As data centres proliferate across India, Tata Communications Ltd sees a $1 billion opportunity in connecting them.
“In India alone, we expect a 5x increase in data centre capacity. Data getting connected in these facilities is a necessity, so in some estimates, the intra-data centre connectivity in India could be a $1 billion opportunity,” Ganesh Lakshminarayanan, its managing director and chief executive, told Mint in an interview.
He said the company's goal will be to corner a bigger share of the data centre-to-data centre networking opportunity in the country. "We’re relying on both interconnections between data centres, as well as offering managed network services outside the data centres, to grow. Eventually, we’ll lean on this industry.”
Focus on digital-first clients
Lakshminarayanan, 58, took charge on 20 May for a five-year term after former chief and Tata group veteran Amur S. Lakshminarayanan retired on 13 April.
In his first quarter in charge, the company saw its net profit halve over the March quarter to ₹129.72 crore. Speaking about the drop in profitability, he said the company will look to ramp up revenue from digital-first client opportunities, such as data centres and cloud migration, to increase operating margin.
“Our focus this year is absolute Ebitda (earnings before interest, taxes, depreciation and amortization). We should make sure that the digital business can grow, this is our operating leverage, and I’ve disclosed this in the latest earnings call as well,” he said, declining to elaborate the factors further.
To be sure, Tata Communications exited the data centre business when it sold 74% of its data centre operations to Singapore-headquartered ST Telemedia Global Data Centres. It continues to hold 26% in STT’s India entity.
A key factor for AI and data centre-linked growth, Lakshminarayanan added, will be to “provide the infrastructure enterprises need to digitize their operations”.
“Our offering is no longer just about connectivity or voice. Its core infrastructure comprises network, cloud and security. Our voice, SMS (short messaging service) and similar offerings form the underlying physical hardware layer,” he said.
Brokerages give a thumbs up
Brokerages have so far reacted positively to Tata Communications’ focus on growing digital services as a core part of their revenue. On 23 April, a note to investors by ICICI Securities said the company’s digital services revenue could grow to ₹28,000 crore by 2027-28. On 23 July, Kotak Securities concurred, stating that demand for data centre connectivity through low-latency networks could boost its core business.
Data centres, which transmit and receive massive amounts of data, require large networking infrastructure including cables, modems and software platforms to work. Low latency refers to a network’s ability to process information with minimal time differences between the time a piece of data is transmitted and received.
Focus on data centres, as a result, could form a key part of the company’s efforts to revive profitability.
For now, though, Lakshminarayanan believes that disruptions to undersea connectivity cables owing to geopolitical conflicts such as the US-Iran war have not significantly disrupted its operations.
In September 2025, an Associated Press report said that undersea connectivity cables around the Red Sea region, including Tata Communications’ infrastructure, were damaged, potentially affecting connectivity in the Indian subcontinent.
“We provide subsea, terrestrial and even satellite connectivity routes in certain markets. We can tell clients what the worst latency route would be. The best in terms of latency is the shortest route, but if that doesn't work, we go to the next route so that client applications continue to run," the executive said.
The company began operations 40 years ago as the state-owned Videsh Sanchar Nigam Ltd (VSNL), to handle India's international telecommunications. The Tata group acquired a controlling stake in 2002 and renamed it Tata Communications in 2008.
With revenue of ₹24,803 crore in 2025-26, Tata Communications has become the conglomerate's 12th-largest business among its 32 listed and unlisted companies. Since the generative AI boom began in late 2022, Tata Communications' shares have gained 41%, and currently trade at around ₹1,752 apiece.