Vinod Kumar is the managing director and chief executive officer of Tata Communications, which provides telecom infrastructure to services providers. NDTV Profit's Vijay Ganeshan Iyer spoke to him about the company's global and domestic operations, as well as its revenue models for the coming quarters.
It has been a PPP (public private partnership), the government still maintains 26%. It's been a great partnership between the Tatas as the strategic partner and the government.
The government has been really supportive of the company at the board level and has given us the operational freedom to build a global business at this point.
I am based in Singapore but I am not there very much. If you have to look at the business (it is) very characteristic of a global MNC. We have India being the biggest home market. Its ‘the single biggest market, accounting for 25 per cent of our revenues, but 75 per cent of our revenue comes from around the world.
Our management team is highly decentralized and we have built an organization that doesn't have what we call a typical headquarters as such.
The game plan for us is very simple. In the telecom sector you (have) got to have a diversified portfolio that is geographically diverse to capture growth opportunities around the world but also to make yourself resilient to the economic ups and downs that all markets go through.
Second is from services standpoint in terms of heavy dependence on voice services to having a blend of voice and data services.
We have moved from traditional network services to management network services and gradually to IT infrastructure services. We are also making selective investments in new technology waves that we are building to position ourselves for the future. Our plan is to maintain a portfolio of geographies and products and segments so that we can be quite resilient and continue to grow.
Speaking from the Tata Communications perspective, we have been building for the last 10 years for this growth and consumer broadband that we are going to see - BWA, 3G, 4G - is going to unleash spectrum, increase speed of last-mile access. For that, we would need pipes which are robust, pipes which are diverse, pipes which are global and that is what we do.
We see the advent of 3G, BWA and subsequent technology on one hand, and on the other hand you have the access side and various kinds of smart devices. This combination positions us really well.
Our wholesale business or service provider business is very robust. Every single service provider in India is using our international connectivity or in some case using our domestic connectivity services. We expect that to continue to grow just because of the surge in the number of customers in the mobile broadband; in that, video will be a big aspect.
The second is Indian enterprises, we have only seen the tip of the iceberg as far as the network is concerned.
The third one that can't be ignored is MNC's coming to India and expanding their presence here. We are (a) small player but rapidly emerging player in global MNC space, or providing services to global MNC space. We are particularly attractive and people will need our services in Indian geography and that will be our third pillar of growth as far as India is concerned.
About general financials, if you look at the last three-four quarters, the business models that we have created are beginning to pay dividends. The last 5-6 yearse, we had to invest heavily to transform the business model to make sure that we shift from voice to data, wholesale to enterprises, India to global. We now have a portfolio that we are confident of.
Each element of the portfolio has reached a certain critical mass that has proven itself and therefore now comes a time we will leverage the investments we have made over the last five years, in particular and 10 years if you want to take a broader horizon.
We have put ourselves on the map with a business model that works and now you will see steady improvement.
Even in the last 3-4 quarters, we reported 16% growth and revenues we reported 50% growth. Our core business which does not include our investments in Neotel in South Africa turned PBT (profit before tax)-positive two quarters ago and we maintained that in Q3, we returned PAT (profit after tax) positive results quite some time. Neotel was a concern with investors. We showed that business has turned (the) corner and business has turned EBITDA (earnings before tax, depreciation and amortization) positive.
Net net, if you look at the business its not just the business model that has transformed, the finances are also moving in the right direction.
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