2020 has taught us many lessons, but also made us Aatmanirbhar. The Aatmanirbhar Bharat ecosystem has the potential to unlock value, and we can take advantage of the unprecedented opportunities. Tejas Networks is building world-class telecom products to build a strong, self-reliant, Aatmanirbhar Bharat.
We talked to Sanjay Nayak, CEO and MD, Tejas Networks, about many interesting things with respect to Aatmanirbhar Bharat. Excerpts from the interview:
VnD: Tell us about Tejas, its products, and Aatmanirbhar Bharat.
Sanjay Nayak: We are delighted to talk about Aatmanirbhar Bharat. About 20 years ago, India had made a name in the world, in the IT space. There were large companies, such as TCS, Infosys, HCL, Wipro, etc.
Unfortunately, there were no telecom companies. We started Tejas to show that we can build world-class telecom products from India, not just for India, but also for the world. This journey has been extremely exciting, and clearly, not easy.
It is very satisfying to see that today, as a country; we have realized the importance of building indigenous products. Last week, PM Modi was speaking about how our solutions should go, not just for India, but for the world. What we do at Tejas, we make at a broad level. We started off making optical transmission equipment.
We also made next-gen SDH, SONET equipment. Over the years, we have developed a lot of new products. In the optical transmission side, I can proudly say everything that India needs to build an end-to-end 100% domestic network, can now be built. Today, our DWDM solution can carry 600GB of wavelength. Also, packet transport, MPLS products, etc., have also been developed.
On the optical access side, FTTH has become the mainstream application, especially; post Covid-19, when people want to do WFH, LFH, etc. You need products such as G-PON. We are proud to say that we have the full range of products. 70% of the BharatNet network was built using our G-PON equipment. We are now supplying to major operators. We have expanded on the optical access.
The last part, we have also focused on the wireless segment. We are focusing on LTE. We have built our own base stations, radios, etc. We are addressing the fixed wireless network, as well as mobile networks. Every single bit of technology has been developed grounds up in Bangalore, India. 100% is manufactured in India. There is no reason to feel that these cannot be done out of India.
More than 50% of the world was engaged in developing products. If you take ex-China, the companies are actually located in India. We should have confidence in our own talent and capability. Tejas is one of the first companies to have put it all together.
VnD: Tejas is widely regarded as the biggest make in India telecom manufacturing company. How is it positioned against the global companies?
Sanjay: While Tejas is an Indian company, to sell our first product to any operator, we have to be globally competitive. Think of Reliance, Tata, BSNL, etc. They may have to buy their domestic equipment from India.
The private operators would not buy any equipment from us if we did not have the absolute best technology to offer that would benchmark us against the best in the world. We did not have the quality required for carrier-class equipment. Thirdly, we would not get a rupee more that would be paid to a global competitor. In technology, quality and price, we have no choice, but to be the best in the world. That’s how we win business in India, and around the world.
We started with software-defined networking (SDN). Today, everybody in the world says the network will be software-defined. SDN allows us to use competencies in software, and to convert the hardware problem to a software problem. All the semiconductor chips used are in the form of IPs. We print the logic real time on the chips. The hardware has become software.
By taking a software-defined hardware approach, we got two benefits. Our cost of development became much lower. In India, you could do something at $25 million, which would otherwise take $100-125 million in the USA. Second, there was a lot of design re-use. We took IPR of 1GB and took it to 10GB, 100GB, etc. Software-defined hardware was something that we did very well in terms of competitiveness.
FTTx, as an example, 9 months back, would you have thought it to be a killer app? We added one card into the PCB. We also created the NG-PON. It gives you an example of the software-defined hardware architecture. Our time-to-market is the shortest. Customers can also upgrade their product. These are our competitive products, not just in India, but everywhere else.
VnD: Tejas has been focused on growing international sales over the last few years. What lessons can domestic companies learn?
Sanjay: International business takes a long time, especially in the telecom equipment segment. Telecom is an infrastructure business. If you are going to build an infrastructure, unless you have local presence, unless you have shown a commitment to be in the market for the next 10 years, why would anybody want to risk their critical infrastructure? It takes time. Time is required to build trust step-by-step. You have to be good on technology, quality and cost. You have to engage with customers. You must have some quality that would not be available from the big players. You get to do a small part, do a good job, and that takes time.
