Tata Communications: The Digital Provider
If there is one word that describes the evolution of Tata Communications, it is transformation. The erstwhile state-owned VSNL is now no more just a simple voice carrier but an integrated telecom company with both voice and data capabilities, on a global scale. And thanks to this transformation, Tata Communications has earned its badge of honour in BW’s Most Respected Companies ranking.
Over the years, international long-distance calling was the trump card of Tata Communications. But now its data vertical is the key driver contributing nearly 62 per cent to its revenues in FY17. This is the vertical that is instrumental in providing leased line networks for large corporates and private networks. It also hosts management services and data centres, providing call facilities, and managing ATM outsourcing across the globe.
The company’s international voice business has shrunk over the years and now comprises just 38 per cent of its revenues in FY17. This segment is still one of the most reliable for making international calls and Tata Communications continues to command a good share of the long-distance call market with a market share of 19 per cent. What has stood Tata Communications in good stead over the years is that it has transformed itself from being a communications services provider within India to a truly global services provider — offering managed communications and IT infrastructure services.
In the digital era, Tata Communications is no longer a provider of mere bandwidth, but a provider of essential technologies that is helping companies make a seamless shift to the digital world.
Tata Communications, a vital player in the cloud business launched a new service to its cloud platform called IZO™ SDWAN (Software Defined Wide Area Networking), to further strengthen the company’s data service offering.
One of the biggest strengths of the company is that it owns and operates the world’s only fibre optic undersea network of cables spanning across 5 lakh km. The network connects Asia, Europe, US and the Middle East. In this business, 28 per cent of the world’s Internet routes travel over the company’s networks, making it the fifth largest global Internet backbone service provider.
In essence, Tata Communications’ network forms the backbone for data and voice connectivity for other telecommunication players and even for new Internet VoIP (voice over Internet protocol) players. It offers an integrated set of services including wholesale voice, domestic and international data connectivity, and Internet backbone connectivity.
Besides, over the last few years it has also added a series of products like video support and cloud-based products for different industries. In the increasingly digital age, this will enable the company to expand its offerings by 50 per cent in the coming years.
On the whole, the company will not require too much capital expenditure, instead it will begin to sweat its assets in the coming years, improving operating margins and cash flows. Global traffic in data and voice is expected to grow steadily at 18-22 per cent over the next few years. In short, Tata Communications is the backbone of the emerging digital networks; so no surprise, it ranks among the Most Respected Companies.
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