MUMBAI: Tata Communications, a global voice and data telecom provider with annual revenues of $2 billion, has identified ‘20 top emerging markets’ that will drive its next phase of growth.
In an interview to DNA Money, Srinivasa Addepalli, senior vice-president (corporate strategy) at Tata Communications, said: “We believe that we’ll be present in most of these 20 countries. That’s our first goal.”
The company, which was a public sector unit about six years ago when it was known as Videsh Sanchar Nigam (VSNL), has transformed itself over the years. It now earns two-third of its revenues from overseas businesses. In the last six years, it invested about $1 billion to fund acquisitions (Tele Globe, a stake in Tata Teleservices) and setting up of new submarine cable.
The growth strategy going forward revolves around regions where global multinational companies are setting up operations. That includes countries in Latin America, Africa and South East Asia and Central and Eastern Europe. VSNL will set up infrastructure that will support various telecom enterprise solutions, including tele-presence, manage data services, messaging etc.
“We intend to have a presence in all the countries where MNCs are investing now… and not stop at just 20 countries”, Addepalli added. VSNL’s gameplan is to cover most of these territories by March or at least by the middle of next year.
The company will be doing this by fostering partnerships with local entities. While it has already announced tie-ups with Egypt Telecom and Etisalat for Egypt and UAE, respectively, it is eyeing joint ventures for other regions in emerging markets.
Why can’t VSNL do it on its own instead of enlisting a partner? “It is tough, to put up the local infrastructure,” explains Addepalli. “For setting up operations, we need to set up local companies. We need various licenses and local regulations in many countries insist that we tie up with local companies,” says Addepalli.
Tata Communications, meanwhile, is also investing in a major way in India. It has earmarked a $2 billion capex over three years, its most ambitious plan in its history.
For setting up fresh capacities in submarine cable undersea, the company will spend $500 million, Wimax for broadband connectivity for a captive market of 30 million potential subscribers will entail an expenditure of $500 million. Another billion dollars will go for setting up data centres and expansion of its fibre network.
Between 2009 and 2011, the company has charted a 12-15% compounded annual growth rate. This means, it will double its revenues to $4 billion and ebitda will grow 20% to about $800 million by 2011-12.
Meanwhile, Tata Communications is likely to use Neotel, the South African firm in which Tata Communications took a majority stake two months back, to flag off services across select African nations in the future.
Addepalli, however, does not confirm this. Instead he says, the company will enter other African nations especially those that are becoming economically stable and are growing.
