IT spending growth in a year of profit surge

Bharti Airtel, one of India’s two behemoth telecom operators alongside Reliance Jio, used the year to make tech acquisitions and announce related moves

In a financial year that coincided with the launch of public 5G services, telecom giant Bharti Airtel significantly increased its overall technology investments. This surge in tech spending was driven by a series of acquisitions and announcements made over the year, signifying a period of growth and consolidation for one of Asia’s largest telecommunications companies.

A quick look through the FY 23 annual report pegs Airtel’s total expenditure on information technology (IT) operations and infrastructure at Rs 657.9 crore — up 22.7% year-on-year (YoY) from Rs 535.8 in FY 22. The IT expenditure is a part of Airtel’s ‘other expenses’ tab, under which the company spent Rs 7,879.4 crore in FY 23. This part of the telco’s expenses rose nearly proportionately to its overall IT expenditure.

Airtel’s net expenditure for the year stood at Rs 67,871.3 crore, rising 15% YoY in FY 23, from Rs 59,013 crore. The overall IT outlay made for 8.3% of Airtel’s cumulative ‘other’ expenses, and just under 1% of its net annual expenses.

To be sure, Airtel’s operating revenue for the year grew 19.4% YoY to Rs 1.39 lakh crore. The key takeaway from Airtel’s FY 23 annual report, interestingly, is a sharp rise in its net profit, which rose by a significant 47.9% YoY to Rs 12,287.4 crore, up from Rs 8,305.2 crore in FY 22.

The key takeaway, therefore, lies in Airtel’s rise in profitability, while the telco succeeded in keeping its expenditures in check.

Leadership commentary: 5G and digital assets lead growth

In his annual shareholder address, Sunil Bharti Mittal, Chairman of Bharti Airtel, said, FY 23 was a milestone year in the Indian telecom industry with the launch of 5G services. We were able to leapfrog into the 5G era, supported by visible ease of doing business in the spectrum auction and allocation processes. Airtel became a frontrunner in this next generation of communication services, and created history by being the first telecom operator to have launched its 5G services in eight cities on the occasion of the India Mobile Congress’ 5G launch.”

“We were able to leapfrog into the 5G era, supported by visible ease of doing business in the spectrum auction and allocation processes.”- Sunil Bharti Mittal, Chairman, Bharti Airtel

Mittal further added that Airtel also experienced its “highest ever market share… be it in B2B or B2C businesses (through FY 23).” The telco, Mittal confirmed, closed FY 23 with a base of over 31 million 5G smartphone users. He also touched upon Airtel’s rollout of digital payments and other value-added solutions throughout the year, as part of the company’s tech offerings.

Among tech collaborations, Mittal confirmed, “Airtel continues to have strong strategic collaborations with industry leaders like Amazon, Cisco, Ericsson, Google, IBM, Intel, Meta, Microsoft, Netflix, Nokia, Oracle, Qualcomm and many more.”

Gopal Vittal, Chief Executive and Managing Director of the company, further highlighted the key role that tech enablement has played for the telco. In his shareholder address, Vittal said, “We have a three-layered business model. The first is digital infrastructure. This is the highway that drives much of India’s economic and digital activity. The second is digital experience, which sits above digital infrastructure. The third is digital services, including digital businesses such as Airtel Finance, Wynk (music streaming), Nxtra (datacentre), Airtel IQ (Communication Platform as a Service or CPaaS business), Airtel Payments Bank and Airtel Ads.”

Through FY 23, and in outlook to FY 24, Vittal affirmed that Airtel is taking a platform approach, with products divided across four categories — buy, bill, pay and serve.

By Vernika Awal

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