SYNOPSIS: Indian telecom operators are investing over Rs. 1 lakh crore in AI and data centre infrastructure to shift beyond connectivity, target enterprise-led growth, diversify revenues, and improve efficiency as 5G capex peaks.
India’s telecom sector is preparing for a major strategic overhaul, with operators collectively planning investments exceeding Rs. 1 lakh crore over the next two to three years in AI-enabled data centres, edge computing, and cloud infrastructure.
The move signals a clear transition away from capital-heavy network expansion toward building compute-driven digital ecosystems, as telcos look to substantially scale their enterprise-focused revenue streams, which could eventually account for up to 40 percent of overall income.
Capex shift towards AI
As 5G rollouts near completion, telecom companies are reassessing how future capital expenditure is deployed. Sources suggest that around 20-30 percent of investment budgets by FY27 may be redirected toward AI-ready infrastructure, including advanced data centres and cloud-native platforms.
This reallocation is expected to be more aggressive among leading operators that have already passed their peak 5G spending phase, allowing them to prioritise higher-value digital infrastructure over traditional connectivity assets.
Enterprise revenues and monetisation strategies
This strategic shift is expected to materially alter revenue composition for Indian telecom players. At present, enterprise services contribute roughly 15-30 percent of total revenues. However, as operators expand beyond basic connectivity into areas such as cloud services, cybersecurity solutions, IoT platforms, and AI-led enterprise applications, the share of B2B revenues could rise to 30-40 percent over the medium term.
These services not only offer stronger growth visibility but also support improved margins, making enterprise monetisation a key pillar of the sector’s next growth phase.
Industry experts note that the country’s two largest telecom operators are making strategic bets on gigawatt-scale AI data centres, which could add nearly 4-5 GW of capacity to India’s digital infrastructure.
A key development in this direction is Bharti Airtel’s strategic partnership with Google to establish India’s first large-scale AI hub in Visakhapatnam, Andhra Pradesh, announced on 14th October. The project is aimed at accelerating AI adoption in India, strengthening the national digital backbone, and enabling Indian enterprises to access Google’s full AI stack and consumer services more efficiently.
Google’s AI hub in Visakhapatnam represents a multi-layered investment of nearly $15 billion over the 2026-2030 period and will include gigawatt-scale data centre capacity supported by subsea connectivity and clean energy infrastructure. The project is being developed in collaboration with ecosystem partners, including Airtel and AdaniConneX.
Additionally, Bharti Airtel had announced in late 2024 that it would invest around Rs. 5,000 crore to double its Nxtra data centre capacity to 400 MW. Separately, Reliance Industries is planning to set up a 1 GW AI data centre in Andhra Pradesh, according to reports dated 14th November.
While financial details have not been disclosed, the proposed facility will further expand India’s AI infrastructure footprint, adding to investments already being made by global technology players such as Google and Microsoft.
The Andhra Pradesh facility is expected to function as a twin to Reliance’s upcoming gigawatt-scale AI data centre in Jamnagar, Gujarat. Together, the two sites are projected to form one of Asia’s most powerful AI infrastructure networks. The Jamnagar project alone is expected to reach a capacity of 3 GW, which could make it the largest data centre globally in terms of scale once operational.
While the investment themes are similar, monetisation strategies differ across operators. Reliance Jio is reportedly pursuing a full-stack AI model, integrating data centres with platforms and applications to create an end-to-end AI ecosystem. In contrast,
Airtel is expanding its Nxtra data centre footprint to deepen its sovereign cloud offerings and enterprise AI services. Industry observers describe this broader transition as a move away from connectivity-led investments toward a compute- and data-centric infrastructure model, enabled by the completion of the major phase of 5G rollouts.
Beyond revenue opportunities, AI adoption is also expected to drive cost efficiencies. According to industry experts, AI-led initiatives focused on optimising operations and reducing expenses are likely to start delivering tangible benefits over the next 18 to 24 months, strengthening the long-term economics of these investments.
The shift by Indian telecom operators toward AI-led infrastructure marks a significant evolution in the sector’s business model, as companies seek to diversify beyond traditional connectivity and tap higher-value enterprise services. Large-scale investments in data centres, cloud platforms, and AI capabilities indicate long-term confidence in enterprise demand and digital transformation.
However, the success of this strategy will depend on execution, timely monetisation, and the ability to build differentiated enterprise offerings in an increasingly competitive landscape. While these investments have the potential to reshape revenue profiles and improve operational efficiency, their impact on profitability and returns will become clearer only as utilisation levels rise and enterprise adoption scales over the coming years.
Written by Shivani Singh
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