PhonePe invests over Rs 2,800 cr to expand infrastructure, including data centers, across India in data localisation push

PhonePe

Fintech giant PhonePe has invested more than Rs 2,800 crore in infrastructure capital expenditure, focusing on servers and data centers across various locations in India. The company said in its annual report, filed on October 21st, that PhonePe is doubling down on hardware infrastructure to support its growing operations.

According to the report, PhonePe’s investment aims to enhance its ability to comply with stringent data localization regulations imposed by financial regulators, while also optimising its infrastructure costs as the company scales.

"There are multiple other advantages to building and operating one’s hardware infrastructure, including easier compliance with the Data Localization norms of financial regulators, and being able to optimize our infrastructure costs at scale," the report stated.

PhonePe also disclosed that its current hardware infrastructure manages nearly 7 lakh cores spread across three data centers in India.

This vast footprint reflects the company's focus on self-reliance in managing critical infrastructure, ensuring higher efficiency and security as it continues to expand its financial services offerings to millions of users across the country.

PhonePe’s report comes when the Indian data centres industry is also in the middle of a massive disruption led by spiralling demand and use cases by AI customers, with AI-driven demand expected to add 500 megawatts (MW) of capacity over the next four years, according to a report by investment bank Avendus Capital.

According to the Avendus report, the sector doubled from approximately 540 MW in 2019 to around 1,011 MW in 2023, making India one of the fastest-growing data centre markets globally.

PhonePe also revealed in its annual report that it has reduced its customer support staff by 60 percent over the past five years, from around 1,100 agents to just over 400 through the use of AI chatbots, while experiencing a 40X surge in transactions between FY18-19 and FY23-24, the fintech major has said in its annual report filed on October 21.

In FY24, PhonePe reported a significant 73 percent increase in revenue, reaching Rs 5,064 crore, on the back of cost efficiency and product diversification. The firm had clocked Rs 2,914 crore in revenue in the previous fiscal.

PhonePe Group has also turned its Adjusted Profit After Tax (PAT) positive, recording Rs 197 crore, a stark improvement from the Rs 738 crore loss reported last year.