Bharti Airtel’s $1 billion fundraise for its data centre arm Nxtra marks a sharper pivot towards a multi-engine growth strategy, with digital infrastructure emerging as a central pillar alongside its core telecom operations, analysts said.

The capital infusion, led by global investors and backed by Airtel, will fund a significant expansion in Nxtra’s capacity from around 300 MW to 1 GW. The scale-up is aimed at capturing a larger share of India’s rapidly growing data centre market, which is being driven by rising demand from cloud computing, artificial intelligence workloads and enterprise digitisation, they added.

What do analysts say?

For Airtel, the structure of the deal allows it to accelerate this expansion without materially straining its balance sheet. External capital accounts for a majority of the investment, enabling the company to scale its data centre footprint while maintaining financial flexibility, experts said. 

“Bharti (Airtel) owns 76% in Nxtra (24% with Carlyle) and will retain a controlling stake of an estimated 61% post this deal, which values Nxtra at $3.1 billion,” analysts from CLSA said. 

Analysts also noted that lower capex over FY2026-28 (21-22% ofrevenue versus 30% historically) would drive deleveraging and increase shareholder payouts, especially when one factors the issue proceeds of Rs 15,800 crore that the telco recently called-in.

Broader shift in Airtel’s growth playbook

The move reflects a broader shift in Airtel’s growth playbook, experts said. While its wireless business continues to generate steady cash flows, the company has been increasing its focus on adjacent segments such as enterprise services, home broadband and data centres. These businesses are seen as the next phase of growth, particularly as telecom penetration matures and incremental gains from subscriber additions begin to moderate.

Within this framework, data centres are emerging as a key long-term opportunity. Nxtra currently operates a network of large and edge facilities across India and caters to enterprises, hyperscalers and government clients. The planned capacity expansion positions it to compete more aggressively in a market that remains fragmented but is expected to see strong capacity additions over the next decade.

The fundraise also signals growing investor interest in digital infrastructure assets, particularly those linked to AI and cloud ecosystems. Nxtra’s partnerships and expansion plans suggest a gradual shift from a traditional co-location model towards more advanced, hyperscale-ready infrastructure, analysts said.

At the same time, Airtel’s core telecom business continues to provide the financial backbone for these investments. Stable operating cash flows and expectations of tariff increases are likely to support funding requirements while aiding deleveraging over the medium term.

The telco has seen 2.9%/9.7% CAGR in total/data subscribers over FY2021-26E led by gradual market share gains and device upgradation. Data monetization and premiumisation are expected to continue to helping average revenue per user (Arpu) growth given the telco’s data consumption has grown at 31% CAGR over the past five years, experts noted.

“We see significant growth headroom with an underpenetrated rural/mobile broadband (MBB) market and 20% subs still on 2G/3G (48% in FY2020). We are building in a 12% tariff hike in 2QFY27E, two years after the last hike, driving 15% CAGR EBITDA over FY2026-28,” analysts from Kotak added.