Transmitting Success

The transmission segment grew by 52.5% to Rs 1,931 crore in FY 2007-08 from
Rs 1,266 crore in FY 2006-07. FY 2007-08 was a good year in many ways as a total
of 121 LoIs (letters of intent) were issued to nine companies. DoT issued the
universal access service license (UASL) to five new companies and four existing
players. Under these UASLs, licensees are allowed to roll out telecom services
in any of the technologies available. It can also provide Internet telephony as
well as Internet and broadband services. Also, DoT has given Reliance
Communications and Tata Teleservices crossover technology permission, ie, they
can now roll out services under the GSM technology.

The companies that got the licenses are Unitech, Videocon, BPL, Shyam
Telecom, Swan Telecom, STel, Spice, Idea Cellular, and Tata Teleservices. Real
estate major Unitech Group, through its eight subsidiaries, and Videocon through
its subsidiary Datacom Solutions, have got LoIs for pan-India licenses for all
twenty-two service areas.

Also, the existing players like Shyam Telelink, already operational in a
Rajasthan circle, has got an LoI for twenty-one circles, Spice has got four,
Idea nine, and Tata Teleservices three. Also, Loop Telecom has got LoIs for
twenty-one circles. Besides, hitherto unknown entities like Swan Telecom and
Stel have got LoIs for thirteen and six circles respectively.

ECI remained the #1 transmission equipment vendor in India, and it continued
to support the tremendous growth experienced by its customers including Bharti
Airtel, Tata Group, Vodafone, and Idea Cellular.

Tejas had also launched new products like TJ1600; full-featured SDH/SONETMSPP,
which can support upto 10 Gbps.

Some of the prominent customers of Tejas Networks were BSNL, MTNL, Tatas
(including VSNL), Bharti, Railtel, and OEM Partners.

Alcatel-Lucent had a growth of 218%. From Tata, RailTel and Bharti Airtel it
bagged orders worth Rs 200 crore and the remaining chunk of revenue was
generated from non telcos and other operators.

Huawei for the FY 2007-08 showed an impressive growth of 239%. It bagged
major order from BSNL because of its reduce price of DWDM.

NSN in FY 2007-08 bagged major order from Bharti, Idea and BSNL.

The main sectors that contributed to the revenues of Tejas Networks were
telecom carriers and service providers, utility companies, Internet/cable
service providers, OEM partnerships with global tier-1equipment vendors, and
sales generated through various VAR/SIs in international markets. Some prominent
customers of Tejas Networks were BSNL, MTNL, Tatas (including TTSL), Bharti,
RailTel, and OEM Partners.

ZTE clocked a revenue of Rs 70 crore and received an upgrade contract for
DWDM from BSNL, and it has generated revenue mainly through incumbent players,
and partly through private players.

Growth Drivers

The market is witnessing investments by operators in SDH-based solutions. In
parallel, migration to other technologies such as IP is being witnessed.
However, such migration is quite subtle at this point and most operators are
taking a cautious view in the matter.

On the business level, there is a move toward consolidation, both at the
service provider as well as the vendor level, creating tighter economies of
scale and a significantly more competitive industry.

From a service provisioning perspective, we are seeing a move by operators
toward total telecom, driven in part by the need for supplementary revenue
sources and the competitive fight for customer retention.

Wireline operators are venturing into the wireless sector, and business
service providers are offering residential packages, creating strong demand for
networking infrastructure solutions that can support a multitude and diverse
service offerings. The key aspect here is to utilize the same network
infrastructure to support different target audiences and different services and
applications, avoiding duplication of networks, and, of course, unnecessary
capital and operating expenses.

The market growth in India is expected to be fueled by ongoing infrastructure
rollout, especially in rural areas, subscriber and usage growth, and the
increased demand for a differentiated, bandwidth-intensive service offering from
service providers, especially in the wireless and broadband realm.

Outlook

The outlook for the transmission equipment industry looks good, as it is one
of the key ingredients for fueling 3G and broadband. With LoIs issued to new
players and service providers improving their reach in remote areas of the
country, tremendous growth will be witnessed in the transmission segment.

Sandeep Budki

sandeepb@cybermedia.co.in