Airtel to Differ from IT Industry's Dividend and Buyback Strategy, Says Sunil Mittal

Bharti Airtel Chairman Criticises India's IT Sector for Prioritising Dividends Over Strategic Acquisitions

Bharti Airtel Ltd chairman Sunil Bharti Mittal has expressed concern over India's IT sector, stating that several companies have prioritised dividends and buybacks over strategic acquisitions. According to Mittal, this approach may lead to the sector becoming "a shadow of themselves."

Mittal made this statement during a conference call with investors following the company's fourth-quarter earnings. He noted that Bharti Airtel would continue to evaluate value-accretive telecom opportunities globally, while maintaining shareholder returns through dividends and buybacks.

India's 16 largest IT companies returned a record Rs 1.3 lakh crore to shareholders in FY26 through dividends and buybacks, a 36.3% increase from Rs 95,400 crore a year earlier. Their payout ratio exceeded 100%, meaning the companies distributed more cash through dividends and buybacks than their combined net profit for the year.

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In contrast, Bharti Airtel has chosen to pursue strategic acquisitions, such as the recent Rs 28,220 crore share-swap transaction with promoter-group entity Indian Continent Investment Ltd. (ICIL). This deal increased Airtel's stake in Airtel Africa to about 78% from roughly 58%.

Mittal believes that many Indian IT firms have failed to strengthen their market position over the last decade by not investing aggressively in new-age businesses within their own sectors. He suggested that these firms should have been buying leading-edge businesses in their own industry over the last 10-15 years.

Bharti Airtel's recent share-swap transaction with ICIL is seen as a strategic move to increase its stake in Airtel Africa. The deal avoids a large cash outflow from Airtel's balance sheet, unlike an expected all-cash deal. Analysts view the share-swap structure favourably, as it allows the company to maintain its cash reserves.

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The transaction also advances the Mittal family's long-term plan of consolidating promoter holdings under Bharti Telecom, the primary holding company through which the promoters control Airtel. Mittal aims to restore Bharti Telecom's controlling stake to above 50% while moving toward a more balanced ownership structure alongside strategic investor Singtel.

While Mittal indicated that there are no immediate global telecom acquisitions under consideration, he suggested that Airtel would continue evaluating strategic opportunities rather than maximising short-term shareholder payouts.