India’s Tata Comm forms partnership in China

India’s Tata Comm forms partnership in China
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First Published: Wed, Feb 13 2008. 10 33 AM IST
Updated: Wed, Feb 13 2008. 10 33 AM IST
Mumbai: Indian telecoms firm Tata Communications Ltd has formed a partnership in China for network services and is looking for similar tie-ups in Asia and the Middle East to boost growth, a senior official said.
“It’s a commercial partnership, where two networks get interconnected,” Srinivasa Addepalli, senior vice president of corporate strategy, told Reuters.
He declined to name the Chinese partner.
Addepalli said under the deal Tata would provide its multinational clients access to China, with the Chinese partner holding rights for the local network.
“We have seen strong interest from our customers who want to connect to China, once we told them that we are starting this, Addepalli said, adding it was too early to say what revenue it would generate.
New York-listed Tata Communications, formerly Videsh Sanchar Nigam Ltd, was a state-run monopoly for international calls. It was taken over by the Tata group in 2002 and has expanded into network services for companies and broadband after a sharp fall in call tariffs hit its revenue.
Enterprise services, which include Internet, virtual private network (VPNs), leased line services and managing the customers network, e-mails and security, contributed about 15% of Tata Communications’ revenue, and Addepalli said he expects it to grow to 25-30% in the next three to four years.
The company plans to double its global locations for providing VPNs from the current 20 by March 2009 and is looking at the Chinese market as a big opportunity, he said.
VPN uses a public communication medium such as Internet to provide remote users access to their organisations’ network. Tata Communications is looking to expand its VPN services in other Asian markets, including Vietnam and the Philippines, and is looking for partnerships, he said.
In the Middle East and north Africa, Addepalli said the company would expand existing partnerships it has for undersea cables and other data services to provide VPNs.
Tata partners telecom companies like Saudi Telecom and Telecom Egypt for managed data services, he said.
“It is a market which is very rich and is growing very rapidly. But at the same time obtaining licences and competing in that market we don’t think is the right way to address.”
For the US and UK markets, the company is looking for acquisitions to boost its managed services such as VPNs, Addepalli said.
The company had bought network service firm Teleglobe International Holdings Ltd in 2006 and Tyco International’s global undersea fibre optic cable network unit a year earlier.
Tata competes with telecoms majors such as BT , AT&T, iBasis and Verizon in its international operations, and with companies such as Bharti Airtel and Reliance Communications in India.
Tata is spending $600 million to build undersea cables between Asia and Europe and also across Asia, including about $40 million in a consortium cable system between India and France.
In India, the company’s plans to expand its Wi Max services to 100 towns by end-2008 from 30 now has been constrained by delays in regulatory approvals and availability of spectrum, or radio airwaves, Addepalli said.
Shares in the company, valued at about $3.5 billion, ended 6.9% down at Rs447.90 in weak Mumbai market on Tuesday.
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First Published: Wed, Feb 13 2008. 10 33 AM IST
More Topics: Tata Communications | China | VPN | Asia | Middle East |