US Investment Firm Carlyle to buy 25% stake in India’s Airtel data center business for $235m

US-based investment firm Carlyle will buy a 25% stake in the data center arm of Indian telecom Bharti Airtel for US$235m amid increasing demand for data centers in India.

Airtel’s data center business known as Nxtra will be valued US$1.2 billion following the purchase by Comfort Investments II, an affiliate of The Carlyle Group, the companies announced on Wednesday.

“Rapid digitisation has opened up a massive growth opportunity for data centers in India and we plan to accelerate our investments to become a major player in this segment,” said Gopal Vittal, the MD & CEO (India and South Asia) at Bharti Airtel.

Nxtra is building multiple large data centers across India to capture the significant growth opportunities.

Neeraj Bharadwaj, the Managing Director for Carlyle Asia Partners advisory team, said: “India is set to become one of the largest markets in the world for digital services. Airtel … is well positioned to leverage the potential growth of data centers in India.”

The proceeds from the acquisition will be used to continue scaling up Nxtra’s infrastructure and offerings across the country in cities like Pune, Chennai, Mumbai and Kolkata.

India is seeing a huge surge in demand for secure data centers, as businesses look to digitally transform their operations through increased cloud adoption as well as growing user data and consumer demand for digital services like smartphone entertainment.

India’s Governmental directive for data localisation has also led to an increased presence by the likes of AWS, Oracle and Google as well as Jio who will build data centers hosted on Microsoft Azure.

Greg Zeluck, the Co-Head for Carlyle Asia Partners advisory team, believed the data center experience of Airtel and Carlyle will help Nxtra capture the growing demand for data center services, as data usage continues to surge.

Airtel is a key player in India’s enterprise connectivity segment, serving over 2,500 large businesses as well as over one million medium and small businesses.

After completion of the acquisition, Carlyle will hold a stake of 25% in Nxtra, while Airtel will own the remaining 75%.

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