Tata Communications Ltd. has announced a significant investment of $450 million to build AI-ready connectivity infrastructure across India. According to the latest regulatory filing, the company will invest this amount over the next three to five years to build a 10,000-km high-speed fibre network with 7.2 petabytes of capacity across the country. The infrastructure will be one of India's largest AI-ready connectivity networks and will be integrated with Tata Communications' global network backbone for end-to-end connectivity. As per the company's announcement, the investment will be financed through operating cash flows, positioning itself for first-mover advantage in data centre-to-data centre connectivity across the country. Rupesh Chokshi, executive vice president and global business head for network services, stated that the data centre-to-data centre connectivity opportunity in India could evolve into a market exceeding $1 billion over the medium term. The investment will primarily fund long-haul and metro terrestrial fibre connecting cities hosting AI data centres and application hubs, with subsea connectivity complementing the initiative through the company's broader international network infrastructure.
The investment comes as India's operational data centre capacity reached nearly 1.8 GW in the first half of 2026, while an additional 3.86 GW is under construction or planned by 2030, according to commercial real estate services firm Cushman & Wakefield. The expansion is aimed at capitalising on the growing need for data-centre-to-data-centre connectivity, driven by increasing cloud adoption, AI deployment and enterprise requirements for high-capacity digital infrastructure. The project will be rolled out in a phased manner, with the first phase covering the Mumbai-Pune-Hyderabad-Chennai corridor, which represents a key AI and hyperscale growth route with major gateways and cable landing stations. As reported by Livemint, the second phase will cover Hyderabad-Vizag and Chennai, while the third phase will span Bhubaneswar, Vizag, Bengaluru, Chennai, Mumbai, Ahmedabad and Jamnagar, expanding connectivity into emerging East Coast and western India data centre ecosystems, including GIFT City and other strategic locations. The AI corridors and data centre clusters will be linked with international cable landing stations to provide comprehensive connectivity solutions.
Tata Communications is targeting a market share of 30-40% in data centre-to-data centre connectivity, as reported by Moneycontrol. While the company is in advanced discussions with customers for its proposed AI Super Highway, it has not yet announced contracts for the network. The company estimates that India's data centre-to-data centre connectivity market could exceed $1 billion over the medium term, driven by growing investments in AI, cloud computing and digital infrastructure. Choksi noted that investments of this nature typically yield a benchmark return of 15-20%, driven by the long-term nature of the assets and customer contracts. The company is in discussions with multiple customers, including hyperscalers, neo-cloud and neo-scaler providers, AI platforms, frontier model laboratories, technology companies, digital-native firms, software-as-a-service providers and large enterprises deploying AI use cases. Capacity requirements will depend on whether customers are running AI inference locally, training models or serving markets such as Europe, Asia-Pacific and North America from India.
The planned capacity augmentation is scheduled to be completed during the financial years of 2030 to 2036, as detailed in the latest regulatory filing. Currently, Tata Communications operates a network capacity of 1.25 Pbps with a utilisation rate ranging from 70% to 80%. The proposed investment aims to elevate the company's infrastructure capabilities to meet future demands with substantial capital expenditure. The enhancement of the network capacity is expected to support various advanced technological applications, including the deployment of AI technologies that require robust data processing and transmission capabilities. As a pivotal player in India's digital landscape, Tata Communications' initiative is set to contribute significantly to the nation's digital evolution and economic growth by enabling more efficient data exchanges and processing for businesses and consumers alike. The company operates a global network comprising more than 500,000 km of subsea optical fibre and over 200,000 km of terrestrial fibre.
Following the announcement, shares of Tata Communications were trading 1.56% higher at ₹1,680 per share on Monday, as reported by Mint. In the September quarter, the company reported a consolidated net profit attributable to equity holders of ₹341.03 crore for Q2FY27, representing an 86.3% increase from ₹183.06 crore in the corresponding quarter last year. Income from operations stood at ₹6,687.89 crore in the September quarter, compared with ₹6,099.75 crore in Q2FY26, representing a year-on-year increase of around 9.6%. For the first half of FY27, Tata Communications reported income from operations of ₹13,270.71 crore, compared with ₹12,059.60 crore in the year-ago period. The positive market response reflects investor confidence in the company's strategic expansion into AI-ready connectivity infrastructure and the significant growth opportunity in India's data centre connectivity market. As per Livemint, the company plans to fund the investment through operating cash flows, giving it a first-mover advantage as others focus on creating data centre capacities or covering smaller connectivity locations.
