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Old January 3rd, 2006, 02:51 PM
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Thumbs up Telecom: Indian Vendors Go Global

Indian Vendors Go GlobalJANUARY 03, 2006As India's nascent telecom industry grows, the country's vendors are becoming more competitive internationally, signing bigger and bigger deals and picking up investment dollars, too. (See India's Telecom Startups Reel in Cash.)
According to a KPMG International study, India's telecom sector saw 21 acquisitions in 2005, with a combined value of $1.8 billion. Many of those were made by domestic companies acquiring interests abroad -- the latest example being IT services firm Wipro Ltd. 's acquisition of Austrian chip developer NewLogic Technologies AG for $56 million to complement its portfolio of wireline and wireless intellectual property cores. (See Wipro's Wireless Expansion.)

The growth of the domestic market this year has given vendors a springboard into the international telecom sector, and companies like Mahindra British Telecom Ltd. (MBT), a provider of OSS, BSS, and remote network management software, have seen more of their business take place outside India -- it teamed with Azure Solutions Inc. to provide a billing system for StarHub Pte. Ltd. in Singapore and announced a global alliance with Australian vendor Clarity, for instance.

"Mahindra is a good example of an Indian company really becoming a global player, which is what companies will need going forward," says Raj Judge, a partner at law firm Wilson Sonsini Goodrich & Rosati, and head of its Indian practice group. Judge says he was astounded to see MBT buying a U.S. company: It acquired Texas-based Axes Technologies last month for $54 million. (See Mahindra-BT Picks Up Axes.)
MBT derives 70 percent of its revenues from BT Group plc (NYSE: BT - message board; London: BTA), which holds a 43 percent stake, but that's down from 85 percent 18 months ago and the company plans to make it 50 percent in the next two years.

"The significant majority of the domestic companies that have been formed have all realized that they need to be global players," says Judge. "If they're not global competitors they won't survive." The domestic market is mushrooming, but it's also highly price competitive and demanding, he says. "If a company can actually succeed in that market they have an amazing platform for the global market, and they are recognizing that's what they need to do."
Judge notes that Indian companies tend to have a "different psyche" to their Western counterparts. "They really do have this sense of confidence that they feel like they can" compete on a global level.

Bob Kondamoori, CEO of optical transport and access equipment vendor Xalted Networks Inc. says India's "very brutal" tendering process, which focuses on getting "the most features at the lowest price," gives vendors an edge in other emerging markets: "It's fiercely competitive because there's all the usual suspects -- Alcatel (NYSE: ALA - message board; Paris: CGEP:PA), Ericsson AB (Nasdaq: ERICY - message board), Nortel Networks Ltd. (NYSE/Toronto: NT - message board) -- plus more. So if you can compete against them, meet all the eligibility criteria and be cheaper than they are, it instantaneously gives you an edge to compete internationally -- places like Indonesia and the Middle East become low hanging fruit."

Xalted Networks, which sells IP DSLAMs and SDH multiservice access platforms as well as OSS software, generates around $35 million in annual revenues, and has OEM partnerships with the likes of Alcatel, Siemens AG (NYSE: SI - message board; Frankfurt: SIE), and UTStarcom Inc. (Nasdaq: UTSI - message board) for contracts in Europe, Asia, and Latin America.
Likewise India's other major equipment vendors, including Tejas Networks India Ltd. , Midas Communication Technologies Pvt. Ltd. , and Telsima Corp. , are branching out with partnerships abroad. "More or less every single operation in India has relationships with partners," says Tejas CEO Sanjay Nayak, noting that the vendor has "one or two" unannounced partnerships in the U.S..

"A lot of Indian companies have a huge U.S. presence," adds Xalted's Kondamoori.
They include Wipro, which reported revenues of $568.2 million for the quarter ended Sept. 30, of which $430.6 million came from its global IT services and products unit. (See Wipro Reports Q2 Profit .)

With India only recently emerging as an attractive telecom market in its own right, "building a company in India for India alone was not interesting enough" for investors, says Tejas's Nayak. But as telecom equipment has become more standardized, he says, "the location of the company doesn't really matter... as long as it has good technology with a local presence," giving India-based companies the opportunity to expand abroad. And with the rigorous conditions that domestic carriers impose on vendors, Indian companies have a rigorous training ground.

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Old January 4th, 2006, 11:02 AM
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Re: Telecom: Indian Vendors Go Global

I am waiting for India like cell service in the USA. I am amazed at the features and convenience the cell users in India have. Here in USA just 3 or 4 major service providers monopolise the way service is provided and the overall costs. In India the competition is intense and the plans are really flexible.
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Old January 4th, 2006, 01:58 PM
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Re: Telecom: Indian Vendors Go Global

Yes, cellular services in the US are a big ripoff. 40-50 bucks for 400-500 mins. Not to mention charges for stupid things like SMS etc. (they send ads and charge you for that!)

What's their running cost man? 5-10 bucks? I think it's true with most other consumer services here. Cable, Dish, Internet. They hand you the equipment free and they strip you with the other service charges.

Oh coming back to Indian vendors, yes this is an amazing trend that has started back home. I read somewhere, Tata acquired around 40 global companies last year, Daewoo being one! It's all happening
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