Tata Communications to spend up to $450 million on AI fibre network

Tata Communications said on Monday, October 26, 2026 that it will invest $400-450 million, about Rs 4,350 crore, over the next three to five years to build a high-capacity fibre-optic network connecting India's data centres and artificial intelligence (AI) hubs. The company said the network will run about 10,000 km with a capacity of 7.2 petabytes, and will be built in three phases starting with the Mumbai-Pune-Hyderabad-Chennai corridor. It plans to pay for the project from its own operating cash flows.

AI is changing what data centres need. Training and running large AI models uses huge clusters of computers, often spread across several buildings and cities. Those sites must swap enormous amounts of data quickly and reliably, which is what high-capacity fibre-optic cable does. A petabyte is a million gigabytes, so a network rated in petabytes is built for traffic at a very large scale.

Building a data centre is only half the job; the sites also need to be connected to each other and to cloud and AI customers. Tata Communications is betting that this "data centre interconnect" business, as the industry calls it, will grow into a market of more than $1 billion, as its chief executive said. By building a dedicated network now, the company hopes to win long-term contracts from cloud companies, AI developers and large enterprises that need to move data between sites.

The phasing follows where demand is strongest. The first corridor links India's biggest data centre markets in Mumbai, Pune, Hyderabad and Chennai. Later phases extend to the east coast at Vizag and Bhubaneswar, and to the west, including Jamnagar and GIFT City in Gujarat.

Operating cash flow is the cash a company generates from its normal business in a year, before any new loans or share sales. Building in phases also lets the company match spending to demand: it can lay fibre on the busiest routes first, sign customers there, and then use that income to support the next phase.

Funding the project from operating cash flows, rather than new borrowing, reduces risk for the company, but it also means the returns will take time: the company expects meaningful financial contribution only around FY28-FY29, the years ending March 2028 and March 2029.

Short-term: The investment signals demand for AI-ready connectivity and is likely to bring work for fibre suppliers, civil contractors and network equipment makers as the first corridor is built.

Long-term: If AI and cloud demand keeps growing, a dedicated high-capacity backbone could lower the cost and delay of moving data across India, helping the country attract more AI computing projects. For Tata Communications, it could become a steady new revenue stream from FY28-FY29.

Who is affected: Data centre operators and cloud providers in India; AI start-ups and large enterprises that need fast links between sites; fibre and telecom equipment suppliers; and Tata Communications' shareholders.

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