In FY 2002-03, the turnkey market was estimated at around Rs 2,350.77 crore. Since we do not have figures for FY 2001–02, it will be difficult to estimate the growth on an year-on-year basis. But the market was upbeat as BSNL, Reliance, Bharti, and Hutch were either building or expanding their network in newer circles. For the turnkey business, we have taken those companies that are based in India and the revenue includes India revenues plus international revenue earned by the India-based companies. The overall market size will have some component of international turnkey as some companies do have an international focus. According to Voice&Data, the international component will be around Rs 600 crore. Due to TCIL, the international component is on the higher side as it contributes around 24 percent of the total market.

In the GSM sector, there have been large deployments by BSNL and Bharti. The incumbent operator went for an all-India deployment of its GSM services across the country. As a fourth GSM operator, Bharti also deployed services in Maharashtra, Mumbai, Gujarat, Haryana, Kerala, Madhya Pradesh, Tamil Nadu, and Uttar Pradesh (W). Hutchison also deployed GSM services in the new circles of Andhra Pradesh, Chennai, and Karnataka. On the basic services front, Reliance went for an all-India deployment of CDMA services. The company has already started services in more than 50 cities. Tata also expanded its services from Andhra Pradesh to new circles of Gujarat, Tamil Nadu, Karnataka, and Delhi. In long-distance, there were significant OFC deployments by Bharti, VSNL, and Reliance. Bharti extended its reach to 24,000 km and Reliance has plans for 60,000 km whereas VSNL has plans to cover 12,000 km.

The Players
There are four categories of companies. One, public sector undertakings like ITI and TCIL that have been doing well on the turnover front but their profit margins are either negative or very low. To do better, they have to focus on meeting deadlines and increasing efficiency. The new management at ITI is actively focusing on meeting project deadlines so that losses can be kept under check. Two, the biggies in the private sector like HFCL, GTL, and Supreme. Both HFCL and GTL started as manufacturing/retailing companies whereas Supreme started as a services company. All the three have some international presence and are very successful on the India front. These companies have to focus on increasing their international presence, in terms of geography as well as value. Three, small players like Shyam Telecom, NDC, BPL Telecom, and Nutek, which have two-digit turnovers and have been doing pretty well in the Indian market. Four, the regional players, who try to restrict their operations in terms of a particular region. They are large in numbers but contribute a small portion of the overall business.

In terms of ranking, TCIL occupies the No. 2 slot with a market share of around 26 percent, with a total revenue of Rs 620 crore. The company has presence in above 50 categories, of which majority comes from Third World countries. The company has operations in Mauritius, Sri Lanka, Madgascar, Saudi Arabia, Kuwait, Ghana, Republic of Yemen, Oman, Zimbabwe, Algeria, Nepal, Botswana, Ethiopia, Nigeria, and others. GTL and Supreme have a small presence in the international market. From FY 2003–04, even HFCL is planning to expand its operations beyond India whereas NDC has announced closure of its international operations in an effort to focus more on the domestic market. Despite good wins, a flat market (worldwide) made things difficult for NDC.

ITI was comfortably seated at No. 2, netting a turnover of Rs 806 crore. In terms of India revenues, ITI was the No. 1 company in the business. However, it had to suffer a net loss of around Rs 352 crore, mainly due to project delays and late receipts of orders.

HFCL occupied the third position with a turnover of Rs 288.5 crore. Having done well on the India front, the company is planning to focus on Kuwait, Iraq, Jordan, Nigeria, Bangladesh, Lybia, and South Africa in this fiscal.

GTL did well by netting a turnover of around Rs 195 crore. The company got a large order from Saudi Telecom Company to the tune of Rs 70 crore, which boosted its top line. Supreme Telecom grew by around 4 percent and netted a revenue of Rs 109.57 crore. The company has been showing a flat growth for the last two years. Shyam Telecom had 3 percent share whereas NDC had around 2 percent. UTL, BPL Telecom and Nutek did a collective business of around Rs 75 crore.

The Trends
Wireless and OFC deployment were the major revenue generators for turnkey operators. Companies did well both on the CDMA and GSM fronts with large-scale deployment of networks by BSNL, Reliance, Tata, and Bharti.

With so many networks being rolled out, turnkey providers had a tough time managing manpower as well as time deadline.

Those who were able to do it well increased both their top line as well as bottom line. With turnkey margins decreasing, it is all the more important for service providers to complete projects in time.

Outlook
It is expected that in FY 2003–04, turnkey business will show a modest growth of around 10 percent. With green field projects except Reliance Infocomm on the verge of completion the turnkey providers will have to focus more on the expansion projects. With consolidation phase getting over and tariffs at rock bottom, service providers have to now focus on network expansion and increase in quality of service. All this will lead to a good amount of turnkey business. With lot of market getting de-monopolized, the companies will have to also focus on the international market. So the international component of the total turnkey business may rise.

In order to cater to the traffic needs, Bharti is planning to do around $350 million (around Rs 1,645 crore) of capex for FY 2003-04. BSNL has been spending on an average of around Rs 15,000 crore every year in terms of capex. Reliance Infocomm has spent around Rs 9,000 crore up to March 2003 and plans are to spend another Rs 9,000 crore. The company is doing a CorDect deployment in smaller cities. On an average, MTNL spends around Rs 1,000 crore in terms of capex.

Tata Group is also investing a lot in telecom infrastructure. Tata Teleservices will expand services in new cities whereas VSNL will lay its DLD backbone. Tata Teleservices (Maharashtra) as well as Reliance

Infocomm are implementing their fiber to the business (FTTB) strategies. All this will lead to good amount of business for turnkey providers.

At present, turnkey providers are focussing more on the low end of turnkey business, like installation and commissioning, with little focus on system integration. But nobody provides turnkey services like managed outsourced service. In the coming two to three years, managed outsourced service will gain importance. However, turnkey providers and equipment vendors will have to work out a model that will change the way service providers in India work.

Pravin Prashant

Top Turnkey Providers