Airtel investing $473 million to build 8 new data centres

Airtel data centres India
Image by Kwarkot | Image by Pixelvario | Bigstockphoto

Bharti Airtel, India’s second-largest telecom operator, is looking to expand its data centre capacity by up to five times in the country with an investment of Rs 3,500 crore ($473 million) over three years. The expansion aims to serve the ever-increasing demand to store data locally for various digital services and prepare for the high-speed 5G services.

The Sunil Mittal-led telecom operator’s data centre subsidiary, Nxtra Data Ltd, currently has a data centre capacity of 100 MW. Airtel, via its subsidiary, will build up to eight data centres, which would include parks.

“…each data park could host up to 100 MW. Some of these could be data centre parks in Pune, Mumbai wherein the company has multiple buildings in one park,” a person was quoted as saying by the Economic Times.

Nxtra offers secure data centre services to Indian and global enterprises, hyperscalers, start-ups, SMEs and governments. Nxtra’s nationwide portfolio of 10 large data centres and more than 130 edge data centres provide customers with co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management.

Nxtra’s revenue has grown by 3.2 times over fiscal 2018-2020, as per an analysis by ICICI Securities.

Airtel’s expansion will occur when other players like Adani Group and Microsoft, NTT, ST Telemedia, Ctrls and Sify are increasing their data centre-related investments in the country to tap the enterprise demand.

The Adani Group recently forayed into the data centre business by forming a 50:50 joint venture with US-based EdgeConneX to build hyperscale data centre parks in six cities. Microsoft is reportedly planning to invest Rs 15,000 crore ($2.03 billion) to set up a data centre in Telangana.

“India data centre market is expected to grow 3 times in next four years to 1,100-1,200MW. We expect Nxtra revenue to grow faster with the launch of more data centres and strong relationship with hyperscalers who are looking to expand presence in India. Further, Nxtra also offers public cloud, private cloud and hybrid cloud services and helps enterprises migrate to cloud architecture,” ICICI Securities said in its analysis note.

Last year, Airtel sold a 25% stake in Nxtra Data for roughly $235 to US-based Carlyle Group, valuing the company at around $1.2 billion. The divestment was aimed at expansion in the market and to take on domestic and international rivals.

“Until recently, most of the data being consumed in India was coming from overseas. We used to go to the Internet, pick it up from the Singapore data centre and then consume it,” the Airtel source told the publication.

As per Chicago-based real estate and investment firm JLL, India’s data centre capacity currently stands at 447 MW. India’s data centre sector will require an investment of $3.7 billion over the next three years in order to fulfil a greenfield development opportunity of 6 million square feet for the industry, JLL estimates. The report said that the telco plans to help its clients host content locally with the help of its data centres supported by its submarine cables. “Airtel then plans to then take the data to its edge data centres across smaller cities in the country,” the person informed the publication.

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