your side, introduce yourself, and ask your question now. Vaidehi? Gopal, we are able to hear Vaidehi. Are you able to hear her? Can you hear me, Gopal? No, I'll just take Gopal's room. I think his audio output is missing. I can't hear you. Gopal, we are able to hear you well. I can't hear you. Yes, Harjeet, I can hear you now. Is it okay now? Yeah, now it's okay. Excellent. Okay. Thank you. Thank you, Harjeet. Gopal, the question comes from Varatharajan Sivasankaran. He's online and ready to ask you a question. Yeah, please go ahead, Varath. Mr. Sivasankaran, you may please unmute your side, introduce yourself, and ask your question now. All right. Thank you, everyone. I would like to remind all the participants to stay connected on the call for the next session on Bharti Hexacom. But before that, Gopal, I would like to pass over to you for your closing remarks. Thank you very much. I think, thank you for all your questions. As usual, they were very perceptive, and thank you for all of that, and I hand over back to Vaidehi for follow-up on the Hexacom calls. Hope to see you soon in the next quarter. Thank you very much, Gopal. With this, I would now like to hand over to Mr. Soumen for his opening remarks on the Bharti Hexacom performance. Good afternoon, everyone. Welcome to the Bharti Hexacom Q3 FY '25 Earnings Call. I'll start with a brief on the proposed passive infrastructure transaction, and we'll then move on to the financial performance. We are planning to transfer approximately about 3,400 telecom towers to Indus. We believe that this transaction will lead to better operational and financial efficiency. From an operational point of view, not only will it free up management bandwidth, but also lead to better expansion of returns. Lastly, we believe that Indus will be able to run these towers more efficiently and create long-term value. Moving on to financial performance, we delivered a revenue of INR 2,251 crores, growing sequentially by 7.3%. Smartphone customer additions were at 4.5 lakh compared to 1.43 lakh in the last quarter, of course, being impacted by the tariff repair. Net customer additions saw a rebound of 4.94 lakhs, which is a churn improved to 1.9% compared to 3.2% in the last quarter. The company delivered another quarter of industry-leading R2 growth of 5.7% to reach 241. EBITDA stood at INR 1,194 crores, with an EBITDA margin of 53%, improving by almost 300 bps. EBITDAaL, which is the new terminology that we have introduced and the right one to monitor the organization's performance, for the quarter was INR 1,042 crores, with a margin of 46.3%. Net income for the quarter stood at INR 261 crores, and cash generation for the quarter was robust, with operating free cash flow, with an EBITDA minus CapEx of about INR 758 crores. Net debt to EBITDA improved to 1.03. With that, I hand you over to Vaidehi to open the floor for questions. Thank you, Soumen. We will now begin the interactive Q&A session. Due to time constraints, we would request if you could limit the questions to two participants to enable more participation. Interested participants may click on the raise hand option on your Zoom application and join the queue. With that, the first question comes from Mr. Sanjesh Jain. Mr. Jain, you may please unmute your side, introduce yourself, and ask your question now. Requesting everyone to kindly raise your hand to be in the Q&A interactive session. Interested participants may click on the raise hand option on the Zoom application to join the Q&A queue. The next question comes from Mr. Vivekanand Subbaraman. Mr. Subbaraman, you may please unmute your side, introduce yourself, and ask your question now. Thanks, Vaidehi, for the opportunity. I'm Vivekanand from Ambit. My first question, Soumen, is that now that the transfer of 3,400 towers will happen to Indus Towers, that's almost 13% of your tower footprint. So how will that change your P&L from a cost structure standpoint? That's question one. I'll ask my next question after this. Well, if you look at net income level, there won't be much of a difference because, of course, we will be receiving some consideration, which has an opportunity cost. So at a net income level, we don't expect much of a difference between what it is now and what it will be later. But of course, once the deal is consummated, we will know, but it should not be very material to the overall P&L. Okay. No, I was more concerned about how we should model the reported EBITDA margin. I mean, from a modeling standpoint, as an analyst, I have to ask you this question. Of course. From an EBITDA point of view, there will be some dilution in the EBITDA consequent to the incremental IP fees. You see, the energy will remain the same. There is no difference. The O&M will remain the same. There will be some IP fees because there will be some return which will be taken by Indus on the investment. To that extent, EBITDA will get very marginally diluted, but that will be very small. And