Fibre services to skyrocket on data centre demand: CloudExtel’s Kunal Bajaj

For Network-as-a-Service, what is the impact of the data centre developments?

There is huge focus right now on the AI boom, data centre investments and the Budget initiative is quite welcome. Where to host the compute, storage and processing is now a global choice, especially the investments for undersea cables. With the growing traffic usage from Asia, Southeast Asia, Middle East, hosting those services in India will hugely benefit the overall ecosystem. It will drive up our ability to scale more rapidly. The scaling would have been very limited on domestic consumption and demand alone. We don’t have AI workloads purely for the domestic market. So, the developments for DC will far outstrip any potential loss or nominal loss in tax revenue which would have never come to India in the first place.

There’s tremenduous demand for data centre connectivity back to cable landing stations. This is starting to now skyrocket, with new cables creating new landing stations and capacity in India. The connectivity between data centres is also driving up a lot of requirement for higher capacity, lower latency, new fibre connectivity.

How has the data centre boom affected CloudExtel’s performance?

We are in the midst of building networks across Mumbai, Pune and Delhi. We should be expanding to new cities like Bangalore, Chennai, Hyderabad, Vizag. Our Board is committed to data centre connectivity growth and is between debt raises, primarily to fund existing projects for DC connectivity for Mumbai and Pune. Beyond that, our Board, investors, as well as banks, are committed to continue looking at upcoming projects in these cities, particularly where we plan to provide data centre connectivity. All of these investments will be carried out in the next three years. We’re going to be significantly building out these inter-DC networks.

What are your expectations in terms of returns?

We believe that the appetite for fibre capacity consumption in India today is just starting to scratch the surface. We’re not even a gigawatt yet. So the appetite is really going to be insatiable. We’ve seen the same thing in the consumer space. In the last 10 years, consumers have moved from consuming less than 115 megabytes per user per month to 30 gigabytes per user per month.

Do you have any projections specific to Network-as-a-Service because of all this excitement?

Just within the major metro cities, a minimum of 3-4 km of fibre cable needs to be built out over the next five years. That is really going to be one of the major drivers. This is not even including the type of fibre that we need for tower backhaul because wireless data consumption is still going to continue to increase. So, a larger percentage of towers will need to be connected to fibre as compared to today. Backhauling from the same networks is going to be enterprise connectivity, which will also increase. So enterprises connected on more commercial-shared bandwidth, wireless connections will need to upgrade to dedicated fibre, particularly as more of our businesses move to the cloud.

Last year, you said your FTTH subscribers will cross a million. What’s the current number?

We’re at 1.1 million homes passed on FTTH and we continue to grow. That’s one of the areas where we will continue to invest. We’re hoping to also expand the partners we’re working with.

How is the company planning its capex?

We’re going to continue raising debt and match equity from our existing investors, Macquarie and Advencap, as more fibre projects come along. We’ve been able to do our investments in the wireless space primarily from our own cash and accruals. So, all the debt and equity is moving towards investments on the fibre side.