Airtel's data center arm to expand capacity to 1GW
What's the story
Bharti Airtel's data center subsidiary, Nxtra, is gearing up for a massive expansion. The company plans to quadruple its capacity to 1 gigawatt (GW) in the coming years. This move is in response to the growing demand for artificial intelligence (AI) and cloud computing services. The strategic expansion is likely to bolster Airtel's enterprise business and improve the valuation of its India operations, according to CLSA.
Strategic alignment
Aligning with Mittal's vision for Airtel
The expansion of Nxtra is in line with Bharti Airtel chairman Sunil Bharti Mittal's vision to transform the company from a telecom operator into a digital infrastructure provider.
In his FY26 annual report, Mittal said that after investing over ₹3.3 lakh crore in building one of India's largest digital infrastructure platforms over the past decade, Airtel is now gearing up for the country's next phase of AI-led digital transformation.
Financial growth
Nxtra's financial performance in FY26
In FY26, Nxtra reported a 17% increase in revenue to ₹24.3 billion and a 25% rise in EBITDA to ₹9.8 billion.
The company's EBITDA margins also improved to over 40%, indicating improved operating leverage.
Nxtra serves enterprises, hyperscalers, and government customers while committing to sourcing 100% renewable electricity and achieving water neutrality through wastewater recycling initiatives.
Investment strategy
Recent fundraising and valuation boost for Nxtra
Nxtra recently unveiled a $1 billion investment plan after a new round of fundraising. The company raised $710 million from private equity investors Alpha Wave, Carlyle, and Anchorage Capital.
Bharti Airtel contributed the remaining $290 million to maintain a controlling stake of about 61%.
The deal valued Nxtra at some $3.1 billion, giving it an enterprise value of nearly 32 times EBITDA.
Business impact
CLSA on Airtel's core business valuation
While CLSA does not give a separate valuation to Nxtra in its sum-of-the-parts assessment, it says the subsidiary's rapid growth and premium valuation could provide additional upside to Airtel's core business valuation.
The report also highlighted the growing importance of Airtel Business, which generated ₹212 billion in revenue in FY26, accounting for around 12% of Bharti Airtel's India revenue.