"Our strategy is to go where our products and services match with those of the carriers"

Recently, Frederick M Lax, president and CEO, Tekelec, was in India on a
mission. The mission was opening up of an India office and meeting key clients
that Tekelec had been serving for the last 18 months. Frederick Lax has worked
with Lucent Technologies and AT&T and has over 25 years of experience in
various executive positions in product and business management, software
technology, global product development, and global customer support operations.

On his first visit to India, Pravin Prashant, senior assistant editor,
VOICE&DATA met with Frederick Lax and spoke to him about the Indian market,
its opportunities, and Tekelec’s worldwide strategy. Excerpts of the
interview:

Deloitte & Touche considers Tekelec as one of
the fastest growing telecom company in Los Angeles area. Would you tell us about
your company and the products that you deal in?

Tekelec has a strong association with signaling and switching solutions. The
company has expertise both on the wireline as well as wireless front. It is also
strong in TDM as well as the IP world. Headquartered in US, the company has
presence in around 30 countries though majority of its revenues comes from the
US.

Frederick M Lax

On the signaling front, the company has a global market share of 40—45
percent with around 40 customers across 30 countries. The company offers
next-generation switching platform called Santera which offers softswitch,
signaling gateway, application server, and broadband office exchange. The
softswitch product is designed to support both TDM and IP platforms. It
possesses the full set of capability and is highly reliable as well as scalable
for wireline as well as wireless operations. Santera helps in integration of
circuits and packets, voice and data, and signaling and switching in a more
efficient way.

On the TDM front we were the first one to have SS7 technology switched over
IP. Tekserver is a new signaling solution with a faster engine and is capable of
covering all the bases, operating effectively with all networks that depend on
different standards and specifications.

How does Tekelec look at the Indian market, in terms
of opportunities that it offers?

India is the fastest growing market in the world. The company is
focusing on signaling and switching solutions for the next generation needs of
the country to help meet its growth objectives. With cellular growth rate on the
higher side, we can provide solutions that will help in growing the topline of
service providers.

India offers significant growth opportunities for Tekelec and the company
plans to have a strong presence here. The Indian market has a huge potential and
it will grow at around 20—40 percent over the next two to three years.

In India, Bharti, Tata, and Reliance have deployed Tekelec
solutions which has helped thse service providers in improving their operating
efficiencies.

Is your solution applicable only for
new operators like Reliance, Tata, and Bharti or is it also useful for incumbent
operators?

Tekelec products are good for greenfield operators as the company can invest in
new generation technologies which will help in lowering the capital expenditure
as well as the operating expenditure. On the other, hand the incumbent operators
can migrate to next-generation technology and enhance their infrastructure for
the growing needs of their customers.

Tekelec’s focus is on three key
initiatives–maintaining signaling leadership, developing the next-generation
switching portfolio, and global expansion. On the global expansion front what is
your worldwide strategy?

Tekelec has been very selective in opening offices. Our strategy is to go where
our product and services match with the carriers. And the best way to support a
region is to establish direct operations where we a see a strong fit for it. We
have already made our presence in China, Singapore, Mexico, Brazil, UK, Germany,
Russia, and Italy among others. In 2003, we opened offices in Singapore, Mexico,
and Russia and in 2004 we are increasing our presence by opening up an India
office.

What is your strategy for the India
office and how do you plan to take it up?

The India office will be a direct sales office and will take care of
sales and support. Since the potential of the Indian market is significant, the
India office will directly report to the global office.

We have appointed a sales team for increasing sales and
support. We will tie up with other companies for sales and support and other
developmental work. We will grow our presence in the Indian market and support
our customers. Having signed up with major customers, and with a good success
rate, the company is now looking for long-term relationships with Indian
companies.

It seems you have already bagged
orders with all the major private service providers even before formally
starting your India office. Would you tell us in detail about the different
orders that you have bagged?

We have bagged the Reliance Infocomm order in 2002, Tata Teleservices
in early 2003, and Bharti in October 2003 and we are presently tying up with
other service providers. On the signaling front we have sold four STP nodes to
Reliance, two STP nodes to Bharti, and few regional nodes to Tata Teleservices.

Is there any plan for R&D in
India for the different products that you possess?

There are additional resources available in India and we will take
advantage of them and increase it with time.

How do you plan to market your
products in India?

We will sell directly with our own sales team and address the market
directly. In India, we are looking at all kinds of partners–sales,
installation, and commissioning. And we are in discussions with them.

The service providers in India can start with the signaling
product called Eagle, which is our flagship product and a market leader. As
service providers require higher-capacity applications for carrier-grade
solutions we will conduct trials and move to our next generation switching
platform called SanteraOne.

What is Tekelec’s overall strategy
for all the markets?

We are creating infrastructure for signaling. When the signaling
network grows and the regulations are clearer, the service providers would add
more applications. It’s a similar model which is applicable for all the
markets. For example, using signaling transfer protocol, one can have multiple
applications on a single platform like SMS accounting, fraud, and number
portability. So, one can keep on adding applications whenever it is required in
the future.

Recently BSNL has issued a tender
for STP nodes. Is Tekelec planning to participate in the tender?

We are in discussions with BSNL and respect their expansion plans. On
the one hand it helps in creating an alternate carrier infrastructure and on the
other it helps in reducing operating expenses. When a carrier is looking for
high growth in wireless they usually go for Tekelec solutions. We have already
seen this in France and Mexico where around 59 percent of our business comes
from wireless while; we support both wireless and wireline.

For BSNL we may bid directly or look at number of potential
opportunities. We will be able to compete with our competitors on price. And we
do recognize the importance of price to win BSNL tenders.

How big is the worldwide market for
signaling and switching products that Tekelec focuses on?

According to various studies, the total addressable market for
combined signaling and switching solutions would be around $3 billion in 2005.

Pravin Prashant