You also have to pick and choose the battles that you want to fight. At Tejas, we looked at where India is located in an interesting part of the world. There is the ASEAN region, and the Africas. We are in the center of Southeast Asia and Africa. These are emerging markets with India-like roots. Success in India gives us the credibility to be successful in these markets. Once we succeeded in these markets, we went to Americas, Mexico and Europe.
The third thing is, India is known as a premier destination for IT services. The brand of India is unique. India needs to brand itself as a proper destination. You also have to build partnership with the overseas. You do stuff that is important, and teach the local guys to do the other stuff. We have made a lot of progress. About 40% of our revenues are now coming from international destinations. Tejas equipment is deployed across 75 countries now. Our journey at the international level is still at the infancy. We should be making more progress as the time goes by.
VnD: How has Covid-19 impacted the telecom industry?
Sanjay: There are three trends. Clearly, broadband infrastructure has become a national priority, say, as a road. India worked as a country. We had rural broadband. Broadband has now catapulted as the top-most priority of all the countries today. Covid-19 has also accelerated the digitization of economies and societies. Everybody has seen what has happened over the nine months. People in Bangalore have seen, and, the same has happened in Chennai and Delhi. The quality of service has not suffered. The number of patients has been a lot more. Everything is happening on time. These are just some examples of how digitization of societies and economies have happened.
FTTx has now become a regular, and has suddenly accelerated. India has less than 5 million home broadband users. TRAI estimates that in the next three years, India will have over 100 million subscribers. It is massive growth. The operators are comfortably getting their ARPUs. It is a situation where people are willing to pay, operators can build good-quality networks, and everybody is happy. The same thing is happening across the rest of the world. London has less than 10% broadband connections. In Europe, people don’t have fiber. So, FTTx is happening around the world. We are now competing with everyone.
There is also huge geopolitical turbulence that has happened. Countries have become conscious regarding whom do they do business with. There are all kinds of trade barriers, embargos, etc. Especially, the depth at which telecom networks are becoming, governments around the world have become conscious of a secure, trusted network. They also want to know what is happening with their networks. The trust factor has gained. Security concerns have changed. What used to be an almost automatic decision, has now changed. People do not want to put all the eggs in one basket. Tejas has taken this opportunity. We bring the best of both worlds. Price competitiveness of the Chinese ecosystem has also changed. The innovation culture of the western ecosystem. This is a magical combination. The Indian government is looking at how Indian businesses can be globally successful.
The size of the global opportunity is huge. The Indian IT industry is somewhere around worth $130-140 billion per year. BharatNet spent about $4-5 billion. In UK, the national broadband is a $12 billion project. The Australian broadband project is worth $40 billion. There are hundreds of countries developing their broadband infrastructure. We are talking about a $100 billion dollar opportunity. Per subscriber cost for BharatNet is $20. Australian broadband is worth $1100. USA broadband is worth $500. This is a great opportunity for us to export. Aatmanirbhar Bharat gives us the impetus to design and make in India. We are also looking at an equivalent export opportunity. We may lose this, due to Covid-19.
VnD: How are you planning to use 5G and fiber broadband across the sectors?
Sanjay: 5G impacts our business in many ways. One, the core business is optical transmission. In India, we are not really getting good 4G experience. The backhaul from the base station is the choking point. 25-30% of cell towers in India are on fiber for 4G. There is a huge opportunity to fiberize the towers. In 5G, when you roll out the network, there are two implications. One, the number of towers for 5G will be 10 times more than for 4G. You cannot have a 5G network if you don’t have a robust backhaul. There is a large opportunity to build fiber backhaul from the tower.
We have upgraded our products to 5G standard. We are aware of the LMLC standard proposed by the TSDSI. Our CTO was part of the initiative. India has been contributing to the front haul standard for the optical fiber already. Some variants of G-PON can also be used for that. Our optical transmission products are being upgraded to 5G backhaul.
Tejas has also been part of LTE development. We are now upgrading our radios to software to make them 5G-compliant. We have won awards for the ultra-converged product. 5G will probably happen in India from 2022. It will take 3-4 years for large-scale deployment. India should develop its own ecosystem for 5G. Reliance is developing its own ecosystem. We also have the possibility of 5G radio ecosystem in the future.