Telecom can be a $100 Billion Export Opportunity for India: Tejas Networks

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.

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 600G 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. A large portion 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.

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 Airtel, Tata, BSNL, etc. 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.  Also we would not get a rupee more than what 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. 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 just one PCB into our product to support FTTx. 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. Our products are competitive, not just in India, but everywhere.

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% to 30% 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 broad trends. Clearly, broadband infrastructure has become a national priority just like physical infrastructure, say roads. 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. FTTx has now become like an essential service, and its adoption has significantly accelerated. Today India has less than 5 million fiber broadband users. But TRAI estimates that in the next three years, India will have over 100 million fiber broadband subscribers. This is massive growth by any standards. ARPUs for FTTx services are much higher than for mobile broadband services like 4G. 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% have fiber broadband connections. In Europe too, many people don’t have fiber connections at home. So, FTTx is happening around the world.

Second, Covid-19 has created huge geopolitical turbulence. Countries have become more conscious of which countries they want to do business with and there is an increasing use of trade barriers, embargos, etc. Governments around the world have realized the need for a secure and trusted network. What used to be an almost automatic decision, has now changed. People do not want to put all the eggs in one basket. Tejas is benefiting from this changed outlook. We bring the best of both worlds  - the price competitiveness of the Chinese ecosystem and the innovation culture of the Western ecosystem. This is a magical combination.

Third, Indian government is looking at how Indian businesses can be globally successful. The size of the global opportunity is huge. Today, the Indian IT industry is somewhere around the size of $150-200 billion per year and it is possible for India's telecom too to be a $100 billion industry with the right set of policies. For example, there are hundreds of countries in the world who are in the process of developing their own rural broadband infrastructure and India with its BharatNet is widely recognized as a world leader by building the world's largest greenfield rural broadband network in the most cost-effective manner.  The per-subscriber capital expense for BharatNet is merely $20 whereas the equivalent cost for Australia is $1100 and for USA is $500. This is a great opportunity for us to export. Aatmanirbhar Bharat gives us an impetus to design and make in India for the world.

VnD: How are you planning to use 5G and fiber broadband across the sectors?

Sanjay: 5G impacts our core business of optical transmission in many ways.  In India, only 25-30% of cell towers are fiberized which creates a choking point on the backhaul thereby adversely impacting the overall 4G service quality. In 5G, the number of towers required will be 10 times more than for 4G. Hence you cannot have a good quality 5G service if you don't have a robust backhaul. Thus 5G opens up a large cell tower fiberization opportunity which can be addressed by our products.

Tejas was a key contributor to the LMLC proposal which was submitted by India's telecom standards body (TSDSI) and has recently been incorporated in the 5G standard. As the first founder-chairman of TSDSI, our CTO was involved in this initiative. India has also been contributing to the front haul standard for the optical fiber. Some variants of G-PON can also be used for that. Our optical transmission products are being upgraded to support 5G fronthaul standards. Tejashas also launched an ultra-converged broadband product that integrates an LTE radio which can be upgraded to be 5G-compliant through software. We have won several awards for this ultra-converged product. 5G will probably happen in India from 2022. It will take 3-4 years for large-scale deployment. India has an opportunity to develop its own ecosystem for 5G and emerge as a world leader in this technology.