Tata Communications bets $450 million on India's data centre connectivity boom

Tata Communications Ltd is stepping up investment in connectivity infrastructure for India's data centre industry. The company said on Monday it will invest about $450 million (around ₹4,282 crore) over the next three to five years to build a 10,000-km high-speed fibre network across the country, linking major data centre hubs.

The announcement assumes significance as India's operational data centre capacity reached nearly 1.8 GW in the first half of 2026, with another 3.86 GW of capacity under construction or in the pipeline by 2030, according to commercial real estate services firm Cushman & Wakefield.

As more data centres come up across the country, Tata Communications is looking to tap demand for fast, reliable connectivity between these facilities. The company estimates that data centre-to-data centre connectivity could represent a market opportunity of more than $1 billion over the medium term.

The company is looking to tap rising demand from cloud adoption, AI deployment, data localisation requirements, and growing enterprise demand for high-capacity digital infrastructure, through this ‘AI super highway’, which it claims to be one of the country’s largest AI-ready connectivity network.

“From a business case perspective, it (monetisation) would be any industry benchmark 15 to 20% return on investment. As we bring capacity online, we will start to deliver revenues, so you start to kind of get that return,” Rupesh Chokshi, chief product and technology officer and executive vice-president & global business head, network services, Tata Communications, told Mint.

“We plan to fund it (the investment) from Tata Communications operating cash flows,” Chokshi said, adding that the company will have a first-mover advantage in data centre-to-data centre connectivity across the country as others are either focusing on creating more data centre capacities or on covering smaller locations in terms of connectivity.

Shares of Tata Communications were trading 1.4% higher at ₹1,677.10 apiece on the BSE at 1:51 pm on Monday.

Also Read | AI boom drives early booking of data centres

The first phase, expected to go live over the next three years, will connect the Mumbai-Pune-Hyderabad-Chennai corridor, a key growth route for AI and hyperscalers. Subsequent phases will extend the network to emerging data centre hubs along India's eastern and western coasts, including Vizag, Bhubaneswar, Jamnagar and GIFT City.

Tata Communications will also link the AI corridors and data centre clusters with its international cable landing stations, enabling links between India's data centres and global AI hubs.

According to Chokshi, businesses need to keep backup copies of their data at multiple locations, while AI applications require large volumes of data to move quickly between computing facilities. Delays in this movement can affect the efficiency of AI systems, as well as the performance of services such as gaming and video streaming.

Tata Communications' announcement comes as Singapore-based Lightstorm Telecom Connectivity Pvt. Ltd, which entered India seven years ago, is also expanding its data centre connectivity business.

In an interview with Mint on 14 October, Amajit Gupta, group chief executive officer (CEO) and managing director (MD) of Lightstorm, said the company has spent $500 million on two projects.

These include an ‘AI corridor’ that connects key undersea internet cable landing sites with top data centre locations in the southern half of India, and ‘I-2SEA’—a 3,600km-long subsea cable connecting mainland India with Singapore and Malaysia.

The competition is also heating up in the data centre business, with companies such as Airtel's Nxtra, Google, Adani, Reliance Industries committing significant investments. By the end of the first half of 2026, cumulative investment commitments in India's data centre sector since 2021 had reached approximately $173 billion, including around $38 billion in the first six months of 2026, according to real estate services and investment firm CBRE.

Mumbai remained the country’s largest market, accounting for 52% of operational stock, the CBRE report said.

On demand for data centre connectivity, Chokshi said the company has an existing order book, with demand coming largely from global customers. A growing share of its expansion is being driven by commitments from anchor customers and contracted demand, the company said in a release on Monday.

When asked about the supply-chain risks and increase in lead times to get equipment, Chokshi said he did not anticipate any significant challenge in meeting the implementation timelines because the providers in the industry are also increasing capacity.

“In the industry, yes there are some higher lead times etc, but then what is also happening is that if you follow the companies that make fibre optics or the companies that are making the electronics etc, each of them has announced additional capacity,” he said.

Tata Communications currently has over 500,000 km of subsea optical fibre and over 200,000 km of terrestrial fibre. In India, the company has over 80,000 km of terrestrial fibre, 30,000 km of metro fibre, with connectivity to 118 data centres.
In the September quarter, the company’s revenue from operations rose 9.6% year-on-year to ₹6,688 crore. Net profit rose 86.3% to ₹341 crore. Tata Communications data services business, which includes core connectivity services and digital platforms & connected services, saw a 11.6% year-on-year growth in revenue to ₹5,811 crore in the September quarter.

Jatin is based in New Delhi and writes on telecom and technology with a keen interest in policy and regulation. With over five years of reporting experience across Informist Media, Financial Express and now Mint, he has extensively covered the telecom, information technology, electronics and semiconductor sectors.<br><br>A commerce graduate, Jatin's work focuses on tracking industry developments, regulatory changes and policy decisions that shape India’s evolving digital ecosystem. Over the years, he has reported on key trends and shifts across these sectors, bringing clarity to complex policy and business issues.<br><br>Known for his strong news sense, Jatin focuses on breaking stories and delivering in-depth reporting that offers readers an understanding of complex topics, policy decisions and corporate developments. His work often examines the intersection of policy and business, highlighting how regulatory decisions impact industry strategy, pricing, and consumer outcomes.<br><br>He brings a strong domain understanding for Mint and his work is widely picked up by other media firms. With a focus on accuracy and depth, he aims to break down developments into clear, accessible insights for readers, while continuing to track emerging trends shaping the future of India’s telecom and technology sectors.

Get Latest real-time updates

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.