Indian Telcos Go Big on AI-Ready Data Centres, Plan ₹1 Lakh Crore Investment

India's telecom sector is pivoting from expanding network coverage to constructing advanced data centers and cloud infrastructure designed for artificial intelligence. This strategic shift will see investments exceeding ₹1 lakh crore over the next two to three years, with the aim of significantly increasing revenue from enterprise clients, targeting a contribution of 40% to overall earnings.

Industry executives report that telecom operators in India are planning to invest this massive amount in AI-ready data centers, edge infrastructure, and cloud functionalities. This transition reflects a move away from prioritizing network expansion toward developing compute-intensive digital infrastructure.

According to Aditya Khaitan, a partner at Deloitte India, a significant portion, estimated at 20-30%, of the FY27 investment budgets is expected to be allocated to constructing AI-ready data centers, edge infrastructure, and cloud functions. Khaitan noted that the extent of this shift will vary among telecom service providers, with the top two telcos, having moved beyond peak 5G investment, likely to invest more heavily.

This strategic pivot has the potential to reshape the revenue streams for Indian telecom companies. Currently, enterprise revenue constitutes between 15% and 30% of their total revenue. Shilpa Malaiya Singhai, MD at Alvarez & Marsal India, stated that Indian telcos have committed over ₹1 lakh crore towards AI-focused data centers in the coming years. Driven by services beyond traditional connectivity, including cybersecurity, cloud computing, IoT platforms, and AI-powered solutions, the contribution of B2B services to total revenue could rise to 30-40%, according to Khaitan.

Bharti Airtel, in late 2024, announced its intention to invest approximately ₹5,000 crore to expand its Nxtra capacity from 240 MW to 400 MW. Singhai added that India’s two major telecom operators have made strategic investments in gigawatt-scale AI-focused data centers, potentially adding a substantial 4-5 GW to the nation's existing digital infrastructure.

These investments include Bharti Airtel's partnership with Google for a 1 GW AI hub in Visakhapatnam, while Jio is planning a roughly 3 GW data center in Jamnagar.

Singhai explained that Jio is pursuing a full-stack AI factory and platform monetization approach, integrating data centers within its broader AI ecosystem. Meanwhile, Airtel is steadily expanding its Nxtra data center footprint to enhance its enterprise portfolio with sovereign cloud and enterprise AI services.

Amardeep Sharma, CTO of Praruh Technologies, characterized the move as a shift from connectivity-centric infrastructure to a compute and data-centric model. He noted that with the major phase of India's 5G rollout largely complete, telecom capital expenditure is demonstrably moving from pure connectivity investments toward AI, cloud, and data center infrastructure.

Singhai also anticipates that AI deployments focused on reducing operational expenses will begin to yield benefits within the next 18-24 months.