Macquarie Capital-backed digital infrastructure company CloudExtel plans to invest Rs 1,000 crore over the next two years to expand its fibre network across India, a senior executive told FE.
The capital will be raised through a combination of internal accruals, bank debt, and fresh funding from existing investors, said Kunal Bajaj, co-founder and CEO of CloudExtel.
Currently, the company operates a fibre network spanning 12,500 kilometres, and provides small cells (compact, low-powered cellular base stations to enhance network capacity in high-density areas) and light sites (small base stations mounted on poles or buildings to improve urban coverage) to telecom service providers.
Bajaj said digital infrastructure demand is poised to grow sharply with increasing 5G adoption and the expansion of data centres, particularly driven by rising AI compute loads. As a result, India’s data centre capacity is expected to double in the next two to three years, he added.
“In both cases, fiberisation of towers and data centres will require scaling up. We will invest Rs 600 crore–Rs 800 crore towards fibre layout and our FTTH (fibre-to-the-home) services, and another Rs 200 crore–Rs 300 crore towards growing the small cell and light site footprint,” Bajaj said.
CloudExtel’s FTTH network currently reaches around 900,000 homes across 4,000 housing societies, while its small cell network spans 6,500 sites. The company’s infrastructure footprint now extends to 500 cities. Bajaj noted that CloudExtel is adding 250,000 FTTH homes annually, a figure the company hopes to increase with the upcoming capex.
Macquarie Capital, which invested $100 million in 2023 for a 51% stake in CloudExtel, is the company’s largest shareholder.
Apart from the structural growth in data consumption, Bajaj said CloudExtel is also poised to benefit from improved cash flows at Vodafone Idea, following the government’s decision to convert ₹36,950 crore in spectrum dues into equity. The telco is now preparing to raise Rs 25,000 crore in bank loans to fund 4G upgrades and a nationwide 5G rollout.
Bajaj said that over the past year, the telco’s network expansion exercise has already ramped up significantly, and with liquidity easing, this activity will further accelerate, percolating into increased demand for CloudExtel.
“A year prior to the April 2024 FPO (follow-on public offer), the telco was installing just about 100 sites a year. This has now ramped up to a couple hundred sites a month. And we were a massive beneficiary of this acceleration,” Bajaj said.