Airtel Unveils Ambitious Data Centre and Sovereign Cloud Expansion Plan
Telecommunications giant Bharti Airtel announced on Friday a strategic push to significantly expand its data centre capacity over the coming years, positioning itself as a premier sovereign cloud provider in India. The company is capitalizing on the escalating demand for local data hosting services to capture a larger market share in this critical infrastructure segment.
Data Centre Capacity and Market Share Targets
Under its subsidiary Nxtra, Airtel aims to achieve an impressive 1 gigawatt (GW) of data centre capacity within the next 3-4 years. This represents a substantial increase from the current operational capacity of 120-130 megawatts. With this expansion, the telecom operator is targeting to elevate its market share in the data centre segment to 25%, up from the existing 12%.
Gopal Vittal, Executive Vice Chairman of Bharti Airtel, emphasized the company's commitment during a post-December quarter earnings call with analysts. "One area where we are not particularly satisfied is our current data centre market share," Vittal stated. "While I cannot provide precise capital expenditure guidance today, you will undoubtedly see increased investments in this segment."
Sovereign Cloud Ambitions and Regulatory Certification
Parallel to its data centre expansion, Airtel is aggressively pursuing certification from the Ministry of Electronics and Information Technology (MeitY) to establish itself as a sovereign cloud provider. Sovereign cloud refers to a digital platform where all data storage, processing, and application operations occur entirely within national borders, from the physical infrastructure to the codebase.
Vittal revealed that Airtel's cloud business, housed under its digital arm Xtelify, has already secured over 16 deals and is engaged in more than 300 ongoing conversations with customers, particularly in the banking, financial services, insurance (BFSI), and manufacturing sectors. "We have built most of the 116 features required to be a highly competitive cloud provider," he added.
AGR Dues Parity and Regulatory Engagement
In a separate development, Bharti Airtel is awaiting a response from the Department of Telecommunications (DoT) regarding its request for parity with Vodafone Idea in the recalculation of adjusted gross revenue (AGR) dues. "We have written several letters to the DoT seeking clarification and requesting parity in the treatment of AGR dues," Vittal explained. "We are yet to receive a response. Once we do, we will determine our subsequent steps."
Financial Performance and Strategic Investments
The company's intensified focus on data centres and cloud services comes as the broader wireless market growth has moderated to approximately 6% annually in recent years, down from the previous 10% growth rate. In the December quarter, Bharti Airtel reported a 55% year-on-year decline in net profit to ₹6,631 crore, which was about 7% below Bloomberg estimates. However, revenue showed robust growth, increasing by 19.6% year-on-year to ₹53,982 crore.
Capital expenditure remains substantial, with Airtel investing ₹1,500 crore annually in Nxtra and incurring a total capex of ₹42,290 crore in FY25. For the nine months ending December, the company has already spent approximately ₹31,456 crore.
5G Deployment and Subscriber Metrics
On the mobile services front, Airtel continues to lead in average revenue per user (ARPU), which reached ₹259 per month in the December quarter. This compares favorably to Reliance Jio's ₹213.70 and Vodafone Idea's ₹172. The company added 4.35 million mobile users during the quarter, bringing its total Indian subscriber base to 368.5 million. Notably, 79.8% of these subscribers are on 4G or 5G networks, with 181 million specifically on 5G.
Shashwat Sharma, Managing Director and CEO of Airtel India, addressed pricing strategies, stating, "We are considering a differential pricing architecture where customers pay more for higher data consumption, rather than distinct 4G or 5G pricing, to avoid market confusion."
Industry Context and Future Outlook
The data centre market in India currently boasts 1.4GW of operational capacity, with an additional 1.4GW under construction and 5GW in the planning stages, according to Macquarie Equity Research. Key growth drivers include data localization laws, supportive regulatory frameworks, government subsidies, rising enterprise cloud adoption, and increasing mobile data demand.
Vittal also highlighted the potential impact of recent budgetary measures, noting, "The tax holiday until 2047 for foreign cloud service providers using Indian data centres, announced in the budget, is in its early stages but will certainly fuel demand for data centres." He emphasized Airtel's competitive advantages, including land availability, green power utilization, and dedicated capital allocation for this business.
In a strategic move, Airtel partnered with Google in October to establish India's first artificial intelligence hub in Visakhapatnam, Andhra Pradesh, further underscoring its commitment to technological innovation and infrastructure development.