what I'm trying to say is whatever is there as an impact will get unwound because this money will help us in either investing or paring down our debt spectrum or otherwise. So at a net income level, we would not be materially different from what we are today. Okay. Got it. Unlike your parent, which has almost two times net debt ex leases to EBITDAaL, in your case, it is only one time. And with the cash inflow from this transaction, you will be looking at only debt of very negligible amounts. So how do we think about the capital structure now, here on, and the use of cash for Bharti Hexacom? So I think there will be, of course, there is an angle of dividend payout. We must also remember that this FWA rollout will create a need for CapEx in Hexacom because this FWA CPE is significantly more expensive than the broadband CPE. So there will be some need of additional investments. But well, yes, the net debt to EBITDA looks very promising, just above one. And as you rightly said, that if we get this money, it will further come down. Dividend payout will be something which should certainly be looked at with a positive angle. Okay. Is there any CapEx guidance that you would like to provide in light of the FWA scale-up that you are planning? Should it significantly accelerate for you in the next fiscal or coming? So directionally, there could be marginal increase. It all depends on the FWA rollout. As you know, in terms of a footprint of the radio CapEx we have done, and hence, there could be some increase because of the FWA CapEx, but directionally, not very different. Understood. Thank you, and all the very best. Thank you. Interested participants may click on the raise hand option on your Zoom application to join the Q&A queue. Upon announcement of name, participants to kindly click on unmute myself in the pop-up screen and start asking the question post introduction. With this, the next question comes from Mr. Piyush Choudhary. Mr. Choudhary, you may please unmute your side, introduce yourself, and ask your question now. Hi. Thanks for the opportunity. This is Piyush from HSBC. On home broadband segment, could you tell us what's the FTTH Home Pass coverage for Hexacom and FWA kind of coverage at this moment? What could be the TAM in the geographies where Hexacom is at the moment? Like the mid-term landscape. Like Mr. Gopal Vittal mentioned that 45 million can go to 90 million for Pan India. How do we break it down to the regions in which Hexacom is there? Thank you. So in terms of addressable market, I would say this would be about 3 to 4 million. We are present in close to about 200 cities in Hexacom. 200 cities for FWA, is it? Total. Between FWA and fiber. And FTTH Home Pass? That I'll have to get back to you. I don't have that ready. About 2 million Home Passes we have currently in Bharti Hexacom. Got it. Got it. Thank you. Thank you very much. The next question comes from Mr. Mohit Motwani. Mr. Motwani, you may please unmute your side, introduce yourself, and ask your question now. Mr. Motwani, you may please unmute your side, introduce yourself, and ask your question now. The next question comes from Mr. Vivekanand Subbaraman. Mr. Subbaraman, you may please unmute your side, introduce yourself, and ask your question now. Thanks. This is Vivekanand again from Ambit. I just have one follow-up. Could you help us understand the exceptional charge of INR 1.4 billion that was taken during the current quarter? And what is the way forward here in terms of this charge? Is there any legal recourse that you have to perhaps get some relief here? Thank you. Well, see, as any other organization, there is a periodic review of the carrying value of various assets and liabilities. So in that review, it was felt that there is a provision which has to be taken. There were also some reversals on account of the recent court judgment on passive infrastructure. It's a combination of this. There is no cash payout or anything of that sort. From time to time, when you review, based on that there's a provision which has been taken towards regulatory dues. And as far as trend is concerned, absolutely not. By nature, it's an extraordinary item. So there is absolutely no trend of this. It's a one-time issue. Okay. Soumen, if you could give some color on what this pertains to, was it any new development during the current quarter, or is this part of some contingent liability that you have decided to provide for during the current quarter? Yes, you will see mostly a corresponding reduction in the contingent liability. I see. Okay. Thank you very much. Thanks. Thank you. Thank you, everyone. Now I'd like Soumen to give his closing remarks for Bharti Hexacom. Thanks a lot for joining in for the call. We look forward to connecting with you in May after our Q4 results. T hank you. Thank you, Soumen. Thank you, everyone, for joining today. Recording of this webinar will be available on our company website. Thank you once again, and have a great day ahead.