Consolidation wave looms: Data centres running hot, but bit players to fold into big bytes in India
While demand remains strong, scale, funding strength and diversified customers will determine who survives in the market, according to experts. Consolidation has not yet begun at scale, but it is likely once the current expansion cycle stabilises, they said.
“Operators with the right real estate, scalable power access and AI (artificial intelligence)-ready infrastructure will be positioned to lead-while sub scale and single-market players may become acquisition targets,” said Shilpa Malaiya Singhai, managing director, TMT, at Alvarez & Marsal India.
She said the industry was still in a capacity-building phase but not all operators would be able to compete in the long-term and would be bought out.
According to S Anjani Kumar, partner at Monitor Deloitte India, a company may get acquired if it helps a larger player enter a new market quickly. For example, if a big data centre firm wants to expand into a new state and a smaller player already has an operational facility there, buying it could save time and speed up market entry.
Similarly, if the smaller company has strong, existing clients that can be retained and upgraded from central processing unit to graphic processing unit services, the buyer gains ready business instead of starting from scratch.
Dhruv Soni, APAC lead for telecom and media strategy at Indra Sistemas, a Spanish IT company, said consolidation could happen if smaller data centre operators struggle to sustain themselves. He warned that when facilities are built too quickly, supply can exceed demand. “If they are built overnight, typically you build over capacity. So, the availability is very high, but utilisation is very low,” he said.
Scale, funding strength set to play a role in deciding who survives in India’s ‘attractive’ mkt
According to him, smaller operators may find it difficult to survive during this period because returns take time to improve. Larger telecom companies could step in and acquire such assets. “A player like Jio will go around and buy 10-20 data centres across 10-20 states of India,” he said, suggesting bigger players may buy regional facilities to expand their network presence while smaller operators struggle to scale up.
“The risk lies with operators dependent on a single large tenant or lacking scale advantages,” said Vinish Bawa, partner and leader for telecom at PwC India. Even as consolidation risks increase, demand fundamentals remain strong. “In mature tier-1 markets such as Mumbai and Chennai, stabilised facilities typically operate in the 65-80% utilisation range, and the demand for data centres is going to be upwards from here,” Bawa said. He added that the current expansion reflects “forward commitments from hyperscalers, AI workloads and enterprise cloud migration”.
A&M said demand in major data centre hubs is very strong. Singhai said vacancy in key markets fell to 4.3% in the first half of 2025, calling it “essentially a sell-out environment for multi MW blocks”. She added that demand during this period was higher than new supply, showing that the expansion is backed by real customer needs. Most of this growth is being driven by hyperscalers and AI workloads, which require more power and larger capacity.
Soni said higher data usage, the rollout of 5G and expansion of fibre networks are increasing the need for computing closer to users. “The required compute and the required consumption has increased significantly,” he said. This means companies will need more data centres located near customers to ensure faster services.
On growth outside major cities, PwC said edge computing in smaller cities is still at an early stage and is more about long-term planning than large-scale demand. A&M, however, said some tier-2 cities are starting to see real traction, though most demand is still concentrated in large hubs.
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