T&M: Little Action

T&M market had a sluggish growth of 16.3 percent in

2000-01, reaching Rs 370 crore of total sales. This figure includes total

communication T&M products sales, which last year was Rs 318 crore. The

service provider segment last year accounted for Rs 250 crore.

This happened despite a strong growth in the telecom

infrastructure equipment, which usually drives the growth of T&M

equipment. This anomaly can be explained with the help of two possible

reasons. First, Bharat Sanchar Nigam Ltd (BSNL) did not buy much of T&M

equipment. Second, the private operators just got more of the old stuff.

That means little new technology was deployed. So while new base stations or

microwave radios are good businesses for equipment and turnkey vendors, not

many service providers require new kind of test equipment along with these

deployments.

Specialized test sets for GPRS, which many vendors pinned

their hopes on, did not sell, as cellular service providers did not deploy

GPRS the way they were expected to. Similarly, with a limited number of

IS-95 systems working, IS-95 CDMA test sets also did not sell much. This,

however, is likely to change, as BSNL is likely to buy in large numbers this

year, though any tender is not yet out.

A growth in OTDR sales somewhat compensated for a sharp

drop in sales of specialized test sets. However, even the projected sales

did not happen as not many companies actually started drawing fiber after

laying the duct. But large duct deployment means that in the next couple of

years, a lot of fiber will be drawn. Assuming that even 30-40 percent of

them will be lighted, it will be a big business for OTDRs as well as optical

network test systems. Also, many companies will go for DWDM, which could

spur the growth of DWDM test systems.

For the third consecutive year, the US sanctions affected

the sale of test equipment to many organizations in India, affecting

companies like Agilent and Tektronix in a major way. With indications of the

ban being lifted, this segment (defense, defense PSUSs, etc) could bring the

smile back to the T&M vendors.

With new fixed service networks being rolled out and the

fourth cellular operators likely to start their operations, there will be

significant sales in the telecom equipment. However, that will mean only

some incremental sale for T&M vendors. Unless the service providers go

for technologies like GPRS, VoIP, and start providing VPN solutions

aggressively, T&M vendors will not have "their" boom time.

The growth of general instruments will be stable.

Overall, the year 2001-02 may be a good year for T&M.

The first quarter shows some promise. Tektronix registered more than 200

percent growth in AMJ 2001. However, if new technologies do not come in, the

incremental sales of the vanilla equipment will not be able to produce more

than 12-15 percent growth.

With more competition coming in, the service providers

will focus on QoS. That will mean network certification and some degree of

outsourcing of T&M work. From 2002-03, services will form a significant

percentage of the T&M vendors’ revenue.

One new segment that will contribute towards significant

T&M sales in 2000-01, will be the new technology companies.

In service provider segment, only the long distance

service provider will go for big T&M equipment purchase. BSNL may revive

the purchase, especially CDMA test sales in the wake of large CDMA

deployment in Wireless in Local Loop. Fixed service providers and cellular

service providers are not likely to buy in large quantities, despite network

expansion.

Indian utilities who have rolling-out ambitious networks will be a new

segment for T&M.