Bharti Airtel bets big on data centres, cloud for market share gains

Telecom operator Bharti Airtel on Friday said the company is looking to expand its data centre capacity over the next few years and position itself as a leading sovereign cloud provider in the country. The telecom operator is banking on the rising local data hosting needs to gain market share.

Separately, the company is waiting for a response from the Department of Telecommunications (DoT) on its request seeking parity with Vodafone Idea for the recalculation of its adjusted gross revenue (AGR) dues.

“We have written a few letters to the DoT asking for a clarification and basically requesting parity on the treatment of the AGR dues. We are yet to hear from the DoT. Once we hear from them, we will then decide what our next steps are,” its executive vice chairman, Gopal Vittal said.

In the data centres business under its subsidiary Nxtra, Airtel aims to reach 1 gigawatt (GW) of capacity over the next 3-4 years, up from the current 120-130 megawatts. With the increase in capacity, the telecom operator is targeting a market share in the segment of 25% from 12% currently, Vittal, said in a post-December quarter earnings call with analysts.

“One of the places we are not particularly satisfied is the fact that our data centres market share is low…While I cannot provide precise capex (capital expenditure) guidance today, you will see increased investments in this segment,” Vittal said.

Airtel’s increased focus on data centres and cloud business assumes significance as the broader market growth in the wireless business has been averaging about 6% for the last couple of years, compared to 10% growth earlier.

AI hub investment

In the budget 2026-27, finance minister Nirmala Sitharaman also announced a tax holiday until 2047 for foreign cloud service providers using Indian data centres. “It’s early days, but we think this will certainly fuel demand for data centres,” Vittal said, adding that the company has a distinct role to play in this environment given its availability of land, use of green power, and capital allocation for the business.

In the September quarter, Vittal mentioned that Airtel has been investing ₹1,500 crore a year in Nxtra. In October, Airtel also entered into a strategic partnership with Google to set up India’s first artificial intelligence (AI) hub in Visakhapatnam, Andhra Pradesh.

In a note in October, Macquarie Equity Research said India currently has 1.4GW of operational data centre capacity, with 1.4GW under-construction and another 5GW in planning stage. “Key thematic tailwinds include data localisation laws, supportive regulatory environment and subsidies from central and state governments, rising enterprise cloud adoption, surge in mobile data demand and OTT (over-the-top) content, and growth of digital-native businesses,” analysts at Macquarie said in the note.

Along with the data centre offerings, Airtel is also doubling down on investments in the cloud business. “We are also looking for certification with Meity (ministry of electronics and information technology) on being constituted as a sovereign cloud,” Vittal said.

Sovereign cloud refers to a digital platform that is entirely within the country for storing and processing data and running applications. From the codebase to the physical data centres, everything is fully located in India.

Arpu growth

Airtel cloud business is housed under its digital arm, Xtelify. In August, the company announced its sovereign cloud offering amid growing focus among Indian enterprises on securing sensitive data. “We have signed over 16 deals with over 300 ongoing conversations with customers across sectors with a focus on BFSI (banking, financial services and insurance) and manufacturing,” Vittal said, adding that there are over 116 features that are required to be a very good competitive cloud, and Airtel has built most of those features.

In FY25, Airtel incurred a capex of ₹42,290 crore. In the nine months ended December, the company has spent about ₹31,456 crore. Besides the cloud and data centre business, the company is also exploring opportunities in the financial services sector and in business-to-business (B2B) offerings.

On the core mobile business, Airtel expects the growth in average revenue per user (Arpu) will be aided by factors such as premiumization, prepaid to postpaid conversions, 2G to 4G/5G upgrades, international roaming, and data consumption, in the absence of any tariff hikes.

Bharti Airtel has increased the gap on Arpu with Reliance Jio. During the quarter, Airtel’s Arpu rose 1.2% sequentially to ₹259 a month. For context, Jio’s Arpu was ₹213.70, and Vodafone Idea’s Arpu was at ₹172 a month at the end of December.

When asked about a differentiated pricing between 4G and 5G, Shashwat Sharma, managing director (MD) and chief executive officer (CEO) of Airtel (India), said, “We have to keep reading and look at really a differential pricing architecture where people pay more for more (data consumption) instead of looking at differential 4G or 5G pricing because that creates a little bit of confusion in the market and customers don’t know what they’re using.”

Subscriber base

To be sure, Sharma was appointed as MD and CEO of Airtel India effective 1 January after Vittal was promoted to the role of executive vice president Bharti Airtel.

In the December quarter, Bharti Airtel added 4.35 million mobile users, taking its total mobile subscriber base in India to 368.5 million. Notably, 79.8% of the company’s mobile subscribers are on 4G/5G. The company ended the quarter with 181 million 5G customers.

The company has rolled out 5G standalone (SA) technology pan-India for home broadband fixed wireless access (FWA) services. Most FWA customers are now on the SA network, which provides ‘superior updates’ and experience, it said. So, 5G standalone means the network that runs entirely on 5G infrastructure, without depending on older 4G systems underneath.

“Our share in 5G shipments continues to improve, and 5G handset penetration is rising. Today, over 90% of smartphones sold are 5G-enabled,” Sharma said.

When asked about slowing net additions in 4G/5G, Sharma attributed the factors to SIM card consolidation driven by previous tariff increases and a shrinking feature phone funnel.

On Thursday, India’s second-largest telecom operator by market share reported a 55% year-on-year (y-o-y) ₹6,631 crore”>fall in its net profit to ₹6,631 crore, about 7% lower than Bloomberg’s estimates. Sequentially, it fell 2.4% in Q3 from ₹6,791.7 crore in the preceding quarter.

Alongside, revenue in the quarter was up 19.6% y-o-y and 3.5% sequentially at ₹53,982 crore. This was largely driven by an increase in its mainstay mobile services business, its focus on premium services, upgrades from 2G to 4G/5G, postpaid subscribers, and its Africa business.

Shares of Bharti Airtel closed 1.5% higher at ₹2,023 on the National Stock Exchange on Friday.