RIL, Bharti Airtel set to dominate India's $8bn data centre boom: Jefferies

India's data centre capacity is expected to quintuple to 8GW over the next 5 years, driven by rising internet traffic, growing adoption of AI & stricter regulatory mandates around data localisation.

Jefferies on India’s data centre capacity: Reliance Industries (RIL) and Bharti Airtel are set to lead India’s rapidly expanding data centre market, analysts said.

 

Jefferies said that these firms, along with AdaniConneX (ADE), may form 35-40 per cent of India's data centre capacity by 2030, highlighting their dominant role in a sector set for exponential growth.

 

“Bharti Airtel, Reliance and ADE together may form 35-40 per cent of India's data centre capacity by 2030,” Akshat Agarwal and Ayush Bansal of Jefferies said, in a note dated September 15. 

Data centre dynamics and growth drivers

 

India’s data centre capacity is expected to quintuple to 8GW over the next five years, driven by rising internet traffic, growing adoption of artificial intelligence (AI), and stricter regulatory mandates around data localisation. Jefferies analysts estimate that this expansion will require a facility capex of around $30 billion and could push data centre leasing revenues to $8 billion by 2030.

 

Data centres are the backbone of digital infrastructure, housing IT hardware essential for enterprises’ computing and storage needs. Beyond the physical structure, these facilities require fibre connectivity, reliable power supply, and efficient cooling systems. 

 

While many enterprises maintain captive data centres, Jefferies noted that “adoption of cloud has spurred demand for leased data centres (colocations),” where operators provide the physical infrastructure, power, cooling, and connectivity to clients including cloud service providers (CSPs). CSPs, in turn, invest in servers and storage hardware and lease these resources to their clients, sometimes owning or renting the underlying data centre.

Multiple growth levers

 

The foreign brokerage identified multiple growth drivers. A 30-fold increase in data traffic since FY17, fuelled by rising smartphone penetration, over-the-top (OTT) platforms, digital payments, and e-commerce, has considerably lifted demand. 

 

Regulatory initiatives such as the Digital Personal Data Protection (DPDP) Act, 2023, and Reserve Bank of India (RBI) guidelines encouraging data localisation are further supporting the market. AI adoption is another key lever, with AI servers requiring “5-6 times more power and liquid cooling versus non-AI servers,” creating additional demand for high-performance data centre infrastructure. Currently, hyperscale CSPs account for 60 per cent of data centre consumption, while the banking sector contributes 17 per cent.

Investment opportunities and telcos’ edge

 

India’s colocation capacity has already surged five-fold to 1.7GW, with occupancy rates at 97 per cent, indicating demand is outpacing supply. The top five players capture around 90 per cent of the market, with NTT GDC alone holding a 20 per cent share. 

 

Jefferies highlighted that given higher proximity to sub-sea cable landing stations, Mumbai and Chennai account for c.70 per cent of installed colocation capacity, with Mumbai alone hosting about 50 per cent due to its concentration of BFSI clients.

 

The projected 6.4GW of incremental capacity will require roughly $30 billion in investment, analysts noted. “This should create downstream opportunities for Real estate ($6 billion), Electrical and power systems ($10 billion), Racks/ Fitouts ($7 billion), Cooling systems ($4 billion) and Network Infrastructure ($1 billion). Given the large capex outlay, access to capital will become crucial to grow in this market,” Jefferies said. 

 

Telcos are particularly well-positioned for this capital-intensive expansion. Bharti Airtel, for instance, already holds a 15 per cent market share and benefits from “healthy free cash flow (FCF) generation and existing enterprise client relationships,” which positions it to capitalise on the sector’s growth.

 

With digitalisation accelerating, regulatory mandates supporting localisation, and AI adoption on the rise, analysts believe India’s data centre sector is entering a high-growth phase, with Reliance, Bharti Airtel, and AdaniConneX at the forefront of this transformation.